- The European Commission’s proposed delay to the EUDR has prompted reactions from around the globe;
- The palm community has generally expressed relief, as have most supply chain participants;
- NGOs have decried it, despite there being no proposed change to the regulations themselves.
The European Commission’s proposed delay to the EU Deforestation Regulation was released yesterday. It outlined a 12-month delay, as well as a new international cooperation framework. New guidance for compliance was also issued.
Key responses from supporters and opponents are outlined below.
Internationally, Indonesia’s government and farm sector showed support, but are wary. Indonesian officials outlined concerns around benchmarking and other processes that are still to come. As reported in Reuters:
“It’s not about the delay but the implementing regulations,” Airlangga said, adding that any postponement would ideally be for two years, not 12 months. “The EU has no right to be a rating agency,” he said.
“We will continue to advocate against which regulations are burdensome, or not in accordance with Indonesia’s law … the EU should also understand our conditions,” Gapki chairman Eddy Martono told Reuters.
Australia expressed similar sentiments, but is still firmly opposed to the regulation.
The country’s agriculture minister Julie Collins stated:
“The EU Deforestation Regulation imposes complex due diligence requirements that create technical barriers for a range of Australian agricultural products… It is welcome news that the European Commission has responded to these concerns, and the important advocacy of Australia’s agriculture industry, with the announcement of the proposed 12-month delay.”
Australia’s main farming body, the National Farmers’ Federation, added:
“Off the back of increasing international pressure and concern, including from the United States, it is pleasing to see the EU has listened to governments and made a sensible decision to delay implementation … We understand this will be subject to the EU Parliament and we urge that decision to be made swiftly …
If this proposal is nothing more than a stay of execution then we should be contemplating other avenues of resolution such as the World Trade Organisation processes, in concert with other jurisdictions.”
Back in Europe, in the European Parliament EPP President Manfred Weber was jubilant, taking credit for the delay.
“I am pleased that Ursula von der Leyen has followed my initiative to postpone the #Deforestation Regulation. Together with our farmers, we are protecting the environment & avoiding a bureaucratic monster.”
The EU’s Parliamentary Greens were surprisingly supportive, which points towards parliamentary approval of the proposal. Greens coordinator Thomas Waitz said:
“With the very generous postponement of the EU Deforestation Regulation, there are no longer any excuses for all companies to implement it quickly by next year.”
Among EU Member States, Czechia expressed clear support, as reported in Euractiv:
“I have been campaigning for a postponement of the deforestation regulation for a long time,” Czech Agriculture Minister Marek Výborný commented … “I agree with the basic idea of the regulation on deforestation (…) However, this is not a problem in Czechia or in most European countries.”
European farm and business groups also expressed relief. COPA-COGECA, Europe’s largest farm lobby stated:
“The focus must now shift to addressing the practical challenges associated with the EUDR’s implementation to prevent uncertainties and avoid supply chain disruptions.””The focus must now shift to addressing the practical challenges associated with the EUDR’s implementation to prevent uncertainties and avoid supply chain disruptions. We will carefully review the guidance document published today and remain committed to further dialogue to ensure workable solutions for all impacted sectors.”
Austrian Chamber of Agriculture President Josef Moosbrugger said:
“The fact that the EU Commission has proposed to postpone the EU Deforestation Regulation is inevitable in order to avoid absolute chaos in the European forestry, wood, agricultural and food value chains.”
Secretary-General of the DBV, Germany’s biggest farmer group, Bernhard Krüsken said:
“The uncertainties caused must now be a reason to fundamentally simplify the regulation again and not to impose additional bureaucracy on countries with effective forest protection.”
In the global NGO corner, criticism was generally reserved for the Commission. The World Resources Institute issued a statement, criticising the Commission and Europe itself:
“While we recognize the challenges the regulation poses for some producing countries, particularly for smallholder farmers, the focus should have been on easing implementation and ensuring greater support for tropical-producing nations. Most disappointing is the push from EU countries to delay enforcement, despite having more technical and financial resources to establish supply chain monitoring and traceability.”
Greenpeace, typically making the most extreme statement, said:
“Ursula von der Leyen might as well have wielded the chainsaw herself. People in Europe don’t want deforestation products but that’s what this delay will give them... The EUDR was agreed in December 2022, and it’s inexcusable that the Commission took so long to issue the supporting documents for the implementation of the law.”
It’s also worth noting that there was an immediate market reaction. Analysts noted a dip in prices for key commodities affected by the regulation, with Bloomberg noting that “Robusta coffee futures fell about 6% Wednesday, while soybeans traded down about 1%. Cocoa in New York also dropped.”
Carlos Mera, an analyst at Rabobank in London said:
“A delay would bring a huge relief to the EU value chains affected, from cocoa to palm oil — and not least to European consumers already affected by a cost-of-living crisis.”
This market impact still remains an under-appreciated aspect of the EUDR. As we’ve noted, coffee prices were at historical highs this quarter, in anticipation of the EUDR. Looking after the environment and protecting trees comes with a cost. The question remains: are the world’s wealthy consumers willing to pay?
We’ll have a full analysis of the delay process and the new guidelines in the coming days.