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On June 9, 2023, the European Union took a major step in the fight against global deforestation by publishing the EU Deforestation Regulation (EUDR) in its Official Journal.
This landmark regulation requires companies to ensure that their products are deforestation-free and produced in compliance with current legislation.
The EUDR covers a wide range of commodities, including wood, soybeans, rubber, cattle, coffee, palm oil and cocoa.
From 30 December 2024, most large- and medium-sized companies will have to comply with the requirements of the EUDR. These obligations extend to operators and traders within the EU market. Operators who place or export goods and products on the EU market and traders who distribute or process these products will have to ensure that their supply chains are deforestation-free and legally compliant.
Small and micro enterprises established before 30 December 2020 will have until 30 June 2025 to comply with the requirements of the Regulation.
The aim of the Regulation is to change the way traders and operators do business and encourage them to adopt sustainable practices by prohibiting the placement of products on the EU market that do not meet deforestation-free criteria.
By focusing on key commodities with significant environmental impacts, the EUDR represents a comprehensive effort to reduce deforestation globally and promote responsible sourcing and legal compliance in the international marketplace.
In the context of the EUDR, ''deforestation-free'' means that the relevant products must have been produced on land that has not been subject to deforestation after 31 December, 2020. But what exactly is meant by deforestation?
The Regulation defines deforestation as the conversion of forests to agricultural use. This means that any conversion of forests to agricultural land is considered deforestation and is therefore prohibited for products intended to comply with the EUDR. However, the Regulation does not cover the conversion of forests to other non-agricultural uses.
In addition, in the case of wood products, forests must be managed in a way that avoids forest degradation, thus ensuring the sustainability and long-term preservation of forests.
Forest degradation is defined as structural changes in forest cover, which can result from a variety of causes. These include:
The Regulation sets out a number of key steps that companies must follow carefully.
The first step in due diligence is the collection of information.
Operators must collect a wide range of data and documents to demonstrate that the relevant commodities and products are deforestation-free and legally produced.
This information includes the product description, both the commercial and scientific name, the quantity, the country of production and the geolocation of all land parcels where the commodities were grown, as well as the date or period of production. The names of suppliers and buyers must also be recorded, along with verifiable evidence that the product is indeed deforestation-free and produced in accordance with current legislation.
Operators must then use this information to carry out a risk analysis.
This step requires risk assessments to be documented with reasoned conclusions, reviewed annually and made available to the competent authorities upon request.
The risk analysis must take into account the risk classification assigned to the country of production or to parts of the country of production, in accordance with Article 29 of the Regulation. From June 29, 2023, all countries will be assigned a standard risk level. The European Commission will develop a central database of deforestation risk ratings and publish a list of low- and high-risk countries by December 30, 2024. This list will be reviewed and updated when necessary on the basis of new evidence.
Finally, operators must put in place controls and procedures to mitigate or manage risks. Risk mitigation measures must be implemented before the product is placed on the EU market or exported. Operators are required to take appropriate risk mitigation measures to achieve zero or negligible risk before placing products on the EU market or exporting them. Although the risk mitigation process is not well defined, its aim is to ensure that products are safe and meet the high environmental standards set by the EUDR.
xFarm is an advanced digital platform designed to help farmers and supply chains track data digitally. It also provides innovative agronomic support tools through the integration of Decision Support Systems (DSS), IoT sensors and Geospatial AI technologies.
These technologies allow farms to easily collect, manage and export detailed information about their products, such as description, quantity, country of production and plot geolocation. This makes it easier to provide accurate and verifiable documentation to demonstrate compliance with anti-deforestation legislation. In addition, by using satellite data and artificial intelligence models, it is possible to verify millions of hectares of fields, identifying boundaries, the type of crop being grown and, finally, the land conversion history to check whether or not a particular area has recently been deforested.
xFarm also provides solutions for risk analysis, helping companies document and verify assessments with reasoned conclusions. The platform is designed to keep information organised and easily accessible, enabling companies to respond quickly to requests from relevant authorities.
Finally, the implementation of risk mitigation actions is possible, thanks to monitoring and control tools that help companies manage risks effectively and proactively. In this way, companies can take appropriate mitigation actions to ensure that their products meet EUDR standards while minimising the risks associated with deforestation.
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