EUDR: A Titanic Challenge – FoodIngredientsFirst – Pietro Paganini
I was recently interviewed by FoodIngredientsFirst, a leading source for the latest trends and insights in the food and beverage industry. In our discussion, we explored the implications of the upcoming European Deforestation Regulation (EUDR) and the significant challenges it presents for smallholder farmers and European consumers.
The full interview is available here on FoodIngredientsFirst >>>. A summary is available here below.
EUDR: A Titanic Challenge
Competere has recently written to the European Commission (EC) proposing an approach to reduce costs for vulnerable smallholder farmers and European consumers ahead of the EUDR’s implementation on December 30, 2024. We are concerned that the EUDR, in its current form, alienates critical stakeholders – particularly small-scale producers who play vital roles in complex global supply chains.
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I highlighted that tens of millions of smallholders operate within intricate systems characterized by geographical complexities, lengthy supply chains, numerous intermediaries, government involvement, and land ownership issues. The EUDR risks overlooking their contributions, prompting producer countries to request exemptions. Integrating these smallholders into the new regulatory framework is feasible but demands time, resources, education, and a comprehensive rethinking of supply chains – a truly titanic challenge.
Our letter to the EC underscores a series of unresolved issues and suggests corrective actions to ensure the EUDR‘s implementation is a “win-win” for biodiversity protection and market competition. Many companies affected by the EUDR are unprepared for the transition due to a lack of information and tools provided by the EC, which could hinder full compliance.
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Additionally, the EUDR will impact diverse supply chains with specific needs that were not fully considered during its drafting phase. A “one-size-fits-all” approach alienates producing countries from the decision-making process. By excluding smallholders, the EU risks promoting deforestation rather than reducing it.
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Amid inflation, the cost-of-living crisis, and geopolitical tensions weighing heavily on Europe’s economy, we fear that the burden on consumers and smallholders could worsen as prices may increase following the EUDR’s implementation. For example, palm oil prices are rising by up to 40% in some cases, with increases ranging from $80 to $200-300, according to industry sources. While some costs can be absorbed by the supply chain, a portion will inevitably fall on consumers, leading to imported inflation at a challenging time for European households.
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To achieve a “successful” implementation, we recommend a transition period of at least two years and a temporary suspension of sanctions during this phase while maintaining the controls specified by the regulation. We also call for the formation of a permanent committee with commodity-based workgroups, involving the broadest possible spectrum of stakeholders – including producer countries, supply chain operators, industry associations, and national authorities.
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I warned that once the EUDR comes into effect, several disruptive issues that the regulation has neglected or failed to address adequately will emerge, impacting trade. Supply chains are complex and cannot be managed with a “one-size-fits-all” approach; each has specific challenges that need to be handled separately. This necessitates time and a thorough discussion of emerging problems to ensure that the regulation achieves its intended goals without unintended negative consequences.
