Economic impacts of EU deforestation-free regulation on palm oil trade

Birka Septy Meliany, Widyastutik, Amzul Rifin and Yusman Syaukat

Agricultural and Resource Economics: International Scientific E-Journal, 2025, vol. 11, issue 4

Abstract: Purpose. This study aims to assess the competitiveness and export efficiency of palm oil from Like-Minded Countries (LMC) to the European Union (EU) during 2013–2022, with a specific focus on the potential implications of the EU Deforestation-free Regulation (EUDR). Methodology / approach. Competitiveness was evaluated using Revealed Comparative Advantage (RCA), Export Product Dynamics (EPD), and the X-model, while export efficiency was estimated through Stochastic Frontier Analysis (SFA). Data were obtained from UN Comtrade, Trade Map, and the World Bank. The methodological novelty lies in integrating these tools to provide a multidimensional assessment of trade performance under emerging sustainability regulations. Results. The findings show notable fluctuations in competitiveness among LMC palm oil exporters. Colombia, Malaysia, and Côte d’Ivoire recorded improved positions, while Brazil and Indonesia experienced declines. Several countries shifted from dynamic or “rising star” categories to “lost opportunity” status, indicating reduced competitiveness. Efficiency analysis revealed substantial gains for Malaysia and Colombia, whereas Nigeria and Argentina showed little or no progress. This study confirm that regulatory barriers have hindered the growth of imports into the EU, leading to a significant imbalance between potential and actual export volumes from LMC countries. Originality / scientific novelty. By combining RCA, EPD, and the X-model within the framework of the EUDR, this study offers a new approach to assessing palm oil trade dynamics under sustainability-driven trade barriers. The use of SFA to measure export efficiency in this context contributes novel insights to the literature on trade competitiveness and environmental policy impacts. Practical value / implications. The results provide actionable evidence for policymakers, businesses, and trade organisations in LMC. Identifying competitiveness gaps and efficiency constraints will support strategy adjustments, enhance export performance, and strengthen resilience to the EUDR. Such measures can help LMC maintain market access, optimise supply chains, and sustain their competitive position in the EU palm oil market.

Keywords: Agribusiness (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:areint:387575

DOI: 10.22004/ag.econ.387575

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