The EU Deforestation Regulation: Update
As the EU parliamentary election nears, global political pressure is growing to modify the EUDR or delay its implementation
Over the last two months, this blog has discussed the EU’s new Regulation on Deforestation-free Products (EUDR), which is due to take full effect on December 30, 2024. This complicated regulation will likely have far-reaching consequences.
This month provides a brief update on how the policy is being implemented globally. But first, a correction to last month’s article:
Correction
Last month, I stated that EUDR will require operators to provide the digital GPS coordinates of the forests or farms where the products originated, to a 4-hectare level of detail. I then explained this to mean that logs from a 20-hectare cutblock would be associated with several 4-hectare polygons.
This is in fact inaccurate. Polygons need do not need to be divided into 4-hectare segments.
The EUDR requires each shipment to be accompanied with precise geolocation information, enabling the place where the shipment originated to be drawn as a polygon on a map. For plots of land over four hectares in size, several geolocation points are required, to show the corners of the plot. For example, a perfectly square plot would have four points, one for each corner. Shipments from plots that are four hectares or less are only required to have one geolocation point.
Thank you to reader Jon Lunsford for pointing this out.
Political Pushback Could Delay Implementation
Last month’s article concluded by asking, “could the December 30 deadline be extended?” This is increasingly looking likely.
As the EU Parliament elections approach, political voices have become more strident. Here are two recent examples from Tree Frog News:
March 18: “EU Deforestation Regulation's traceability requirements will be nearly impossible for US paper, wood pulp industry to meet, 27 US Senators say; lawmakers push US Trade Representative to ensure EUDR targets countries where deforestation is likely to occur” (press release)
March 25: “EU members call for revision of anti-deforestation law”
“A group of EU countries led by Austria is calling for urgent revisions to the bloc's anti-deforestation law set to go into effect at the end of the year, saying it could hurt European farmers, according to a document reviewed by Reuters on Monday.”
The EUDR is proving unpopular among forest products and agriculture producers, for the obvious reason that it will be challenging and costly to manage. It will also have the same effect on US- and EU-based operators that it is intended to have on tropical operators: the expansion of farms into forested areas will be expressly forbidden.
The strong EU farmers’ lobby has already forced changes and delays to other environmental legislation. For example, EU Parliament passed a “watered-down” version of the Nature Restoration Law on February 27, only for the final EU Council vote (originally scheduled for March 25) to be cancelled at the last minute. Several countries, including forestry powerhouses Sweden, Finland, and Austria, as well as Italy, Hungary, Poland, the Netherlands, and Belgium indicated they planned to either vote “no” or abstain from voting. With only one month left in the current EU Parliament session, it is uncertain whether the legislation will be passed.
Unlike the Nature Restoration Law, the EUDR has already been passed. However, the call for changes to the EUDR is gaining momentum. In a closed-door March 26 meeting of EU Agriculture ministers, 20 of 27 countries were said to have supported Austria’s call to revise the law and delay its implementation.
What About EUDR Effects on Tropical Farmers?
If the EU traceability requirements are “nearly impossible” for US-based pulp companies to meet, what will they mean for tropical and subtropical farmers? Palm oil and rubber producers in Southeast Asia, beef and soybean growers in Latin America and Australia, and coffee and cocoa farmers in Africa will all be affected. The traceability requirements may have potentially unintended consequences. For example, there have been reports of EU-based coffee roasters scaling back orders from Ethiopia (where small farms predominate) and instead ordering from large corporate farms in Brazil. In remote parts of Ethiopia, where internet access it patchy and land ownership is often disputed, it may indeed be nearly impossible to digitally map all farms by the end of 2024.
Ethiopia is not the only country where EUDR regulations could hit smallholders especially hard. In September 2023, a joint letter by ambassadors from Indonesia, Brazil and Malaysia, signed by ambassadors from Argentina, Bolivia, Colombia, Dominican Republic, Ecuador, Guatemala, Honduras, Mexico, Paraguay, Peru, Thailand, Nigeria, Ghana, and Ivory Coast, expressed concerns with the new regulations. Stating that, “smallholders may end up being excluded from international value chains not because they have deforested their land but due to their inability to show compliance with the stringent requirements imposed by the EUDR” the letter asks the EU to consider easing due diligence requirements for smallholders in developing countries.
Developing countries have at least received one reprieve. While the EUDR originally planned to designate countries as low, medium, and high risk for deforestation, it will initially treat all of them the same: as moderate risk. Developing countries had expressed concerns that being labeled “high risk” would cause EU buyers to shift their purchases to other regions (as per the Ethiopian coffee example).
While the delay in assigning risk categories may help countries that would likely have been designated as high risk, it will mean that countries that would likely have been designated as low risk (including EU countries) will not have the “simplified due diligence” option that they might otherwise have had.
Potential Impacts Are Still Emerging
As the companies, farms, and industry organizations around the world learn about the EUDR and begin planning for it, the widespread effects of the policy are still emerging. Will there be shortages of different commodities? Probably not, but there may be price increases (EU economists dispute this). Buyers may shift to suppliers in easier-to-assess regions, while producers may redirect shipments to non-EU markets.
The EUDR has the ambitious goal of reducing deforestation worldwide. Will this goal prove to be too ambitious to achieve by the beginning of next year? Only time will tell.