The proposed delay in the European Union’s anti-deforestation law (EUDR) is causing significant losses for companies that have already invested in compliance. Industry groups and traders warn that a 12-month postponement would undermine efforts made by businesses to source agricultural products responsibly.
Key points include:
The EUDR aims to ban imports of commodities like cocoa, coffee, cattle, soy, palm oil, and timber unless they can prove they are not linked to deforestation.
Originally set to take effect on December 30, the delay is being considered due to concerns about supply chain disruptions and the readiness of small-scale farmers to comply.
Companies like Cargill and AAK, which are part of the EU’s vegoil and oilmeal group Fediol, have already paid premiums for compliant raw materials, and a delay would render those investments ineffective.
Cocoa processors and chocolate makers face similar challenges, as they have secured deforestation-free beans at a premium, which will likely diminish to zero due to the law’s postponement.
The financial implications are significant, with companies unable to pass on costs to consumers, leading to potential losses.