INFORM October 2024

REGULATORY REVIEW

inform October 2024, Vol. 35 (9) • 29

2. Trading and shipping Deforestation-free and legal commodities must be kept separate from other goods while being traded and shipped. Mixing compliant and non-compliant commod ities or commodities of unknown origin is not allowed. In such cases, the whole shipment would be non-com pliant and cannot be placed on the EU market. 3. Importing Before placing a product on the EU market, the importer must perform due diligence. The importer must also submit a Due Diligence Statement and will receive a reference number (and security token), which must be reported in the customs declaration for import. Only compliant products may be placed on the EU market. The operator may place the product on the EU market when it has been released for import by the cus toms authorities. 4. Producing Large manufacturers of goods in the EU (e.g. chocolate manufacturers) must check that due diligence has been exercised upstream in the supply chain. Large producers must check the Due Diligence Statement (DDS) of the commodity importer and sub mit their own DDS for their products, using the refer ence number of the upstream DDS. The operator then receives a new DDS reference number and security token. 5. Selling or exporting products Before selling the product on the EU market, large retailers must check that due diligence has been exer cised upstream in the supply chain. The retailer must check the DDS upstream in the sup ply chain and submit their own DDS based on all previ ous reference numbers. The trader then receives a new DDS reference number and security token. Small companies do not need to check or submit due diligence statements for products that have been sub ject to due diligence further up the supply chain. While this requirement is new for agricultural com modities, similar provisions, like the 2019 Commission Communication on Stepping up EU Action to Protect and Restore the World’s Forests, were directed at wood products. Its implementation shows how such requirements can drive forest governance reforms in producer countries. Land tenure and use rights provided legal frameworks for sustainable for ests, land management, restoration and conservation. The EU says the 2019 Commission was the first step towards today’s deforestation Regulation. By promoting the consumption of ‘deforestation-free’ products and reducing the EU’s impact on global deforestation and forest degradation, they say the new Regulation on deforestation-free products is expected to reduce greenhouse gas emissions and biodiversity loss.

for animal feed. From 2001 to 2015, soy agriculture accounted for 8.2 million hectares of deforestation and production is still expanding (https://tinyurl.com/3d98uunk). The company established a program that offers financial and technical support to farmers who practice regenerative agriculture ( https://admadvantage.com/regen/). They report that in North America they have enrolled over 5,300 farmers across 15 states for the 2024 season. The program is designed to provide complete traceability across the supply chain. The technology verifies, tracks, and segregates participating beans from their originating farms, during transportation, and to their final destination. ADM told news outlets that they will be expanding the program to key regions beyond North America. GROWING PAINS Developing nations like Malaysia and Indonesia have expressed criticism of the ban. They complain that such regulation will be a risk to their economies, since together they supply the major ity of the world’s palm oil. Leaders of developing nations have pointed out that it is wealthy, technologically advanced coun tries, responsible for climate change, who are imposing eco nomic limits on lower- and middle-income nations with this law. For any small supplier compliance with the regulation could be complicated and expensive. They will need to map the precise borders of their farmland to show that the com modities are not linked to deforestation. In addition, hundreds of farmers contribute to any given batch that traders deliver to mills in developing countries. A single uncertified farm would deem the entire lot ineligible for export to the EU, risking the fragile economic structure in these countries. A spokesperson for the European Commission said steps are being taken to ensure that smaller farmers will not be pushed out of business by the regulation, such as technical and financial support, including a 110 million euro pledge. COMPLIANCE The legal production requirement mandates that, in addi tion to being deforestation-free, relevant products placed on or exported by the EU must have been grown, harvested or obtained in accordance with the relevant legislation of the country of production. According to the EUDR, the following actions need to be taken at each stage of the supply chain to comply: 1. Growing Commodities must be produced legally and be defor estation-free. Geolocation data of the area of produc tion must be collected. Commodities that were produced illegally, on land deforested after December 2020 or that are not trace able, do not comply with the rules and cannot be placed on the EU market. Compliant commodities must be stored separately from those that are of unknown origin or are not compliant.