Jakarta. Indonesia and Malaysia, which together control the world’s palm oil supplies, have set up a joint task force in response to the European Union deforestation-free regulation (EUDR), an official said on Wednesday.

In May last year, the EU issued a regulation requiring suppliers of agricultural products and cattle to prove they don’t lead to forest degradation. The regulation will come into force next year.

The regulation will seriously affect Indonesia’s crude palm oil exports to the EU, one of the world’s biggest commodity buyers, said Musdhalifah Machmud, deputy for the Coordinating Ministry of Economic Affairs in charge of food and agriculture commodities.

“The task force will seek solutions to the imminent EUDR implementation as it will pose challenges to both Indonesia and Malaysia," Musdhalifah said during a discussion at Trisakti University in Jakarta.

Indonesia in particular will be very hard to meet the EU’s traceability and transparency requirements because the local CPO supply chain depends largely on individual farmers who lack of necessary certification, she said.

In addition, many Indonesian CPO producers aren’t aware of the EUDR so they need training and information.

"We must fight against global misinformation alleging that palm oil plantations have negative impacts on the environment," Musdhalifah said.

The task force have held several discussions with EU officials, most recently last week, to minimize the impacts from the regulation, which could push traditional farmers from the CPO supply chain.

Europe remains Indonesia's third-largest export market after China and India, with an annual volume of 4.2 to 4.3 million tons. Besides palm oil, other Indonesian forestry commodities like cocoa, coffee, rubber, and wood products are also at risk of being impacted by the EUDR.