The EU Deforestation Regulation (EUDR) - due to take effect on 30 December this year - cannot be postponed as some palm oil players are urging, because it is already law and in force, delegates at the 9-11 September OFI International 2024 conferences and exhibition heard.
“It’s a regulation and if you want to break up an EU regulation, you would have to negotiate with all 27 member states,” said Ruben Brunsveld, Deputy Director, Market Transformation EMEA, of the Roundtable on Sustainable Pam Oil (RSPO).
The EUDR and meeting its complex requirements dominated market concerns among those attending the OFI International ‘Trade Outlook & Logistics’ forum. The conference, along with the OFI Technical Commercial Conference, exhibition, and the 3rd Sustainable Vegetable Oil Conference (SVOC), attracted more than 578 attendees from over 40 countries.
The EUDR requires companies selling or exporting seven commodities in the EU (cocoa, coffee, palm oil, soyabean, cattle, rubber and timber) to ensure they are deforestation-free and legally sourced, TRACT CEO Allison Kopf said.
If companies were not compliant, they faced significant fines (40% of their EU turnover), bans on non-compliant products, reputational damage and supply chain disruptions, she said.
To comply with the EUDR, the conference heard that companies must:
- Conduct due diligence by collecting a vast amount of information, data and documents.
- Assess their deforestation and devise risk mitigation measures.
- Submit all information in a due diligence statement (DDS) to the EU information system.
The complexities come in the details, and lack of clarity on some issues.
Kopf said the first challenge was in collecting the required data.
“In terms of traceability, you don’t own all that information and you need this from your suppliers.
“In terms of geolocation data, most people don’t have polygon mapping data.”
There were a lot of false positives in geolocation data and a method was needed to account for this and to have adjustable thresholds.
It was also a huge task to prove legal compliance with regulations including for land use, human rights, tax, anti-corruption, trade and customs.
Brunsveld said traders or shippers must not mix compliant and non-compliant commodities.
If different products were combined, such as different oils, all the data had to be searchable and linkable, Kopf said.
There could be hundreds of due diligence statements that needed to be tied together, which had to be shared with customers and traders, and companies needed systems to find and share only the necessary data.
The file size limit of 25MB for due diligence statements was also a problem, Gustavo Idigoras, president of the Chamber of Vegetable Oil Industry of Argentina (CIARA) said.
A vessel carrying 60,000 tonnes of soyabeans could have information relating to 5,000 farmers, 200 collectors and two to three crushing plants and plants, and this information could far exceed the 25MB limit, while fragmenting the information into different files was too time-consuming.
In the short term, Kopf said small farmers would lose out because they could not comply with the EUDR’s requirements, and big traders and manufacturers were currently only buying from large producers.
Nevertheless, Brunsveld said he was proud of what the EU was doing to tackle its contribution to deforestation.
He said that while the EUDR did not recognise any certification as a “green lane” to market access, RSPO or other third party verified schemes could be used in risk assessments, and companies which had passed the RSPO audit should be able to use this to demonstrate legal compliance.
Each EU country would also have their own competent national authority (NCA) to police the EUDR and the Dutch NCA had just announced on 10 September that “companies certified by robust schemes will be considered low risk and deprioritised for controls.”
Delegates at the OFI Trade Outlook & Logistics conference also heard from Oil World CEO Thomas Mielke, who observed that there was a mismatch between current prices and a looming global production deficit in 2024/25.
World supplies of sunflowerseed and rapeseed/canola were forecast to decline by 10-11M tonnes in 2024/25.
“In the past two seasons the growth in world rapeseed and sunflower oil output has largely offset the slowdown in world palm oil output,” he said. “This will not be the case in 2024/25, creating a bullish supply scenario for vegetable oils in the next 12 months.”
He also said there was insufficient growth in world supplies of used cooking oil (UCO), tallow, grease and other non-food feedstocks for the biofuel sector in the years ahead, questioning whether recent Chinese UCO exports were really UCO or old rapeseed and sunflower oil stocks.
