The political fallout from last week’s vote on the European Union Deforestation Regulation in the European Parliament continues with EU member states rejecting attempts by the European People’s Party (EPP) to derail the new law.
At a meeting of the 27 Member States on Wednesday (21 November), the European Council (EC) agreed to support a 12-month delay as proposed by the European Commission. Still, it rejected other amendments from the EPP, including a longer delay of 24 months and changes to the ‘no-risk’ countries’ category.
The EC said in a statement: “This postponement will allow third countries, member states, operators, and traders to be fully prepared in their due diligence obligations, which is to ensure that certain commodities and products sold in the EU or exported from the EU are deforestation-free. This includes products made from cattle, wood, cocoa, soy, palm oil, coffee, rubber, and some of their derived products.”
EPP calls action of Member States 'irresponsible'
The EPP immediately claimed the Member States’ action was “irresponsible". Christine Schneider MEP, the European Parliament's lead negotiator on the Deforestation Law, said: “They are obstructing urgently needed changes to the Deforestation Law that could stop illegal global deforestation and protect European companies, foresters, and farmers against unreasonable bureaucracy.
"The law must be both effective and practical. We must extend the implementation deadline by a year and introduce changes to provide companies with the planning security they need. We must ensure that these changes are adopted before the end of the year," she added.
While a 12-month delay is likely, it is not legally binding as yet because, as many commentators have noted, the EUDR has not been officially postponed until a final decision and a proposal of the EU Commission are adopted, signed, and published in the Official Journal before 30 December 2024.
This would then give legal certainty, predictability, and sufficient time for a smooth and effective implementation of the rules, including fully establishing due diligence systems covering all relevant commodities and products.
It is time to end this unnecessary drama
These due diligence systems include identifying deforestation risks in supply chains and monitoring and reporting measures to prove compliance with EU rules.
Anke Schulmeister-Oldenhove, Forest Manager at the WWF European Policy Office, said: “As businesses in the EU prepare for the regulation’s application, WWF urges policymakers to prioritise swift implementation.
“The EUDR represents a critical tool for addressing the global deforestation crisis, and a weakened law would undermine the EU’s leadership in sustainable trade and climate action. It’s time to end this unnecessary drama and get on with the EUDR implementation.”
Political donations to the EPP
A report by the Earthlight website alleges that the EPP, a large center-right political party, received political donations from influential companies linked to illegal deforestation, which are likely to benefit from changes to the EUDR.
Over €1.7 million has been donated to EPP members, including Austria’s Österreichische Volkspartei (ÖVP) party and Germany’s Christlich Demokratische Union Deutschlands (CDU) party, from companies and shareholders who profit from goods covered by the EUDR and have links to illegal deforestation or are exposed to forest-risk commodities, the report said.
The EPP has not yet responded to other media’s requests for comment on its donations.
Cocoa market news
Cocoa prices continued to develop upwards to a three-month high, increasing +20% (vs w-1) due to EUDR uncertainty, along with other factors, including funds participations, reduced crop forecast due to post-heavy rains in West Africa and critically low warehouse stock - as well as the quality of beans from the current harvest.
In its November Market report published a week ago, the International Cocoa Organisation (ICCO) observed that with the new harvest season underway and considering the flow of cocoa arrivals amid an increase in producer prices, “one would generally expect to see a continuous year-on-year rise in cocoa flows.
“However, for the month under review, there were divergent arrivals in Cote d’Ivoire, which contributed to the price movement of cocoa at the time. Cote d’Ivoire’s cumulative arrivals during October see-sawed and consequently affected prices."
Low cocoa stocks contributing to price pressure
Ali Zamat, General Manager at Africa Trade Co, said: “Global cocoa stocks are at their lowest level in nearly two decades, adding to price pressure. Although strong in some regions, demand remains uneven with a decline observed in Europe.”
While shrinking global cocoa stockpiles are bullish for prices, recent favourable weather in West Africa has allowed farmers to return to fields and proceed with the ongoing harvest of the main crop.
Another bearish factor for cocoa prices is a recent supply increase from Cote d’Ivoire, the world's largest producer.