Let’s reduce poverty & deforestation via greater EUDR traceability requirements (commentary)

The EU’s regulation on deforestation-free products (EUDR) was hailed as a watershed in the fight to protect the world’s forests when it came into force in 2023.

The world’s first law its kind, the EUDR requires companies selling certain high-risk goods on the EU market – including palm oil, cocoa and soy – to prove that they haven’t harmed forests.

The path to achieving this “global benchmark” in forest protection was long and arduous, and followed years of intense political debate, tireless campaigning, and behind-the-scenes lobbying by industry forces and member states, who were intent on weakening or entirely sabotaging the regulation.

Yet the challenges in passing the EUDR pale in comparison with those involved in implementing it – and making it work.

A thorny issue

One of the biggest hurdles is the vexing question of traceability.

The requirement for companies to trace goods’ supply chains back to where they were produced, to ensure they’re legal and deforestation-free, is at the heart of the EUDR.

How this traceability is done, by whom, and at what cost, is a major bone of contention for many governments in the tropical forested countries who will be impacted by the law. Indonesia and Malaysia, the world’s two biggest producers of palm oil, for instance, have described the EUDR as protectionist and discriminatory.

A persistent complaint from producer governments is that requiring smallholder farmers to demonstrate the origin of their goods will be too big a burden as it will require that they geolocate their farms. Advocates respond that this can be done in a few clicks via a map application on a smartphone, but admit it does require a smartphone and internet access.

It is also true that farmers’ cooperatives will face higher costs, as they must manage all the data collected – including geolocated farm boundaries – and ensure that cocoa grown in compliance with the EUDR is separated from that which isn’t.

Living on the edge

In many instances, these smallholders are already living on the edge.

In Côte d’Ivoire, where nearly six million people rely on the cocoa industry for their survival, and most of the cocoa beans the country produces are destined for Europe, half of cocoa farmers live below the extreme poverty line.

A similar situation prevails in Ethiopia where most coffee is produced by low-income smallholders and destined for Europe.

But if the EUDR is implemented in the right way, it can be an opportunity for smallholders. In Côte d’Ivoire, farmers’ organisations say they support the Regulation because it could help push their government to complete the national cocoa traceability system — which they have been demanding for many years, as a means of ridding the local cocoa sector of corruption. This corruption blights the lives of smallholders, who are regularly forced to sell below the government-set price, with multiple local middlemen taking cuts along the way.

In fact, the EUDR has directly pushed the Ivorian government to finalise their national traceability system, according to the head of the Ivorian Conseil du Café-Cacao. Since the EUDR was passed, the government has been handing out ID cards to farmers which will not only permit EUDR traceability, but also serve as a bank card to receive e-payments which will have a major impact on clearing up fraudulent under-payments to farmers. This has been received enthusiastically by farmers as, in the words of one farmer, “Now I can sell my cocoa at the guaranteed price.”

See related: E.U. passes historic law forcing companies to track deforestation

Supporting producer countries’ national traceability systems

As Côte d’Ivoire shows, such national traceability systems are the key to maximising the EUDR’s positive impacts for small farmers. And many other producer countries – such as Ghana, Malaysia and Indonesia – are also developing national systems to trace EUDR commodities, which they are asking for the EU to use in EUDR compliance.

A new report from my organization, FERN, found that if designed correctly, such systems could ensure that smallholders    don’t bear the burden of complying with the law. Nation-wide traceability systems are more efficient than asking companies to each conduct traceability in their own supply chains, which often means farmer cooperatives producing data multiple times in different formats for different companies.

But national traceability mechanisms must be designed with smallholder farmers in mind, providing information that helps them strengthen their bargaining power and push for better prices. This will mean ensuring farmers and NGOs can access the data and tracking issues such as the prices paid at different points in the supply chain.

National systems also provide the chance to magnify the impact of the EUDR beyond supply chains destined for the EU, improving forest protection and transparency across a whole country.

The onus is now on the E.U. to signal its willingness to support nationally-owned traceability systems in producer countries: via financial support, but also by giving some weight to high-quality national traceability systems when it creates its deforestation risk-rating for producer countries.

Doing so will benefit those in the supply-chain who toil for little reward, while also assuaging some tropical forested countries’ key criticisms of the EUDR. More broadly, it would be a significant step towards slashing global deforestation.

Julia Christian is a lawyer trained in the U.K. and the U.S., and has worked for with FERN since 2014. She’s a co-author of FERN’s report, “Transformative traceability: How robust traceability systems can help implement the EUDR and fight the drivers of deforestation,” which can be read here.

Related audio from Mongabay’s podcast: Major funders promise to bankroll efforts to reduce deforestation, but are these pledges adding up to positive changes for forests and communities? Listen here:

See related coverage:

Indonesia’s oil palm smallholders get a boost in bid for sustainability

EU deforestation-free rule ‘highly challenging’ for SE Asia smallholders, experts say

EU parliament passes historic law forcing companies to track deforestation