ALERT: Is the EUDR about to be postponed?
Over the past seven days, there has been much chatter about whether the European Commission will propose postponing the EU Deforestation Regulation (EUDR). While there is no definitive evidence that it plans to do so, we understand that there is significant pressure on the European Commission (EC) and ongoing discussions around potential delays.
What we know so far
Pressure and Discussions
1. International Pressure: The Biden administration and senior US trade officials have formally requested the EU to delay the EUDR. Their concerns focus on the substantial challenges US exporters face, particularly in the timber, paper, and pulp industries, to comply with the regulation by the December 2024 deadline. These officials have highlighted issues such as the need for a finalised information system and implementation guidance and the incomplete designation of competent authorities in EU member states.
2. Industry Concerns: Various industry groups, including the European Coffee Federation and other food and beverage sectors, have also called for a delay. They argue that the current timeline only allows companies, especially smallholder producers, to meet the new requirements with significant disruptions to supply chains.
3. EU Member States: Some EU member states have supported calls for a delay, recognising the “challenging” deadlines and the need for more explicit guidance and implementation support.
4. EU Internal Discussions: Within the EU, significant voices, including Peter Liese from the European People’s Party (EPP), have called for a postponement. They argue that the current regulation presents excessive bureaucratic challenges and could impose substantial costs on EU consumers and producers (see below).
5. Supplier Countries’ Concerns: Countries including Indonesia, Brazil, and Malaysia have expressed strong concerns about the EUDR, highlighting the regulation’s potential to disproportionately impact smallholder farmers and developing economies. These countries have pushed for more detailed and differentiated guidelines to accommodate their unique circumstances.
$1.5 billion potential cost to EU consumers
Agribusiness consultants at GlobalData, a leading data and analytics company, estimate that EUDR compliance premiums for companies operating in the supply chain for just two of the targeted commodities, oil palm products and their derivatives (such as crude palm oil (CPO) and palm kernel oil (KPO) and rubber could be more than $1.5 billion alone. It says that while companies operating in these supply chains will be able to absorb some of the costs themselves, a good proportion of these compliance premiums are likely to be passed on to EU consumers through food and drinks and product price increases.
CocoaRadar understands that the $1.5 billion EUDR compliance premium figure is based on GlobalData Agribusiness consultants' estimation of current commodity pricing and the likely impact of increased EUDR compliance costs on the supply chain of these commodities.
There is no specific estimate for cocoa premiums, and GlobalData said it recognises that EUDR-compliant commodity premiums are still being agreed confidentially between buyers and sellers, so some uncertainty remains over the final numbers.
EU Sustainability Regulations study
GlobalData Food & Beverages Consultants' new study, 'EU Sustainability Regulations: How the EUDR and other Sustainability Regulations will Impact Consumer Markets, ' explores some of the EU's key sustainability regulations, focusing on the EUDR's aims and the compliance challenges ahead for farmers, companies, and manufacturers trading in the commodities targeted by the regulation.
The study also looks at what the EUDR could mean for the global supply chain of the target commodities, its potential impact on consumer markets and pricing within the EU, and how it could affect the bloc's future competitiveness with China.
The ‘Brussels effect’
It could be argued that the EU aims to use the 'Brussels effect' to direct global policy on sustainability. This is the idea that the global landscape responds to EU 'externalizing', its laws because the bloc is a significant global consumer market. According to Eurostat, the EC's own database, the EU has a population of over 448.7 million people, one of the biggest consumer markets in the world.
Fred Diamond, Senior Food & Beverages Consultant and Analyst at GlobalData, said: "The aims of the EUDR are understandable, and cutting greenhouse gas emissions and protecting biodiversity is essential. However, there could be some disruption ahead. The extra demands of the EUDR could lead some commodity suppliers in what the EU terms 'third countries' to move away from the EU and increase trade with countries that impose fewer regulatory requirements, such as China. Some food categories, such as plant-based meat, may have to reformulate and switch to other protein sources, such as pea protein, if the result of the EUDR is an increase in the price of soya for food production.”
To fully read GlobalData Food & Beverages Consultant's new study 'EU Sustainability Regulations: How the EUDR and other Sustainability Regulations will impact consumer markets', download your free copy here.
EU Commission’s Stance
Despite these pressures, the EU Commission has maintained that the EUDR will come into effect as planned on December 30, 2024. The Commission acknowledges the concerns and is working on providing the necessary support and guidelines to ensure smooth implementation. However, up until now, they have not made official statements indicating a willingness to postpone the regulation  .
Support and Guidance
The European Commission, along with organisations including, the Programme for the Endorsement of Forest Certification (PEFC) and the Forest Stewardship Council (FSC), is actively providing business guidelines and support. These guidelines cover aspects like legality, certification processes, and best practices. The EU also engages with multiple stakeholders, including partner countries, to ensure a smooth transition to deforestation-free supply chains.
So, What Next?
In summary, while there is substantial pressure and ongoing discussions about potentially delaying the EUDR, the EU Commission has not officially proposed any postponement. Businesses, traders, and operators should continue to prepare to comply with the regulations by the current deadline.
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Further reading: From the desk of CocoaRadar
EUDR: 10 Burning Questions Answered By The European Commission
Sources:
World Coffee Portal
https://www.pefc.org/news/the-latest-eudr-updates-at-the-european-commission-level
https://www.pefc.org/news/the-latest-eudr-updates-at-the-european-commission-level
Member discussion