Our View: EUDR means well but implementation may be rocky

On the surface, the European Union's deforestation regulation (EUDR) is an admirable piece of legislation.

As the EU recognized that, as a major consumer of relevant commodities, it is in part a contributor to deforestation, the degradation of forests and emission of greenhouse gases, the European Commission implemented a plan to reduce its negative impact on the environment.

As such, EUDR came into force in June 2023, and will go into effect for large companies by the end of the year, and for small- and medium-sized enterprises by June 30, 2025.

Under this regulation, any operator or trader who places any of the seven commodities—cattle, wood, cocoa, soy, palm oil, coffee and rubber—and their derived products, must ensure that they are not linked to land deforested after Dec. 31, 2020, and are not contributing to forest degradation.

This, of course, is much easier said than done.

And for rubber producers specifically, it's a "gargantuan task," according to Global Platform for Sustainable Natural Rubber Director Stefano Savi, due to the complexity of the NR supply chain. The intent of EUDR is a "great opportunity to improve how things are done" along the NR supply chain, he said, but the extensive blockchain of data required to prove compliance leaves smallholders vulnerable in an already challenging industry and risks excluding many good faith farmers from the EU market.

Whitney Luckett, president of Simko North America L.L.C., said EUDR is likely to create a two-tier market in which some producers will have little to no issue proving compliance, while others risk getting squeezed out.

"Small farmers typically operate on less than 2 hectares of land, making it very difficult to provide a decent standard of living," the Association of Natural Rubber Producing Countries told Rubber News. "Persistently low market prices don't cover costs of production, and extreme differences in bargaining power between farmers and buyers exacerbate income instabilities. In addition, adverse climate conditions, a shortage of skilled tappers, an aging farmer demographic and the prevalence of leaf diseases further threaten livelihoods."

Simply put, many smallholders don't have the means to document their EUDR compliance.

Associations, however, are working to aid smallholders. The European Tyre & Rubber Manufacturers Association said it is working with GPSNR "to ensure that knowledge is disseminated at all levels of the natural rubber supply chain." And GPSRN is helping to develop guidelines of compliance for smallholders via public consultation.

ANRPC said its Working Group on Sustainable Natural Rubber is getting dialogue partners together to help smallholders achieve sustainable NR traceability through a pilot study that it hopes to complete by the end of next year.

What remains, however, is the uncertainty surrounding the workability of the EUDR's information system, through which the industry will need to submit their due diligence declarations.

ETRMA and the German Rubber Industry Association have both expressed concerns over the lack of clear guidance from the EC that was promised months ago. WDK President Michael Klein says such delays in the implementation of EUDR's information system could "pose an acute threat" to the NR supply chain.

Perhaps he is justified in calling EUDR a "prime negative example" of regulation without proper impact assessment and industry expertise.