EU deforestation regulation: US government demands delay to protect food businesses

24 Jun 2024 --- The US has reportedly urged the EU to delay its Deforestation Regulation (EUDR), which is set to come into force in December, because the new rules would hurt US producers of cocoa products, timber and other forest-risk commodities.

On Friday, the Financial Times revealed the Biden Administration had sent a letter dated May 30 to the European Commission (EC) warning the law posed “critical challenges” to US businesses and should be delayed until the challenges have been addressed.

The EUDR would require companies to provide a “due diligence” statement supported by geolocation data to confirm their products have not come from deforested land after 2020.

According to the Financial Times, US timber merchants have said they are considering cutting EU exports as they cannot prove their paper does not come from deforested land. Likewise, Asian, Latin American and African governments complained earlier in the year about a need for clearer guidance on EUDR compliance.

The regulation impacts various supply chains, including cocoa, soybeans, coffee, palm oil and beef. It is set to be reviewed in June 2028.

Cocoa and climate change
While US producers may fear the EUDR’s economic impacts and compliance complexities, environmentalists argue the longer-term issue is the need to establish greater transparency in supply chains.

“Any new regulation will require companies to invest in compliance, but the ultimate goal of the EUDR is to bring greater transparency and governance to supply chains — in the end, this is a win for everyone,” Vasco van Roosmalen, CEO and co-founder at carbon solutions provider ReSeed, tells Food Ingredients First.

“Just look at what has been happening to cocoa prices lately — they have increased significantly due to supply-side issues, including impacts from climate change. The cocoa supply chain is filled with smallholder farmers vulnerable to climate change.”

“The EUDR is part of a necessary approach to bring greater transparency and investment into these vulnerable supply chains. These investments can help farmers become more resilient and adapt to climate change impacts, which are happening today.”Confectionery producers on both sides of the Atlantic foresee serious challenges with the EUDR, including unnecessary administrative burdens.

In April, cocoa prices surpassed US$12,000 per metric ton — a 280% increase from the prior year. The record-high prices pushed chocolate makers to increase consumer product prices and reduce product size, fueling the so-called “shrinkflation” trend.

In his State of the Union Address in March, US President Joe Biden criticized brands for using “shrinkflation” tactics amid a cost-of-living crisis.

According to the US Department of Agriculture, US chocolate and cocoa products had a US$1.89 billion export value in 2023. Exports of these products to the EU totaled US$34.53 million.

European confectionery concerns
Last week, the Association of Chocolate, Biscuit and Confectionery Industries of Europe (Caobisco) also sent a letter to EC President Ursula von der Leyen raising concerns around the EUDR’s implementation. 

Among the concerns are the due diligence obligations for operators and traders further down the supply chain and clarity on the transition period.

“The date of application of the EUDR is approaching at full speed, while several key components are still further delayed or lacking clarity,” the letter reads.

“This is particularly concerning as companies rely on legal clarity to further adapt their systems, processes and organizational resources to the EUDR requirements and ensure a high level of preparedness.”Timber problems: The American Forest and Paper Association warns it is “impossible” to comply with the EUDR as pulp is produced from leftover sawmill and forest residue mixed from various sources.

“Given the risks that companies will bear in case of non-compliance, urgent action is required from the EC to provide all the necessary tools and systems, as specified in the regulation.”

Caobisco warns this action is necessary to minimize the risk of market disruptions, food waste and unnecessary administrative burden on companies.

Nature Restoration Law
In other EU regulatory news, EU ministers greenlighted the controversial Nature Restoration Law last week after Austrian climate minister Leonore Gewessler broke the deadlock by voting in its favor — reportedly without her government’s permission.

The law had faced potential collapse after several member states withdrew support for the regulation earlier in the year amid right-wing pushback and farmer protests.

The Nature Restoration Law, a pillar of the European Green Deal, aims to restore at least 20% of the EU’s land and sea areas by 2030 and all ecosystems needing restoration by 2050.

However, landowners have questioned how the law would be financed.

By Joshua Poole