It is difficult for rubber farmers to meet their daily needs, let alone fulfill EUDR requirements

The Chairman of the National Rubber Processing and Marketing Business Association (UPPB), Roizin, stated on Friday (10/5/2024) that the majority of rubber farmers in Indonesia are small-scale farmers who do not partner with rubber companies. They tap rubber latex to meet their daily needs.

"When it's already difficult to buy rice that is more expensive than last year, let alone being asked to meet EUDR requirements," he said when contacted from Jakarta.

In fact, BPS and Gapkindo data shows that the number of rubber farmers in the country is more than 2.1 million people.

Also read: Don't let rubber get “wound”

Roizin explained that currently, the price of raw rubber at the farmer level is Rp 9,000 - Rp 10,000 per kilogram (kg). This price has improved significantly compared to a few years ago when it was around Rp 3,000 - 4,000 per kg.

However, the price of rubber is not yet ideal as it is still below the price of rice which is currently at Rp 13,000-14,000 per kg. The retail price of rice is also still higher than the highest retail price (HET) while the medium rice set by the government is Rp 12,500-Rp 13,500 per kg according to zoning.

In addition, according to Roizin, the production of rubber by local farmers continues to decline from an average of 100 kg per week per hectare to 50 kg per week per hectare. This condition also affects the production of raw material for rubber (UPPB) which has decreased from 20-50 tons per week to 10-25 tons per week.

There are many factors causing it, such as a large number of rubber plants that are 20-30 years old and have never been replaced with new plants. Rubber plants are also continuously affected by diseases, especially leaf fall and white root rot fungus.

"The issue of rubber in the upstream sector has been accumulating and there has been no significant improvement effort. The implementation of EUDR will only add to the burden of the farmers. They are worried that rubber will not sell well in the EU (European Union) market," he said.

It's difficult to buy rice, which is more expensive than last year, let alone being asked to meet EUDR requirements.

Roizin hopes that the government, large rubber companies, and related institutions will help small rubber farmers meet the requirements for EUDR. In addition, rejuvenation of rubber plants needs to be carried out using a scheme similar to that of rejuvenating smallholder oil palm to increase rubber production.

"The regional government and a few private rubber companies have started to collect data and implement traceability of local rubber plants, but the number is still small and not yet massive," said Roizin.

The EU will fully implement the EUDR in January 2025. The regulation requires commodities exported to the EU to be certified with geolocation-based verification or due diligence (coordinate points or polygons) based on satellite imagery and global positioning system (GPS) of plantations accompanied by the application of traceability methods.

This regulation prohibits a number of commodities that come from land that has been deforested after December 31, 2020 from entering the EU market. In addition to rubber, this applies to commodities such as coffee, palm oil, cattle, soybeans, cocoa, wood, charcoal, and rubber as well as derivative or processed products such as meat, furniture, paper, leather, and chocolate.

Until now, there are only 971 rubber plantation E-STDBs that have been issued. Specifically, in the rubber sector, at least 491,106 E-STDBs are needed to fulfill the portion of rubber exports and its derivative products to the European Union.

Industrial difficulties

Uhendi Haris, the Deputy Executive Director of Gapkindo, stated that rubber processing industry players who have established partnerships with farmers earlier will be relatively easier to prepare themselves for the implementation of EUDR. However, most rubber processing factories do not have direct interactions with farmers.

"In terms of the supply chain, natural rubber materials from farmers will go through at least three middlemen or collectors before reaching the processing factory. This will make it difficult for downstream rubber business owners to trace the origin of the rubber," he said.

He explained that even the first level collectors have accommodated raw materials produced by dozens of farmers. Meanwhile, the second level collectors will gather raw materials from dozens of first level collectors, which means they have manipulated raw materials from hundreds of farmers.

As for meeting the factory's need for raw materials that can reach tens to hundreds of tons per day, the final level collectors will package the raw materials that come from thousands of farmers who they obtain from the second level collectors. This condition makes it difficult for most rubber processing factories to trace the source of the raw materials they use.

“Segregation here is a challenge in itself. This is different with factories that already have strong partnerships with farmers. "Identifying sources of raw materials will be relatively easier for them," said Uhendi during a discussion with Kompas, last week.

Also read: Accelerate Data Collection on Planters to Anticipate European Union Anti-deforestation Regulations

Another issue, according to Uhendi, is related to the legality of most of Indonesia's rubber production land, which has the status of community plantations. This issue has the potential to hinder the government's efforts in accelerating the registration of farmers through the Electronic Cultivation Business Registration Integrated System (E-STDB).

Based on data collected by Gapkindo, so far there are only 971 E-STDB rubber plantation certificates that have been issued. Specifically for the rubber sector, at least 491,106 E-STDB certificates are needed to fulfill the export portion of rubber and its derivative products to the EU.

"I cannot estimate how many farmers already have land ownership certificates (SHM). Issues related to the legality of raw material sources can also create conflicts for processing factories that are late in partnering with farmers," said Uhendi.

Furthermore, according to Uhendi, rubber plantation locations in Indonesia are widely dispersed with minimal supporting infrastructure such as roads, electricity, and internet access. This situation also presents its own challenges for processing factories that have to directly reach out to track and identify the sources of raw materials.

Complying with EUDR regulations is important for stakeholders in the rubber commodity industry in Indonesia. Although only 11 percent or 206,203 tons of the total 1.79 million tons of exported rubber products in 2023 were exported to the EU, other export markets such as Japan and Korea, which import natural rubber from Indonesia in raw or semi-finished form, will still export their finished products to the EU.

If this issue does not find a solution soon, according to Uhendi, the export volume of Indonesian rubber products, which has already decreased every year, will become even more threatened.

"If Indonesia is unable to fulfill exports in accordance with EUDR requirements, traders will most likely look for alternative markets or divert the portion of exports that Indonesia cannot fulfill to other rubber producing countries that meet these requirements," he said.

Also read: Different fates of Indonesian and Thai rubber

Push for EUDR delay

In the bilateral meeting between Indonesia and Germany in Berlin on May 6, 2024, Indonesia once again voiced its objection to the implementation of EUDR. RI hopes that Germany can understand these objections and support RI as well.

This was stated by Deputy Trade Minister Jerry Sambuaga to the Chancellor and Minister of Economy and Climate Action of Germany, Robert Habeck. At that time, Jerry was asked to accompany Coordinating Minister for Economic Affairs, Airlangga Hartarto.

Jerry stated that when it comes to environmental policies and sustainability, Indonesia prioritizes fairness. The implementation of EUDR will harm Indonesia's important plantation and forestry commodities, such as cocoa, coffee, rubber, wood products, and palm oil.

Indonesia and several other countries are pushing for the policy to be delayed. In addition, the European Union is also expected to be more flexible in adopting the standardization regulations of other countries' commodities in traceability and sustainability systems.

The step taken by Indonesia, according to Jerry, has received support from like-minded countries, one of them being the United States. At the Agriculture Fisheries Council Configuration (AGRIFISH) meeting, 20 out of 27 countries also called for a delay in the EUDR, including Germany.