Smallholder farmers struggling with new forestry requirements [Advocacy Lab Content]

Farmers with small plots of land are struggling with new requirements as part of the EU Deforestation Regulation, lacking resources and technical know-how, and leaving them open to exploitation by larger suppliers.

While most of the food we eat comes from large industrial farms, most of the world’s farmers themselves are not part of these big enterprises. Worldwide, most farmers are engaged in small-scale agriculture – and not just in the developing world.

According to a study conducted by the European Parliament’s research department, small farms make up the vast majority of the EU’s ten million farms. Small farms allocate larger shares of their production to food and have a more diversified produce portfolio than larger farms.

The problem for these smallholder farmers is they lack the resources of their larger peers, and thus they can be disproportionately impacted by environmental and health requirements. Though most of the EU’s agricultural funds have gone to large farms, a new policy framework is starting this year allowing national governments flexibility to tailor measures to small farms and local conditions.

The EU’s Deforestation Regulation (EUDR), passed into law last year, is one such set of requirements causing concern for smallholder farmers. Agriculture is the main driver of deforestation, with beef production alone accounting for 41% of deforestation.

New rules, new proof

The EU’s new rules, which will require proof from products on the EU market that they do not come from land that was deforested or degraded after 2020, are set to become mandatory for smallholder farmers on 20 June 2025. Austria, Finland, Italy, Poland, Slovakia, Slovenia and Sweden are seeking to delay the implementation.

On a recent visit to Paraguay, Bolivia, and Ecuador, the EU’s Environment Commissioner Virginijus Sinkevičius said that the Commission is ready to talk about the concerns. The EUDR, which is the world’s first ban on deforestation-linked products, has been criticised as protectionist by some of the EU’s trade partners.

The rules will affect imports of cattle, cocoa, coffee, palm oil, soya, and wood, as well as many derived products like chocolate and leather. Companies seeking to place their products on the EU market will have to use geolocation data to demonstrate that these do not come from deforested or degraded land after December 2020, with businesses facing fines of up to 4% of their total annual turnover in the EU if they breach the regulation.

According to European Parliament data, the EU’s consumption is responsible for about 10% of global deforestation, of which two-thirds are accounted for by palm oil and soya.

Preparations and implications

Even if the requirements are watered down or delayed before next June, smallholder farmers will need to start preparing now for the implications.

“Each EU farmer that produces soy or breeds cattle will not be allowed to make their relevant products available on the EU market or export them unless he or she has proven that it is deforestation-free – and this has to be done in advance, before selling the product,” says Thomas Maximilian Weber, a specialist at the Austrian Chamber of Agriculture. “No piece of cattle and no kilogram of soy can be sold without due diligence declaration.”

Smallholders may lack the resources and technical know-how to implement these new requirements. This may mean that they need support from larger suppliers, which could make them vulnerable to exploitation.

Compliance costs

In addition, compliance costs are disproportionally higher for smallholders compared to large-scale farmers. Smallholder farmers in developing countries often lack the resources and capacity to comply with these requirements. As a result, they may face difficulties accessing EU markets and may be at risk of losing their livelihoods.

Other challenges include limited access to information and resources on sustainable farming practices, high costs associated with certification and compliance, and difficulties in navigating complex supply chains.

Additionally, smallholder farmers often operate in remote areas with poor infrastructure, making it challenging to meet the traceability and transparency requirements of the regulation.

The new requirements won’t only impact European farmers. Farmers worldwide who want to sell their goods on the European market will also be impacted.

“Farmers in third countries are worried about their market access to the EU – the verification and control of the deforestation-free practices would increase costs even for smallholder farmers,” said Kati Partanen, a board member at the World Farmers’ Organisation.

“The planned EUDR would, according to the estimates, prevent only about 1.5 % of annual deforestation in the globe. Are the costs in balance with the goals? Auditing and additional reporting incur costs for farmers, which probably cannot be covered by additional income. This is particularly challenging for smallholder farmers. Because of corporate due diligence, companies and wholesalers can also refuse to buy farmers’ products if they do not fulfil reporting and auditing obligations,” said Partanen.

Certification schemes

Certification schemes, such as the Roundtable on Sustainable Palm Oil (RSPO) the Forest Stewardship Council (FSC), and the International Sustainability and Carbon Certification (ISCC) could help smallholder farmers deal with the new requirements. Such schemes provide farmers with training and support to implement sustainable practices, improve productivity, and access premium markets.

Certification also helps smallholder farmers demonstrate their commitment to sustainability, enhancing their market access and competitiveness. However, there are still open questions about how certification schemes will link with the legislation.

“Meeting the [EUDR’s due diligence] requirement might present a great challenge for companies importing or exporting affected goods to the EU markets, especially when suppliers frequently change,” said Jessica Scheimann, communications manager at ISCC System.

“One option to comply with the regulation could be the establishment of its own control systems. This might involve the deployment of designated personnel at the points of origin to ensure traceability back to the specific plots of land. Instituting own control systems comes with a substantial investment of both human capital and financial resources and can be susceptible to errors.”

However, farmers have complained that the certification schemes made necessary by the new legislation are still going to represent an additional cost.

“Certifications have a good goal, but they are often too expensive, especially for smallholders,” says Partanen. “The goal is that certificates would bring price premium, but actually the additional price is not even covering the price of certification and the methods it requires. There’s a need for lighter guaranteed processes to achieve good results with low costs.”

Costs may be relative

The question of costs may be relative. Scheimann noted that third-party certification is a cheaper alternative to in-house systems. The legislation has left it up to farmers and businesses whether they want to use such third-party certification schemes.

Own-control systems will be another option for compliance. Either way, given the continued uncertainty over the start date of obligations, experts say that small farmers should start preparing now.

In the meantime, agricultural lobbying groups are trying to convince EU lawmakers to delay the start date for the EUDR requirements, given that it is coming soon, and things don’t seem to be ready. “The EU needs to postpone the entry into force for at least one year,” says Weber.

“Half of 2024 is almost over and so far, we neither have a functioning EU information system nor a benchmarking system. If we really want to make the implementation of EUDR easier for farmers, the Commission needs to include a fourth category called ‘no risk of deforestation’ where the member state and not the single farmers have the obligation to prove that all farmers on its territory are deforestation-free.”

Weber would prefer a situation where smallholder farmers don’t need to run certification procedures, either in-house or third party. “EU farmers are expected to face additional costs and also financial risks in connection with EUDR. If on top of that, they would have to pay a certification service, I will invite the Commission experts to explain to them the why and how of EUDR to farmers.”

[By Dave Keating I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]

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