The EUDR is a new regulation that requires business operators in the EU to prove that their products containing specific commodities are deforestation-free. It will come into force on December 30, 2024.

• The regulation covers commodities, such as:
  
  1. Cattle and derived products (e.g., beef, leather);
  2. Cocoa and derived products (e.g., chocolate);
  3. Coffee and derived products;
  4. Oil Palm and derived products (e.g., palm oil, palm kernel oil);
  5. Soy and derived products (e.g., soybeans, soy oil, soy protein);
  6. Wood and derived products (e.g., timber, paper, wood pulp, cardboard, wooden crates); and
  7. Rubber and derived products.

Businesses must issue a due diligence statement establishing negligible deforestation risk in their supply chain since December 2020. They must also prove that the products were grown legally according to local land rights and other regulations.

Complying with the EUDR requires significant changes in business operations, including extensive data collection and supply chain transparency. For example, businesses need to provide geolocation data for every farm plot that contributes to shipments.

Since a high proportion of coffee and cocoa crosses EU borders, non-compliant shipments will need to find other markets, potentially trading at a significant discount. This could negatively impact the prices of these commodities.

If a business is found non-compliant, it will lose the entire affected parcel of goods and could be fined up to 4% of its annual turnover in Europe.

The UK is expected to implement its version, known as the Forest Risk Commodities regulations. While not identical, complying with the EUDR will help operators adhere to the UK law

The EUDR comes into force on December 30, 2024. Businesses need to collect all necessary data and have their due diligence and traceability systems in place by then.

There is uncertainty about whether national competent authorities will be ready to enforce the regulation by December 30, 2024.

Businesses should start collecting relevant data, conducting risk assessments, and implementing traceability systems immediately to ensure compliance with the EUDR.