Peter Liese, the EPP's Environmental Spokesperson has called on the European Commission to delay the implementation of the EUDR, arguing that while the goals are just, many EU commodity producers cannot cope with looming rules.
“The European Commission absolutely must postpone the entry into force of the deforestation regulation and then use the transitional period to reduce bureaucracy in the text,” Liese said in a statement.
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The EUDR mandates that those trading specific commodities and their derived products in the EU market (directly or exporting to) will need to follow due diligence reporting of the goods and supply chains they wish to trade in and demonstrate that their products are not linked to deforestation or to forest degradation.
Currently, the EUDR is set to come into full force 30 December 2024 for larger companies and in 2025 for SMEs.
It is the latest in a round of sustainability regulations from the EU which attempts to influence global policy as part of the bloc’s efforts to achieve The European Green Deal aims.
The European Investment Bank predicts that the EU’s various climate actions could result in a potential hit to EU-wide GDP of -0.4% by 2030, taking into account all of the EUs sustainability initiatives, but adds that the costs of ‘not acting’ would be greater.
The EU currently has a population exceeding 448.7m and is home to one of the biggest consumer markets in the world, so it’s not out of the question that replica regulation will emerge across the world.
"We must do something about deforestation worldwide and take our responsibility seriously. It is unacceptable for areas the size of eleven soccer pitches to fall victim to deforestation per minute. However, the regulation has been turned into a bureaucratic monster by a majority of Greens, Social Democrats, Leftists and French Liberals,” argued Liese.
The EPP environmental spokesperson contends that many small farmers around the world are struggling and points out that he is not alone in his qualms over the upcoming rules.
“Third countries are complaining massively about the legislation, including countries that are pursuing the same goal as we are, namely to stop deforestation. Most recently, in a letter dated May 30, the Biden Administration from the U.S. urged the Commission to postpone the entry into force.”
He continued: “We can adopt the postponement in the short term making use of the urgent procedure so that all sides have time to breathe and then calmly discuss changes to the text that mean less bureaucracy but still protection against deforestation.”
Liese says he has had discussions with representatives of the European Commission and representatives of other political groups which leads him to feel optimistic a postponement will be proposed.
EUDR could cost EU consumers up to $1.5bn
His call to the Commission comes at the same time as a new study has revealed the financial implications the EUDR will have on consumers.
Carried out by agribusiness Consultants at data and analytics company, GlobalData, it estimates that EUDR compliance premiums for companies operating in the supply chain for oil palm products and their derivatives, and rubber could be in excess of $1.5bn for these commodities alone.
Food and drink categories likely to be most affected by retail price hikes due to the EUDR include coffee, chocolate, soy-based meat alternatives and oil palm products.
The study also examined the impact the regulation could have on the EU’s competitiveness against other areas such as China.
Fred Diamond, senior food & beverages consultant and analyst at GlobalData, elaborated: “The aims of the EUDR are understandable and cutting greenhouse gas emissions and protecting biodiversity is essential. However, there could be some disruption ahead.
“The extra demands of the EUDR could lead some commodity suppliers in what the EU terms ‘third countries’ to move away from the EU and increase trade with countries that impose fewer regulatory requirements such as China. Some food categories, such as plant-based meat, may have to reformulate and switch to other protein sources, such as pea protein if the result of the EUDR is an increase in the price of soya for food production.”
Like Liese, Diamond also points out that the regulation could result in an uneven playing field: “The gap between big and small companies could get wider as larger companies are more able to shoulder the additional regulatory burden.”
This means a good proportion of these compliance premiums are likely to be passed onto EU consumers in the form of food and drinks and product price increases.
“The exact impact on consumers will depend on a variety of factors, including how companies choose to respond to the regulation, the extent to which the regulation is enforced, and how much assistance EU member states are willing to give to supplier countries to help them align with the new rules,” he added.
In other news, Tate & Lyle has completed the sale of its remaining interest in Primient, receiving cash proceeds of $350m.
