Independent smallholders make up a significant portion of Indonesia and Malaysia’s palm oil supply chain, but they are struggling to meet the European Union Deforestation Regulation (EUDR) mandates which add further complexity to their work.
In both markets, EUDR’s requirements are exposing major gaps in readiness among independent smallholders who lack resources to meet its legal, technical, and administrative standards, said sustainability professionals at agribusiness group Wilmar International.
The EUDR was set to take effect in December 2025 for medium and large operators, and June 2026 for micro and small enterprises.
Despite efforts by the European Commission to streamline compliance obligations, smallholders in Indonesia continue to struggle with limited awareness of EUDR requirements, said Yudi Triadi, Indonesia smallholder lead at Wilmar.
Securing land legality documents, geolocation data and ensuring traceability are some of the problems they are currently facing, particularly in Indonesia, along with low participation in local sustainability certification standards such as Indonesian Sustainable Palm Oil (ISPO) and Roundtable on Sustainable Palm Oil (RSPO) that have existed for a long time compared to EUDR.
“While these schemes can serve as an important stepping stone towards compliance, access remains restricted due to financial, technical, and administrative barriers, and dependence on middlemen further complicates the situation,” he said.
Triadi, who oversees engagement with smallholders in Wilmar’s Indonesian supply chain said land legality and documentation remain a critical issue as many smallholders are still pending their formal land titles.
This makes it challenging to fully demonstrate compliance with deforestation-free requirements, as land titles are essential to establish ownership and traceability, but they do not capture the historical land-use data needed to verify whether the area is deforestation-free.
On top of this, the requirement for geolocation mapping becomes a significant barrier. While larger companies may already have GPS-based systems to provide accurate polygon mapping of their plots, independent farmers have neither the tools nor the capacity to do so.
This is especially the case in Malaysia where polygon mapping is currently the biggest challenge for smallholders to be EUDR-ready. Polygon mapping is the process of identifying and recording the exact geographic boundaries of farmland using geolocation coordinates, which are required to prove that the area has not been linked to deforestation after December 31, 2020.
James Wong, conservation lead at Wilmar’s sustainability unit in Malaysia, noted that similar to Indonesia, smallholders in Malaysia lack technical expertise to do polygon mapping without assistance.
“They have their mental maps – they know exactly where their boundaries are. But to map it into polygons with clear lines, is the biggest challenge,” he said.
Wong, who works closely with some 190 smallholders in Bintulu, Sarawak, highlighted that small-scale farmers are often unfamiliar with digital mapping due to their age and where they live.
“If you look at the profile of the smallholders, most are elderly couples in their 50s and 60s living in remote locations. Young farmers tend to catch up faster, but it takes time for older people,” he said, adding that the Malaysian Sustainable Palm Oil (MSPO) certification used to be the only national legal compliance requirement prior to the announcement of the EUDR.
With limited awareness and technical understanding of the EUDR, preparing smallholders to comply with the upcoming regulation certainly requires targeted training and outreach to address existing structural and capacity-related barriers.
Hence, expecting full compliance by smallholders within the current timeframe is simply not realistic and should instead be approached progressively through phased implementation, Triadi said.
That timeline, he noted, should be seen as a shared opportunity for governments, companies, and partners to accelerate support so that smallholders can gradually align with EUDR while maintaining access to the European market.
Preparing smallholders to be EUDR-ready
Despite these challenges, leading palm oil producers like Wilmar are doing their best to ensure smallholders in their supply chain are supported adequately to meet international compliance demands and adopt certification standards through training, technical support, and replanting programmes.
In Indonesia, Triadi shared the company supports independent smallholders through cooperatives to achieve ISPO and RSPO Independent Smallholders Standard certification as a first step to meeting EUDR requirements.
Tan, an Independent smallholder from Sarawak (right), with an Malaysian Palm Oil Board officer in the field. Image: Wilmar
“Beyond certification, we provide assured market access by guaranteeing that their Fresh Fruit Bunches (FFB) are purchased directly by our mills. This reduces their reliance on middlemen, shortens the supply chain, and improves the selling price,” he said.
He added that Wilmar is also introducing a traceability system at the farmer level to ensure FFB origins can be monitored transparently.
The company currently engages 4,620 independent smallholders in Indonesia covering around 10,661 hectares, with 38 per cent already certified under RSPO and 80 per cent under ISPO.
It has also implemented initiatives like Program Sinergi dan Pemberdayaan Petani Kecil (PROSPEK) that contribute to long-term industry resilience and EUDR readiness, said Edrin Moss, Wilmar’s assistant general manager of upstream certification.
PROSPEK is a capacity-building programme focused on supporting over 24,000 independent smallholders in Indonesia with sustainable practices, certification, land legality, market access, and traceability to strengthen partnerships and prepare them for regulations like the EUDR.
“We are working with over 6,400 farmers in South Sumatra and in February this year we trained 26 trainers from five cooperatives to cascade skills to more than 1,500 other farmers on No Deforestation, No Peat, No Exploitation (NDPE), ISPO, harvesting, fertiliser use, and safe spraying,” he said.
Beyond PROSPEK, Moss added that Wilmar also supports smallholders in Malaysia through its fertiliser credit programme, which enables participants to access high-quality fertilisers at competitive prices through bulk purchasing. In addition to this benefit, farmers enrolled in the programme receive agronomic guidance and advice on Good Agricultural Practices (GAP), including sustainability practices.
He emphasised that Wilmar’s efforts go beyond these initiatives, as maintaining long-term partnerships with smallholders ensures they remain integrated in the supply chain while advancing towards global sustainability standards.
Tan, an independent smallholder from Sarawak, shared that he has been ready for EUDR compliance since 2024.
“I’ve already completed my polygon mapping and there’s no land-use conflict on my farm,” he said.
Owning about 29 hectares, Tan explained that parameter survey or polygon mapping is the most tedious part of the requirement, but he managed to get it done with help from Wilmar’s consultants. The process involved consultations, on-site visits, and about a week of farm surveys.
As a first-generation farmer who began in the 1990s, Tan hopes organisations such as the Dayak Oil Palm Plantation Association, which represents local smallholders, can provide more financial support to help small-scale farmers meet these compliance requirements.
Nita Trisnawati from Koperasi Pemasaran Perkasa Nalo Tantan, a cooperative that represents smallholders in the Merangin district of Jambi province. Image: Wilmar
Some smallholders in Indonesia are also prepared for new regulations. Nita Trisnawati from Koperasi Pemasaran Perkasa Nalo Tantan in Jambi said her cooperative feels confident about their EUDR readiness.
“We’re already certified under ISPO and RSPO and have long adopted sustainability measures aligned with international standards,” she shared.
Nita credited support from Wilmar and PT Agrindo Indah Persada, which helped her cooperative from establishing the organisation and completing legal documentation to receiving training and mentoring.
“Wilmar also supported us in compiling farmer databases, mapping farmer plantation plots, and preparing for ISPO and RSPO certification,” she added.
However, she noted that ensuring accurate polygon mapping is not simple and it requires technical expertise which can be costly for small-scale farmers.
Financing mechanisms
Financial constraints remain one of the other significant barriers for independent smallholders in meeting the EUDR’s stringent traceability and compliance requirements in palm producing countries.
Both Triadi and Moss acknowledged that where awareness and technical capacity are growing, access to financing continues to lag behind which can hinder progress.
“Even when smallholders are willing to comply, the costs associated with documentation, mapping, and adopting traceability systems can be prohibitive,” Triadi said.
He noted that several financing mechanisms and support systems are now being developed to help bridge the funding gap. On the one hand, governments and development agencies are introducing grant-based and blended finance schemes to assist smallholders with land legality, geolocation mapping, and digital traceability tools.
On the other hand, industry players like Wilmar are also investing in capacity-building programmes, offering subsidised access to technology, and piloting group certification models that lower compliance costs for individual farmers.
“We also see increasing collaboration with financial institutions, where sustainability-linked financing and replanting loan schemes are made more accessible to smallholders when they are part of structured programmes with mills or cooperatives.”
These mechanisms, Triadi said, are designed to gradually ease the financial burden on farmers while helping them align with certification systems such as ISPO and RSPO, as well as regulatory frameworks like the EUDR.
“Ultimately, the most effective approach is a partnership model where companies, governments, NGOs, and financial institutions pool resources and align support so that smallholders are not left behind, and instead, are progressively integrated into sustainable and traceable supply chains,” he added.
Meanwhile, Moss highlighted that while some farmers can access replanting funds or cooperative-based loans, many are excluded because banks cannot release credit without clear proof of land legality.
“This becomes a problem where the land is under native customary rights, inheritance arrangements, communal ownership, or other tenure types that are hard to formalise on paper,” he explained.
To address this, Moss suggested that collaboration with local authorities and land offices could help create simplified legal verification processes for smallholders.
Alternatively, sustainability-linked guarantees from governments or industry could serve as a financial backstop, helping to unlock credit for farmers and accelerate their compliance with sustainability and deforestation-free supply chain requirements.
He cautioned that if these support systems fail to scale in time, the consequences could ripple across the entire supply chain – smallholders risk losing market access while mills face potential supply disruptions.
Wong emphasised that technical and financial assistance are the two most critical forms of support smallholders need to prepare for compliance. He said those who are part of Wilmar’s supply chain receive technical assistance to help them meet requirements such as polygon mapping and data collection.
“However, for those supplying to other mills whose companies are unable to provide these services, additional funding is needed so they can hire consultants or access similar support to achieve compliance,” he added.
Triadi, on the other hand, noted that major industry players like Wilmar recognise the success of the EUDR will depend on how inclusive it can be for smallholders, who make up a significant part of the palm oil supply base.
“Inclusivity of smallholders in our supply chain is an integral part of our NDPE policy, and we continue to expand programmes that strengthen this inclusion.”
“Our focus is on building support systems that are practical, affordable, and scalable for farmers. Early and collective action from companies, governments, and financial institutions is critical to ensure smallholders are not left behind,” he said.
