EUDR webinar: Key takeaways

Farrelly Mitchell recently brought together industry experts Dr. Michelle Riblet, Michael Ekow Amoah, and Andreas Cerdan to share their insights into the upcoming EU Deforestation Regulation. During the hour-long webinar, these experts unpacked the complexities of the regulation, explored its far-reaching implications on the agricultural sector, offered valuable perspectives for stakeholders, and showcased how EUDR can drive digital transformation within the industry. Here are some key takeaways from each of the speakers at the event:

Overview: Introduced in 2023, the EUDR is a regulation aimed at reducing global deforestation and forest degradation. The regulation comes in response to growing fears of greenhouse gas emissions, climate change, and biodiversity loss. Deforestation practices are directly linked to these challenges, as they destroy natural ecosystems, hinder the positive environmental impact of trees, and impact the soil’s ability to sequester carbon.

Impact: The main goal of the regulation is to ensure that products traded within or exported from the EU are produced sustainably, transparently, and without evidence of deforestation. It targets specific commodities within the forestry and agricultural industries, including: coffee, cocoa, cattle, soya, palm oil, timber, and rubber. EUDR has the potential to significantly influence these key sectors, their trading patterns, and their production practices.

Enforcement: The legislation prohibits production of commodities which are directly or indirectly linked to deforestation or forest degradation. The European Commission categorises countries into three risk categories – low, standard, and high – based on their levels of deforestation risk. Using this  country categorisation for risk and other information, operators must conduct supply chain risk assessments and implement risk mitigation plans to ensure regulatory adherence and avoid penalties.  A due diligence statement is an essential document required for entry into the EU market which must contain specific information and geolocation data to prove that they imported products comply. In cases where a business fails to provide such evidence, they may be penalised through fines, product confiscation, or even market prohibition.

As one of the commodities listed under the EUDR, cocoa production is likely to be heavily impacted in the coming years. Cocoa is crucial to the Ghanaian economy and is the nation’s largest agricultural export, contributing approximately $2 billion annually to the national GDP.

Like much of Africa’s agricultural sector, the Ghanaian cocoa industry is dominated by smallholder farmers, many of whom lack the resources to meet the data collection requirements imposed by the EUDR. Consequently, the task has fallen to COCOBOD to implement nationwide strategies to address this issue.

COCOBOD has implemented a national traceability system, known as the Ghana Cocoa Traceability System. This system addresses limitations in existing private traceability systems, ensuring comprehensive coverage for cocoa farmers and reducing duplication and inaccuracy. By capturing geolocation data and conducting assessments for deforestation and child labour risks, it provides an end-to-end traceability solution that aligns with EUDR requirements.

Beyond compliance, the system also ensures lower compliance costs, increased competitiveness for buyers, support for cocoa farmers adhering to voluntary standards, and alignment with regional African standards. The Ghana Cocoa Traceability System also helps to addressing various food safety, economic, social, and environmental issues within the cocoa value chain.

Tools: To collect, share, and analyse the necessary data, suitable technological tools are required. Satellite data has emerged as an excellent way to detect deforestation remotely, as AI processes perform vegetation analysis and check against various parameters such as canopy density and tree height to determine forest loss and new coverage.

Blockchain technology can also be used to facilitate data capture and sharing, ensuring secure data transfer from end-to-end of the supply chain. These systems are scalable, allowing for both manual entry and the importation of large GPS location databases.

To reduce the burden on internal teams, the collection, analysis, and sharing of data should be entrusted to automated processes and AI wherever possible. If implemented effectively, AI can provide ongoing and real-time data of product origins, with tools such as mobile apps relaying this information to farmers.

Strategies: With downstream stakeholders already requiring compliance on new orders, it is vital that businesses act proactively to get ahead of the legislation as new technologies will need time to implement and integrate into existing systems. This will necessitate a period of adjustment where businesses adapt to new workflows, train their staff, and ensure that their supply chains are fully in line with EUDR requirements. Regulated parties may also need to convince partners to embrace these changes, invest in compatible systems, and commit to a shared vision of sustainability and transparency. To bridge the gap between underdeveloped farms and modern technological tools, businesses must improve access and awareness of technologies, simplify them, and smooth the transition wherever possible. Ultimately, this takes time, so steps must be taken as soon as possible.

Adhering to the EUDR legislation will require a deep understanding of agricultural policy, supply chains, traceability and transparency, and agtech implementation.

At Farrelly Mitchell, our food and agribusiness experts can bring clarity to complex agricultural policies and develop bespoke strategies to comply with them. Our team are committed to sustainable transformation and can provide comprehensive audits and assessments to identify areas for operational improvement and supply chain optimisation. We work with clients across the food and beverage supply chain, including farmers, distributors, manufacturers, and retailers. We can identify suitable strategies and technologies, including supply chain optimisation, regenerative agriculture, and agroforestry, to ensure EUDR compliance for your business as well as your supply chain partners.