EU anti-deforestation rule sparks concern in agribusiness industry
The European Union’s anti-deforestation rule, which prohibits imports of products from deforested areas, is putting Brazilian producers in fear. Some don’t know how to comply with the regulation and claim that the European requirements are more stringent than the Brazilian legislation. They warn of a potential cost increase and loss of competitiveness in Brazilian products sent to Europe.Trade ties between Brazil and the EU have been growing: the trade flow went from $69.9 billion in 2018 to $74.8 billion in 2021 and $95.2 billion in 2022. In the 12 months to June, it reached $95 billion. The EU is the second main destination of Brazilian exports, coming only after China. But the future of this relationship in the medium term is uncertain.Approved in April by the European Parliament and in force since June 29, the European Union Deforestation-Free Regulation (EUDR) is expected to affect 356 Brazilian products from seven production chains — coffee (which has half of its production exported to Europe), soybeans (15%), beef and leather (5%), cocoa (5%), timber and paper (13%), palm oil (10%), and rubber (4%), according to Brazil’s Ministry of Agriculture.The new European law prohibits the entry of products from areas with any level of deforestation up to December 2020, regardless of whether it is legal. The Brazilian Forest Code allows 20% of the forest area where the property is located to be cleared in the legal Amazon and 65% in the Cerrado.Among the main penalties that the new European legislation stipulates is the suspension of the importing trade, the seizure and destruction of the products, and fines of up to 4% of the annual revenue collected by the operator in charge.The new rule begins to be enforced in December 2024, which means producers have less than 18 months to implement mechanisms and keep track of their supply chains. The EU says it is necessary to collect data on geolocation coordinates of where the commodities were produced and that large producers and exporters are responsible for overseeing compliance, being able to compare geolocation with satellite images or forest cover maps to assess compliance with the requirements. Small and medium-sized producers have 24 months to adapt to the new regulation.Many are unsure about how to do that. Some are more advanced, such as the coffee sector, but beef and soy are still unclear on how to proceed."How Brazilian producers can adapt to the new rules is the million-dollar question...
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