EUDR Enforcement will begin on December 31, 2024 for large companies.
What does this mean?
As of December 31, 2024, every commodity covered by the EUDR – soy, beef, palm oil, wood, cocoa, coffee and rubber as well as derivative products – must:
- Be sourced from land that is certified 100% deforestation free from land harvested after the cutoff date of December 31, 2020 – no exceptions!
- Be traceable to their original plot of land via geolocation coordinates provided in mandatory due diligence statements submitted by operators ahead of products or raw materials being exported or placed on the EU market.
- For products traded in bulk, such as soy or palm oil, this means that the operator needs to ensure that all plots of land involved in a shipment are identified and that the commodities are not mixed at any step of the process with commodities of unknown origin or from areas deforested or degraded.
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Implications for palm oil
Supply disruptions
8.5% = number of palm oil producers, processors and traders that can trace 100% of their raw materials from their supplier mills to the plantation of origin.
Price increases
$170 million – $2.5 billion = Annual estimated EUDR compliance-related costs for companies conducting business in the EU.
RSPO inadequacy
“Insufficient” = RSPO certification alone as evidence to prove compliance with the EUDR requirements, as determined by an RSPO GAP analysis.
Future limitations on supply
2030 = When the demand for palm oil may begin exceeding the maximum amount of arable land in palm growing regions.
What can CPGs do to prepare?
- Plan with internal teams to determine when adhering raw materials must be acquired by to ensure products supplied in January 2024 meet all requirements.
- Ask suppliers about how they are preparing to meet EUDR requirements to ensure supply chain continuity after 31 December 2024.
- Limit the use of covered commodities in new formulations.
- Re-formulate existing formulas to eliminate covered commodities.
- Diversify supply chains with palm alternatives from nonagricultural sources - such as Palmless™ - which are not subject to EUDR regulation.
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