The entry into force of the EU Deforestation-Free Regulation (EUDR) has established a new sustainability benchmark for agricultural trade with the European Union.
As the world’s third-largest cocoa producer and fourth-largest coffee exporter, Indonesia’s core EUDR compliance challenge lies not in “proving the absence of deforestation,” but in overcoming the fragmented, smallholder-driven production model and decentralized data management system—both of which hinder effective traceability and legitimacy verification.
Clarifying the industry’s compliance pain points and factual development context is critical for enterprises seeking to successfully penetrate the EU market.

Industry surveys and remote sensing data indicate that the peak of deforestation linked to rubber cultivation has passed, and rubber itself is no longer a major driver of large-scale deforestation today. However, the EU is highly dependent on natural rubber imports, with a multi-tiered supply chain structure: "smallholders → collection points → primary processing → centralized factories". Raw material mixing in the midstream often leads to broken traceability, exposing enterprises to EU market access risks associated with "deforestation involvement".

The defining feature of Indonesia’s coffee and cocoa industry— and the central context for its EUDR compliance—is its “smallholder-led” structure.
According to the 2025 EUDR Legitimacy Research Report by IPB University (Bogor Agricultural University), over 80% of Indonesia’s coffee and cocoa originates from smallholders with cultivation areas of less than 2 hectares.
These smallholders operate primarily as family-run businesses, with no foundation for standardized management: most lack official ownership certificates for their cultivation land (known locally as Hak Guna Usaha, or HGU), and land parcel data is scattered across local governments, cooperatives, and other entities—with no centralized records.
When EU importers demand “land parcel geographic coordinates + post-2020 deforestation-free certificates,” this fragmented information system leaves the supply chain in a state of “information deficit,” making it impossible to quickly meet compliance demands.
This fragmented structure is a historically rooted industry trait, tied to the livelihoods of millions of smallholders. It means compliance cannot simply replicate the standardized models used for large plantations.

EUDR compliance barriers for Indonesia’s coffee and cocoa industry center on “data management” and “implementation coordination”—not whether the industry itself drives deforestation.
1. Multi-Entity Governance Creates Data Silos
Data related to legal agricultural land is registered across multiple systems, with no unified integration:
- The National Land Agency (ATR/BPN) system primarily covers large plantations and excludes smallholders;
- The Ministry of Agriculture (MoA)’s STDB/e-STDB system registers smallholder data, but has limited boundary accuracy and outdated information;
- Local agricultural bureau platforms lack interfaces with national systems, leaving cooperative records (stored in paper or Excel) unable to sync with official databases;
- Forest function zoning maps from the Ministry of Environment and Forestry (MoEF) often misalign with agricultural land boundaries.
Consequently, the same parcel of agricultural land may have conflicting coordinates, area measurements, and land-use classifications across systems—creating hidden risks for compliance verification.
2. Satellite Verification Faces “Matching Challenges”
EUDR mandates satellite remote sensing for land parcel compliance verification, but data fragmentation reduces verification accuracy:
- If a smallholder’s declared parcel does not match government maps, it may be flagged as “abnormal coordinates”;
- Accurate cooperative registrations without official identification numbers may be deemed “legally insufficient”;
- Boundary discrepancies between forestry and agricultural maps may incorrectly classify farmland as “within forest function zones.”
3. Smallholders Lack Independent Compliance Capacity
EUDR compliance requires specialized skills: GPS data collection, satellite imagery interpretation, and document organization. Smallholders generally lack the equipment, expertise, and guidance to complete these tasks independently.
Without external support, countless smallholders risk being excluded from EU supply chains entirely.

Indonesia’s coffee and cocoa industry is not a major driver of deforestation. Its output growth relies entirely on intensive management and eco-friendly practices.
1. Output Growth Stems from Old Plantation Revitalization and Agricultural Innovation
Over the past decade, industry output has grown steadily—but this growth is unrelated to new forest clearance:
- Coffee sector: 1990s-era plantations in regions like the Gayo Highlands have boosted yields by 30-50% through replanting and grafting new varieties (e.g., Ateng Super, Gayo 1). Farmers use organic fertilizers instead of chemicals and retain shade trees—achieving “yield renewal without deforestation”;
- Cocoa sector: Between 2015-2022, cultivation area decreased by 1.2%, while smallholders increased unit yields by ~20% through pruning and grafting.
2. Agroforestry Models Align with “Deforestation-Free” Mandates
The industry traditionally uses agroforestry systems, where coffee and cocoa trees are intercropped with fruit trees and timber species.
This model features high canopy coverage, preventing soil erosion, reducing pests, and maintaining carbon sequestration—fully aligning with EUDR’s core requirements.
3. Data Verification: Minimal Contribution to Deforestation
According to monitoring data from Global Forest Watch and WRI Indonesia, deforestation linked to coffee and cocoa cultivation accounts for less than 3% of Indonesia’s total deforestation. This is far lower than deforestation driven by palm oil, pulpwood plantations, and critical mineral mining.

EUDR compliance for Indonesia’s coffee and cocoa industry hinges on “collaboration,” not “regulatory pressure”—requiring coordinated efforts from multiple stakeholders:
- Government: Establish a national land parcel database, integrate interagency data interfaces, and enable local authorities to upload satellite verification results;
- Cooperatives & Exporters: Organize land surveys, compile smallholder documents, establish “batch-to-parcel” tracking, and retain transaction/transport records;
- Processors & Re-Exporters: Link land parcel data to raw materials upon factory entry, maintain dual records of quality and origin, and attach coordinate verification reports;
- Third-Party Organizations: Provide satellite verification, risk assessment, and policy alignment support.

Faced with the fragmented nature of Indonesia’s coffee and cocoa industry and the challenges of data integration, enterprises often struggle with “no clear traceability path, disjointed data, and unclear verification guidelines.”
Rest assured! SKYCO2 offers end-to-end EUDR compliance services, addressing key bottlenecks to help enterprises seamlessly align with EU market access requirements. We empower you to navigate EUDR with confidence and seize EU market opportunities.
If your enterprise exports Indonesian coffee, cocoa, or other agricultural products to the EU and is struggling with EUDR compliance planning, please feel free to contact SKYCO2.
We deliver tailor-made compliance solutions, leveraging professional expertise and collaborative resources to help you meet compliance demands, seize EU market opportunities, and achieve a win-win for business growth and sustainability commitments.