Deforestation-Free Products
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Questions and Answers

What does the new EU regulation on deforestation-free products require from companies and smallholder farmers in Southeast Asia?

  • To only sell their agricultural products to EU markets
  • To stop producing agricultural products on recently deforested or degraded land
  • To provide data proving their agricultural products are not linked to recent deforestation (correct)
  • To pay a fee for every imported agricultural product

    • What is the potential consequence for Indonesia's SMEs and smallholder farmers if they cannot comply with the new EU regulation?

  • Risk exclusion from EU markets (correct)
  • Increase their production to meet EU demand
  • Be forced to sell their products at lower prices
  • Receive financial support from the EU

    • What is the main concern regarding the new EU regulation on deforestation-free products?

  • It poses a direct threat to the livelihoods of farmers (correct)
  • It will reduce the demand for agricultural products
  • It will increase the cost of agricultural products
  • It will lead to an increase in deforestation

    • What is the importance of Indonesia's rainforest?

    <p>It acts as an invaluable carbon sink and provides a habitat for vast biodiversity</p> Signup and view all the answers

    What is the percentage of gross domestic product accounted for by agricultural commodities in Indonesia?

    <p>Around 5 percent</p> Signup and view all the answers

    What is sustainable financing?

    <p>Debt that comes with environmental, social, and governance commitments for the company receiving the finance</p> Signup and view all the answers

    What is the role of sustainable finance in supporting sustainable production and protecting rural livelihoods in Indonesia?

    <p>It offers an important way for European stakeholders to support sustainable production and protect rural livelihoods</p> Signup and view all the answers

    What is the main obstacle hindering overseas investors from having clarity over the environmental impact of their investments in Indonesia?

    <p>The lack of a clear and standardized framework</p> Signup and view all the answers

    What is the main purpose of the new EU regulation on deforestation-free products?

    <p>To require companies and smallholder farmers to provide data on their agricultural products</p> Signup and view all the answers

    What is the potential impact of the new EU regulation on Indonesian farmers?

    <p>They will be excluded from EU markets</p> Signup and view all the answers

    What is the significance of Indonesia's rainforests?

    <p>They are home to the world's largest expanse of rainforest</p> Signup and view all the answers

    What is the relationship between agricultural production and deforestation in Indonesia?

    <p>Agricultural production is coupled with forest and biodiversity loss in Indonesia</p> Signup and view all the answers

    What is sustainable financing?

    <p>Financing that comes with environmental, social, and governance commitments</p> Signup and view all the answers

    What is hindering the flow of sustainable finance into Indonesia?

    <p>The lack of a clear and standardized framework</p> Signup and view all the answers

    What is the role of European stakeholders in supporting sustainable production in Indonesia?

    <p>To invest in sustainable finance instruments issued by entities involved in agricultural commodity supply chains in Indonesia</p> Signup and view all the answers

    What is needed to support Indonesia's farmers and their sustainability transition?

    <p>Mobilization of resources from governments, companies, investors, and financial institutions in Europe and other parts of the Global North</p> Signup and view all the answers

    Study Notes

    New EU regulation on deforestation-free products poses a threat to Indonesian farmers and forests

    • The EU has banned the import of products made from agricultural commodities produced on recently deforested or degraded land.
    • The new law will require companies and smallholder farmers in Southeast Asia to certify that their agricultural products are not linked to recent deforestation and to provide data to prove it.
    • Indonesia's SMEs and smallholder farmers are likely to struggle to comply with the strict requirements for traceability and geolocation data that the regulation imposes, risking exclusion from EU markets.
    • This new EU regulation poses a direct threat to the livelihoods of farmers and risks exacerbating the very economic and social conditions that encourage encroachment into adjacent forests.
    • Indonesia's farmers need more financial support and access to training and new technologies to help them increase yields while transitioning to more sustainable practices.
    • Indonesia is home to the third-largest expanse of rainforest globally, which acts as an invaluable carbon sink and provides a habitat for vast biodiversity.
    • Indonesia is one of the world's biggest producers of agricultural commodities, employing around 10 million people and accounting for around 5 percent of gross domestic product.
    • While these commodities remain favored by consumers in Europe and globally, and while there is limited financial incentive to change growing practices, production will continue to be coupled with forest and biodiversity loss.
    • Sustainable financing, including green bonds, is debt that comes with environmental, social, and governance commitments for the company receiving the finance.
    • Investment in sustainable finance instruments issued by entities involved in agricultural commodity supply chains in Indonesia offers an important way for European stakeholders to support sustainable production and protect rural livelihoods.
    • Currently, the lack of a clear and standardized framework limits the flow of sustainable finance into Indonesia, hindering overseas investors from having clarity over the environmental impact of their investments.
    • Governments, companies, investors, and financial institutions in Europe and other parts of the Global North need to work together to mobilize resources to support Indonesia's farmers and their sustainability transition.

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    Test your knowledge on the new EU regulation on deforestation-free products and its impact on Indonesian farmers and forests. Learn about the strict requirements for traceability and geolocation data that the regulation imposes and how it poses a direct threat to the livelihoods of farmers. Discover the importance of sustainable financing and how it can support sustainable production and protect rural livelihoods. Take the quiz and find out how you can contribute to the sustainability transition of Indonesia's agricultural sector.

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