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Working with businesses to benefit people, nature and climate
Fauna & Flora's Business & Nature programme engages with the private sector to transform business practices, reduce environmental impact and create nature-positive outcomes.
Daniel Meyer from Fauna & Flora’s Business & Nature team considers whether the forthcoming EU legislation will be effective in curbing agriculture-related deforestation, or simply push farmers towards less well-regulated markets.
According to the UN’s Global Land Outlook, agricultural expansion and our food system are the main direct drivers of nature loss.
Over recent decades, hundreds of millions of hectares of natural ecosystems have been converted for pastures, crop production and forestry, leading to biodiversity loss, degradation of ecosystem services and intensified climate change. Still today, almost 5 million hectares of forest are being lost every year globally due to agriculture. Without addressing this challenge at scale, there is no chance of achieving the Paris Agreement or the goals of the Global Biodiversity Framework (now known as the Biodiversity Plan).
To tackle agricultural drivers of nature loss, at the end of 2022 the European Commission approved the European Union Deforestation Regulation (EUDR). The regulation lists seven high-impact agricultural commodities: cattle, palm, soy, cocoa, coffee, wood and rubber, and their derived products. Any company wishing to place them on the EU market will have to comply with specific due diligence requirements – the most important being the provision of the exact location of the farm to EU authorities, evidencing that the EUDR-listed products have not caused deforestation after 31st December 2020.
Set to come into force on 30th December 2024, the EUDR could be a landmark regulation to combat deforestation and forest degradation on a global scale, but there are still a number of challenges to navigate.
The regulation lists seven high-impact agricultural commodities: cattle, palm, soy, cocoa, coffee, wood and rubber, and their derived products. Around 90% of all tropical agriculture-related deforestation in recent decades has been driven by the seven commodities targeted by the EUDR.
Daniel Meyer
Senior Technical Specialist, Business & Nature
The regulation lists seven high-impact agricultural commodities: cattle, palm, soy, cocoa, coffee, wood and rubber, and their derived products. Around 90% of all tropical agriculture-related deforestation in recent decades has been driven by the seven commodities targeted by the EUDR.
Daniel Meyer
Senior Technical Specialist, Business & Nature
Could EUDR be a game changer?
The EUDR requirements are important pieces in the puzzle to tackling nature loss. Around 90% of all tropical agriculture-related deforestation in recent decades has been driven by the seven commodities targeted by the EUDR, with livestock accounting for almost half. EU countries, including their food companies and commodity traders, have significant responsibility for this – mainly through their historically large import share of these commodities into their markets.
The EU’s idea is to revolutionise this by providing market access to farmers and producing regions that are deforestation-free, and to create constraints for businesses associated with high levels of deforestation. For example, in the current proposal, the fines that non-compliant companies face have been set at 4% of annual turnover. Non-compliant companies also run the risk of confiscation of their products and a ban on placing future products on the European market for a year. This would have serious financial consequences for a company. New monitoring tools are also being developed, such as the EU Observatory on Deforestation and Forest Degradation. This observatory aims to monitor the world’s forest cover and supply chain drivers of nature loss. By the end of this year, the EC will also launch its own EU Benchmarking System to rank countries and regions in terms of their deforestation risk.
The EU has a history of developing regulations that the rest of the world then follows. The EUDR could, therefore, go a long way in inspiring other key markets (such as China and the US) to adopt similar deforestation-free policies.
Deforested area in Alta Floresta, Brasil, now used for cattle pasture. © Evan Bowen-Jones / Fauna & Flora
Deforestation in Alta Floresta, Brazil, to accommodate commercial cattle ranching.
What are the challenges to EUDR being effective?
There are challenges, and there is criticism. An important question that needs to be addressed is how farmers will comply with EUDR regulatory requirements, especially in a world with swelling demand for food? For most farmers, any increase in costs or bureaucracy would simply encourage them to transfer their sales to markets with less stringent environmental regulations. Another challenge, typically raised by farmers’ associations and governments in producing countries, is that national laws should dictate whether or not deforestation is allowed. Anything beyond that is a violation of the right to national sovereignty.
Major agri-food companies and global commodity traders have also been sceptical of the EUDR. According to some estimates, the value of EUDR-listed products in the EU market is over US$ 400 billion annually, or around 5.5% of all imports into the EU made in 2022. In this context, there are concerns about increased transaction costs, potential trade laundering and supply chain disruptions. For example, there is nothing to prevent the EUDR-listed commodities from being imported through countries with a lower risk of deforestation and then imported back into the EU.
Itinerant farmer in Mozambique burning away bush cover at night, making way for a cleared field to plant crops before the on-set of seasonal rain. © JABRUSON / Fauna & Flora
A Mozambique forest set ablaze to clear land for agriculture.
The way forward
The main objective of the EUDR is to tackle agricultural-driven deforestation, with a view to reducing greenhouse gas emissions and biodiversity loss. To support these goals, a number of solutions could be considered:
- Support farmers and consider local context in producer countries
One of the most important challenges for implementation of the EUDR concerns the lack of local capacity to comply with the regulation in producing countries. The EU market is an important source of income for many millions of farmers and local communities; this is especially true in sectors such as coffee, cocoa, palm oil and rubber in Africa and Southeast Asia. Developing inclusive projects that support farmers not to deforest and comply with EUDR is therefore essential. - Support companies trading EUDR-listed commodities to transform their business practices
Downstream agri-food companies (processors, manufacturers, retailers and supermarkets) purchasing the EUDR-listed commodities must not only be deforestation-free, but also understand their relationship with nature – including assessing risks, dependencies and impacts. - Strengthen supply chain transparency and traceability
Producer countries and companies, as well as civil society, must strengthen supply chain transparency and reinforce traceability. This means investing in supply chain intelligence and monitoring systems that make it possible to better understand trade and sourcing patterns, supplier locations and impacts on the ground. - Strengthen EUDR-related policies and effective law enforcement
The EU will need to collaborate with national authorities and stakeholders and develop frameworks for effective implementation and prosecution of breaches of the EUDR. If not, trade laundering and lobbying efforts to water down the EUDR could become potential outcomes.
Since 2012, Fauna & Flora has been working with Asho Chin Communities Association (ACCA) sustainable coffee agroforestry, Myanmar. © Kyaw Kyaw Naing / Fauna & Flora
Sustainable coffee agroforestry in Myanmar.
Wider actions required – governmental, commercial, financial
Fauna & Flora welcomes the opportunities brought by the EUDR to protect natural forests and nature. But we are also aware of its challenges and that the regulation is not a silver bullet. Continued support for farmers adapted to local realities is essential to make the EUDR effective. Complementary actions, such as improved traceability systems by companies and governments, and new financial models, are also needed to transform global agri-food systems and ensure they are helping to halt and reverse nature loss – rather than driving it.
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