Debunking EUDR Myths: Truth Behind the Regulation 

The EU Deforestation Regulation (EUDR) has generated quite a buzz since its announcement, sparking a mix of concerns and misconceptions in the agribusiness community. Many companies find themselves grappling with conflicting information about what compliance really means and how it will affect their operations. From fears of overwhelming paperwork to concerns that smallholder farmers will be left behind, myths abound. Let us unravel these EUDR myths and provide clarity on the realities.  Whether you’re a small producer, a large importer, or somewhere in between, understanding the truth can turn compliance from a daunting challenge into a strategic opportunity for your business.  

Let’s dive in and separate fact from fiction! 

Myth 1 – We Need To Trace Every Grain Of Coffee For Eudr Compliance 

In simple terms, while it’s ideal to trace every grain of coffee back to its origin, this isn’t always feasible in practice. Supply chains are complex, involving many steps where commodities from different sources are often mixed together. Instead of tracing each individual product to a specific farm, companies can group all the sourcing areas together and report them as a whole. 

For example, if you’re sourcing coffee beans from various farms in a region, you might not be able to say which beans came from which farm. However, you can declare that all the farms you work with meet compliance standards. This approach is called aggregated traceability, where the origin of the product is traced collectively, not individually.  

Let’s say you import a bulk shipment of coffee beans. You don’t need to label each bag of beans with its exact farm of origin, but you can confirm that all the beans in the shipment come from farms that meet sustainability or legal requirements, as long as no unapproved or unknown-origin beans are mixed in. 

This method ensures transparency while simplifying reporting, making it more manageable for companies. It’s especially useful for procurement heads and supply chain managers in agribusiness who must balance regulatory compliance with the realities of sourcing from various suppliers. 

Myth 2- Agroforestry And Sustainable Farming Conflict With Eudr 

Contrary to some misconceptions, agroforestry and sustainable farming practices do not conflict with the EU Deforestation Regulation (EUDR). In fact, these environmentally respectful methods are encouraged. Agroforestry, which combines trees and crops on the same land, is seen as agricultural use rather than forest under the EUDR. This is because agroforestry, like sustainable farming, enhances biodiversity and promotes soil health, making it a sustainable practice. 

For instance, if you’re a farmer who integrates tree planting with crop farming, the EUDR won’t classify your land as forest, meaning you’re still compliant with the regulation. The same applies to oil palm plantations and other agricultural lands that maintain eco-friendly practices, such as planting protective tree groups or grazing areas. 

For sustainability heads in agribusiness, this means your agroforestry efforts not only align with the EUDR, but they also strengthen your compliance by showcasing environmentally responsible agricultural use. This flexibility ensures you can pursue sustainable growth without worrying about regulatory conflicts. 

Myth 3 – Sourcing From European Suppliers Is Exempt From Eudr 

Even if a company sources materials or products from European suppliers, they’re not exempt from the EU Deforestation Regulation (EUDR). The law requires businesses to ensure that their entire supply chain is free from deforestation, whether the products come from Europe or another part of the world.  

For example, if a European supplier sources palm oil or rubber from a region that has a high risk of deforestation, the company buying these materials must still check and ensure that the products meet EUDR standards. It’s not enough that the supplier is based in Europe; what matters is where the raw materials originally come from. This means companies need to conduct due diligence, asking for geolocation data and ensuring their products are traceable to deforestation-free sources.  

This ensures that even products bought from European suppliers comply with the regulation, and failure to do so could result in restricted access to or export from the EU market. 

Myth 4 – Eudr Will Result In Excessive Paperwork 

Many companies fear that the EU Deforestation Regulation (EUDR) will result in excessive paperwork. However, the reality is much simpler. The EUDR allows businesses to handle due diligence requirements digitally through an online platform called the Information System.  

For example, let’s say you’re a company importing cocoa into the EU. Instead of manually submitting paperwork for every shipment, you only need to upload your due diligence statements once to the system. The statement includes information such as geolocation data of your sourcing areas to ensure they are not linked to deforestation. This data is stored in the EU’s central registry and can be reused for future shipments, reducing repetitive paperwork. 

Additionally, the system is designed to connect seamlessly with your own company’s existing databases using APIs (Application Programming Interfaces). This integration means you won’t have to manually re-enter data, which saves time and effort. By using the Information System, businesses can streamline their compliance process and ensure all necessary data is accessible for Member States’ authorities to check, making the whole process more efficient and less burdensome. 

This reduces stress for companies that are concerned about additional admin work and makes it easier to stay compliant with the EUDR, especially when managing large and complex supply chains. 

Myth 5 – Eudr Will Create Supply Bottlenecks And Price Increase 

Many businesses worry that the EU Deforestation Regulation (EUDR) will create supply bottlenecks and increase prices. However, the truth is that the benefits of complying with the EUDR can outweigh the costs.  

For instance, consider a company that sources coffee from various regions. To meet EUDR requirements, the company will need to implement traceability measures, which can initially seem like a burden. However, these measures often align with existing best practices in supply chain management, and companies will have transition periods to adapt, especially small and micro-enterprises (SMEs). 

By improving traceability, the company can reduce the number of intermediaries in its supply chain. This means fewer hands in the process, leading to better efficiency and potentially lower costs in the long run. Additionally, obtaining geolocation data of the farms can be done using widely available and free technologies. This is usually a one-time setup cost that will save money over time. 

Moreover, an Impact Assessment related to the EUDR indicated that the costs of compliance are expected to be much lower than the benefits derived from reductions in greenhouse gas emissions. Products that meet EUDR requirements are likely to have a competitive edge in the market as consumers increasingly demand sustainably sourced goods. This could translate into higher sales and better brand loyalty, offsetting any initial compliance costs. 

In summary, while there may be concerns about supply disruptions and costs, the EUDR offers an opportunity for businesses to enhance transparency, improve sustainability practices, and ultimately gain a competitive advantage in a market that values responsible sourcing. 

Myth 6 – Existing Sustainability Certifications Are Enough To Comply With Eudr 

Many companies believe that having existing sustainability certifications is enough to comply with the EU Deforestation Regulation (EUDR). However, this isn’t true. While these certifications demonstrate a commitment to sustainability, they don’t automatically guarantee compliance with the EUDR’s strict requirements. 

For example, let’s say a coffee company has a Fair Trade certification. This certification indicates that the coffee is sourced ethically, but it doesn’t cover all aspects that the EUDR requires. Under the EUDR, companies must provide detailed information such as: 

• Description and quantity of goods: What exactly are you selling and how much? 

• Country and region of origin: Where do your products come from? 

• Geo-location data: This is crucial for tracking the specific location of the farms where the coffee is grown. 

• Proof of deforestation-free status: Companies need to show that their sourcing doesn’t contribute to deforestation. 

Even with a certification in place, the company still holds legal responsibility to ensure that its supply chain does not contribute to deforestation. The EUDR emphasizes that certification alone is not sufficient; companies must actively assess their practices and gather the necessary data to prove compliance. 

That said, companies with certified sustainable supply chains may find it easier to meet the EUDR requirements. These certifications typically promote better organization, transparency, and traceability in their supply chains. For instance, if a company is already certified organic, it might already have robust tracking systems in place, which can aid in gathering the required information for EUDR compliance. 

However, larger operators and traders (those that aren’t small or medium-sized enterprises) must still conduct thorough due diligence and will be held accountable for any violations of the EUDR. This means that while certifications can help with risk assessments, they do not absolve companies from their legal obligations under the EUDR. 

Myth 7 – Resellers Are Not Impacted By Eudr 

Many people think that resellers—those businesses that buy products and sell them without changing them—are not impacted by the EU Deforestation Regulation (EUDR). However, that’s a misconception. In fact, resellers play a crucial role in the supply chain and have specific legal obligations to meet under this regulation. 

The EUDR mandates that every business placing products on the EU market must ensure that their supply chains are free from deforestation. This means that resellers must: 

1. Verify Compliance: Resellers need to ensure that their suppliers—those from whom they purchase products—comply with EUDR regulations. They must have proof that the goods they are selling do not contribute to deforestation. 

2. Conduct Audits: Resellers might be required to audit their suppliers’ practices to confirm they are sourcing sustainably. This can include reviewing documentation or even visiting farms or facilities. 

3. Establish Transparency: Companies must implement transparent supply chain practices. This means being open about where products come from and how they are sourced. 

Scenario 

Imagine a small chocolate company in Europe that imports cocoa beans from various suppliers. Even though the company does not grow or process the cocoa itself, it is legally responsible for ensuring that the cocoa complies with the EUDR requirements. 

1. Due Diligence Requirements: The chocolate company must verify that the cocoa beans it imports are sourced from farms that do not contribute to deforestation. This includes checking that suppliers have the necessary documentation, such as geolocation data, proving that the cocoa is harvested from sustainable areas. 

2. Risk of Non-Compliance: If the company purchases cocoa from a supplier that sources from a farm known to engage in illegal deforestation practices, the chocolate company could face legal risks, fines, and reputational harm. Even if the supplier claims to follow sustainable practices, the chocolate company must conduct its own verification. 

3. Impact on Smallholders: Cocoa farmers, particularly smallholders, are also affected. While they are not directly subject to the EUDR’s obligations, they must provide the geolocation data to their buyers to prove that their cocoa is deforestation-free. By collecting this data, smallholders can strengthen their position in the supply chain and potentially secure better prices for their cocoa. 

It’s important to note that all businesses, including small and medium-sized enterprises (SMEs), must comply with the EUDR. Larger companies have more extensive due diligence responsibilities, while micro-enterprises (very small businesses) can pass on their due diligence responsibilities to the next entity in the supply chain. However, the original operator (the first entity to place the product on the market) is still ultimately responsible for ensuring compliance. 

Myth 8 – Businesses Have More Time To Comply With Eudr 

The European Commission has proposed a one-year delay for implementing the EU Deforestation Regulation (EUDR), which would allow businesses more time to meet the requirements for sourcing deforestation-free products. While this may seem beneficial at first, it could have several negative consequences. 

Delaying the regulation means that businesses might feel pressured to quickly adapt when the deadline finally arrives. This could lead to rushed decisions, which may increase the costs of compliance and the risk of not meeting the requirements. For instance, a small chocolate manufacturer who waits until the last minute to secure certified cocoa sources may find that prices have skyrocketed or that reliable suppliers are no longer available. 

Instead of waiting, companies should take a proactive approach. By preparing now, they can position themselves as leaders in sustainability. For example, a coffee importer that invests in sustainable sourcing practices and builds strong relationships with farmers can enhance its brand reputation and attract environmentally-conscious consumers.

The proposed delay could open the door for reconsidering other regulations linked to the European Green Deal, which aims to create sustainable food supply chains across Europe. If businesses see that compliance deadlines can be pushed back, they might not prioritize sustainability efforts, leading to further delays in addressing deforestation issues. 

The delay could unfairly penalize those companies that have already invested time and money to comply with the EUDR. For instance, a palm oil producer that has worked hard to achieve sustainability certifications may feel frustrated if competitors who delay their compliance gain a temporary advantage. 

Overall, while the delay may provide temporary relief, it risks undermining the progress made toward sustainable sourcing. Companies that act now can not only avoid pitfalls associated with last-minute compliance but also benefit from enhanced market positioning and consumer trust.  

Your Pathway to Compliance and Sustainability with TraceX 

As we’ve explored, the myths surrounding the EUDR can often cloud the path to compliance and sustainable sourcing. However, with the right information and tools, businesses can navigate this regulatory landscape confidently. TraceX’s EUDR Compliance Platform is designed to streamline the compliance process, providing robust solutions for traceability and transparency in supply chains. By leveraging advanced technologies, TraceX helps companies not only meet the EUDR requirements but also gain a competitive edge in the growing market for sustainably sourced products. Embracing this opportunity can transform compliance from a challenge into a powerful asset for your business. Let’s work together to build a more sustainable future!