EU Legislation for Deforestation-free Supply Chains: Call for Strong EU Country Partnerships to Mitigate Exclusion of Smallholders

COCERAL, FEDIOL, and FEFAC, representing the EU grain and oilseed trade, crushing and animal feed industry, urge the Council and European Parliament to ensure mandatory structural engagement between the European Commission and Member States and producing countries in the final text of the EU Regulation on deforestation-free supply chains to mitigate the exclusionary impact of the Regulation on smallholders. As proposed by the European Parliament, the partnerships should “pay particular attention to smallholders in order to enable these smallholders to…comply with the requirements of this Regulation”, “be supported by adequate resources”, support good governance, address the root causes of deforestation, and include joint roadmaps.

As we have previously highlighted, the traceability requirements of the EU are expected to lead to the exclusion of many smallholder farmers from the EU market in various commodity sectors. To take the example of palm oil, only around 1% of smallholders may be able to comply from the date of application of the rules by large and medium companies, as these volumes are very difficult to trace back to plot level in a segregated manner. This will impact approximately 4 million smallholders (who represent 40% of total crude palm oil produced globally).

To reverse the negative impact of the EU Regulation on smallholders and to aim to have a larger number of smallholders compliant with the EU Regulation, the European Commission and Member States must commit to strong and structured partnerships with producing countries to create the necessary enabling environment for compliance with the EU Regulation. The barriers to smallholder compliance must be identified and joint solutions developed for the EU Regulation to have a positive impact on smallholders and forest protection worldwide. Roadmaps as proposed by the European Parliament should aim to develop and accelerate implementation of solutions such as:

• Support national sustainability certification schemes and initiatives in achieving full and accurate traceability.
• Find solutions on how to share the traceability data considering data privacy protections in certain producing countries.
• Support capacity building for modern and easy-to-use technological systems to enable full and updated farm traceability at national level.
• Support and encourage national traceability systems with updated and accurate farm registers which correspond to the land ownership boundaries.

While an oral political agreement took place during the trilogue discussion of 5 December 2022, we understand that the technical details have not been finalised and that the fate of Article 28 on Cooperation with third countries remains uncertain. Failure to guarantee strong wording on cooperation with third countries, as proposed by the European Parliament, will result in the exclusion of the majority of smallholders from EU supply chains and limit the EU Regulation’s impact on reducing total deforestation in producing countries. We therefore strongly urge the co-legislators to make sure Article 28 lives up to the challenge along the lines of the European Parliament’s amendments and to ensure there are urgent and meaningful accompanying measures for government-to-government engagement.