An opportunity for rubber producers in Malaysia: the new EU Regulation on Deforestation
Trade Forum talked with Stefano Savi of the Global Platform for Sustainable Natural Rubber (GPSNR) based in Singapore, about how the European Union Regulation on Deforestation-free products can offer a unique opportunity to companies and small-scale farmers in Malaysia to improve their lives.
Growing consumer demands as well as environmental regulations are making sustainably and ethically produced natural rubber an essential commodity in the global market. Having said that, the formation of GPSNR back in 2019 highlights the supply chain’s commitment towards sustainability long before regulatory or market demands came into play.
In the past decade, companies have been increasingly recognizing that working on sustainability and equity can enhance supply chain stability by improving resilience against climate change impacts and biodiversity loss. Today, GPSNR represents 60% of the world’s natural rubber demand, uniting different stakeholders under a shared mission to transform natural rubber into a sustainable, equitable, and fair supply chain.
At GPSNR, we work with smallholders on capacity building projects to improve their farming practices for better quality as well as resilience to unpredictable market conditions. These include training smallholder producers on fighting diseases, agroforestry and Good Agricultural Practices.
Our new Shared Investment Mechanism will see manufacturer members contribute to a fund to scale these programmes, helping smallholders build resilient incomes that can withstand market and environmental challenges.
The EUDR has placed sustainability at the forefront of all affected commodities, including natural rubber. Natural rubber is a key ingredient in tires and many other products, with around 90% produced by smallholders mostly living in Asia. The growing demand for sustainability is something we have been advocating for quite some time now.
At GPSNR, we bring together companies, smallholders, academia and civil society to transform the natural rubber supply chain.
Rubber producers in Malaysia have been increasingly adapting their processes to sustainable production models, which can put them in line with the EU Regulation on Deforestation-free products. However, the producers are at different levels of preparation.
The government of Malaysia has initially expressed its concerns on the Regulation, asking for more time for its mandatory implementation but later announced an initiative to support small producers.
Many buyers and producers have been working hard on getting ready for the start of the new year, preparing data, polygon mapping, and processes, to be able to comply. Many, certainly those within GPSNR, have not been in favour of a postponement.
The EUDR has the potential to be a revolution. There are around 420,000 hectares of plantations in Malaysia that are not actively used; and there is currently no market push so far to expand. This means that at least from a deforestation perspective, Malaysian rubber is very likely to be generally compliant with the regulation’s requirements.
This is an opportunity within this new regulation that can offer incentives to expand the current production in a sustainable way, with access to a premium market.
As the EUDR has accelerated the producers’ work on collecting data, traceability and compliance will become an advantage and opportunity for producers. By following traceability with long term goals of sustainability, we’re also not ending the source of livelihoods of the same producers.
My hope is that no one is against the aim of the EUDR, but that it is also implemented in a sustainable manner.
For this you need technical organizations like the International Trade Centre, to complement the existing national and regional initiatives and legislations. We have also called on more dialogue among the officials and producers who are part of the rubber industry.
Smallholders are an important member category in GPSNR with elected representatives at the GPSNR Executive Committee. This ensures a structure that includes smallholder voices in every big or small decision-making process.
On the ground, our capacity-building efforts have had a positive impact on more than 10,000 smallholders in Thailand, Côte d'Ivoire, and Indonesia, supported by over $2 million in financial commitments in the last two years only.
Our RubberWiki platform also supports knowledge sharing among smallholders, helping to bridge any gaps.
At GPSNR, our approach to sustainability is interwoven with equity. The Shared Investment Mechanism, which I have spoken about earlier, reflects this principle strongly by ensuring that sustainability costs are shared fairly, preventing smallholders from bearing an undue burden.
GPSNR is working to overcome the challenge of scaling our capacity-building initiatives to reach a larger number of smallholder farmers. The Shared Investment Mechanism, set to launch in 2025, aims to expand successful sustainability programmes while ensuring that costs are equitably distributed across the supply chain.
Another key challenge has been creating a system capable of verifying sustainability commitments across diverse supply chain actors in a practical, effective, and robust way.
Our new assurance system, also launching in 2025, will guide members through commitment, implementation, and third-party assessments. While it has already been piloted by GPSNR members from various points in the supply chain, we anticipate further learnings when it is fully implemented next year.
As both initiatives roll out in 2025, I look forward to the valuable insights that will help drive a more equitable and sustainable rubber supply chain.
