EUDR compliance: It’s complicated

February 15, 2024

As the EUDR regulation is set to come into force in 2025, Technical Editor Clay Gordon investigates what this means for the cocoa and chocolate sector

The TL;DR (‘Too Long Don’t Read’): The European Deforestation Regulation (“EUDR”) is set to come into full force on 1 January 2025. When it does, it will have an impact on every cocoa bean, every gram of derivative product, and every piece of finished chocolate that enters the EU – no matter where the cocoa was grown or where the derivative or finished product was produced. If you are located outside the EU, make products that use cocoa in any form, and want to sell those products in the EU, you must be able to prove your products are EUDR-compliant when they arrive at a port of entry in an EU member state on or after 1 January 2025.

EU Member States are required to ensure that non-compliance with EUDR rules results in penalties – monetary and other forms – that are both “effective” and “persuasive.” These penalties will be levied against the company that first offers the product in the EU, which should mean that smallholder farmers will not have to directly bear the burden of those penalties. However, to the concern of many, it is entirely unclear how much of the cost of compliance will be borne by farmers.

Some Context

According to the FAO – the Food and Agriculture Organization of the United Nations – an estimated ten million hectares (or roughly 24.7 million acres) of forests are lost worldwide each year. About 90% of those losses can be attributed to the conversion of forested land into land for agricultural use. Of that 90%, approximately 7.5% (or 675,000 Ha) are associated with cocoa production. Cocoa, according to FAO statistics, places fourth on the list of the top six crops that contribute to continuing deforestation. Rounding out the list of the top six contributors are oil palm (~3 million Ha), soy (~2.95 million Ha), timber (~790,000 Ha), coffee (~630,000 Ha), and cattle (~450,000 Ha).

Reducing deforestation – a major contributor to climate change – has been a topic of interest of EU regulators for some time. Keenly aware that the marketplace lacks the will to formulate a response to the environmental mess that has been created, EU regulators sought to create and implement a regulatory framework that would force companies to perform strict due diligence and attest that products sold into the EU do not come from deforested lands.

But what does it mean to be EUDR-compliant?

The EUDR sets strong mandatory due diligence rules on companies that import products that contain any of the six aforementioned regulated agricultural commodities into the EU.

Cocoa buyers and traders, cocoa processors and chocolate makers – any company that uses cocoa in any form – will have to prove both that a) their products do not contain any cocoa ingredient that was produced on land that was newly deforested after 31 December 2020, and b) that their products are also in compliance with all relevant, applicable laws in force in the cocoa-producing country. The first requirement means that being EUDR-compliant will end the controversial practice of mass balance.

As a part of their due diligence efforts, companies will be required to provide precise geographical boundary information for the lands on which the commodities they source have been grown. At a panel session at the most recent International Cocoa and Chocolate Forum held in London in October 2023…

Read the full feature in our magazine.