Food industry officials say they are running out of time in order to prepare for the new EU regulations to reduce carbon emissions within supply chains. They accuse Brussels of issuing proposals lacking detail and that will not stop deforestation.
The new rules will come into effect at the end 2024. They will force companies to prove that their products were not produced on land recently deforested. This will make the EU first region in the world to ban the import of goods linked to deforestation. The list of commodities that will be affected includes palm oil, cocoa beans, beef, rubber, and soy.
Many in the industry believe that the EU is too late to finalise details for an initiative aimed at reducing carbon emissions and preserving biodiversity.
It has not yet finalised a list of countries that are “high risk” and whose exports will be subjected to additional checks. The selection process, which will shape the future supply chains of companies, has been made more difficult by the strong objections raised by many countries in the global south.
Nathalie Lecocq is the director-general of Fediol, the EU’s trade group for vegetable oils. She said: “It will not be enough [for the EU] if they come up with guidelines by December 2024.” In certain cases, it is necessary to invest. . . You cannot wait until last minute.”
Louis Dreyfus Company is one of the largest food traders in the world. While the company was “actively preparing for compliance”, it was clear that the sector still needed more guidance “in time before enforcement by the end of 2024”.
Food companies in the EU will be required to geolocate their plots of land and provide these coordinates to EU authorities. The number of checks will be determined by the risk of deforestation in the country of production.
The EU has not made it clear yet how strict they will be with the new rules. This uncertainty is causing companies to hesitate about how rigorous their approach should be.
Nanne Tolsma said that the uncertainty surrounding legislation was making contract negotiations more difficult.
Food manufacturers and retailers want to include clauses in their contracts with traders that specify who will pay the fines if they do not comply. These fines could be as high as 4% of annual turnover.
Olivier Tichit is the sustainability director for Musim Mas in Indonesia. He accused the EU “blindly applying” its definition of deforestation. The act defines it as “conversion from forest to agricultural uses”.
Tichit said that this would create two-tiered system where companies would ship goods deforestation free to Europe, and the remainder to other regions.
Abiove, Brazil’s industry association for vegetable oils, said that the rules would increase prices for European consumers without reducing deforestation. Brazil is the largest exporter of beef and soyabeans in the world. China and the EU are Brazil’s two biggest customers for agricultural exports.
However, NGOs claim that the food industry had plenty of time to prepare. Gert van der Bijl is a senior EU policy advisor for Solidaridad. A Netherlands-based NGO that focuses on sustainability in commodity production, Gert van der Bijl said the regulation has been in development since 2015.
Van der Bijl said that food companies who fail to prepare could turn to countries that have better infrastructure and systems of traceability, excluding smallholders from poorer nations. The EU and companies should collaborate with producing countries to avoid this.
Tichit stated that Musim Mas had already reduced the number of palm oil suppliers they used. “You need to find people who have already complied with the law today.” . . “Those are the ones that you should keep,” he added.
Laurent Sagarra is the global head of sustainability for coffee producer JDE Peets. He believes that companies should go above and beyond EU traceability regulations. He said that if you don’t, “you won’t solve the deforestation problem, but just make us feel good in Europe”.
Sagarra, the Netherlands-based coffee company, said that instead of excluding farmers from high-risk areas in order to comply with new rules it was working with government and NGOs to ensure all smallholders were included in the supply chain.
Chris Beetge is the head of Olam Food Ingredients’ EMENA region, which includes one of the largest suppliers of cocoa beans, coffee and other goods in the world. He said that “a whole-landscape approach” would be needed to bring “farmers, local governments and civil society together”.
According to a spokesperson for the commission, the EU executive body “works very intensively” on implementing the deforestation regulations with both partner countries and businesses.
Since the June ratification of the regulation by the European Commission, data solutions startups that map deforestation report a surge in interest.
Thomas Vaassen is the chief executive officer of Meridia. This data firm works with some of the largest agri-food firms. He said that companies are under the impression “we don’t have enough time”. “We should have begun two years ago, and now we’re panicking.”
Some people believe that technology is limited in its ability to aid in compliance.
Andre Vasconcelos said that suppliers and traders were reluctant to disclose the details of farms where they sourced their commodities, which meant that the supply chain for ingredients like soy was still a “blackbox”. Trase is a data-driven initiative that tracks supply chains.
He called for greater transparency by traders and said: “We have all the technical knowledge, geospatial expertise to implement this regulation.” The issue is political will.