Skip to content
Home » Articles » Navigating Inequities: EU Deforestation-Free Regulation Impact – A Spotlight on Ivory Coast

Navigating Inequities: EU Deforestation-Free Regulation Impact – A Spotlight on Ivory Coast

Written by Yasmine Rugarli

The impact of man-made disasters on forests is now, more than ever undeniable. In 2022, the equivalent of 11 primary tropical forest football pitches was lost every minute.

The EU is currently responsible for 10% of global deforestation due to consumption habits and unsustainable supply chains – especially deriving from agricultural production. Nevertheless, as the world’s largest single market, the EU hold significant power to curb global deforestation tendencies and mitigate destructive activities. Therefore, the new EU’s Deforestation Regulation (EUDR), appears as a pivotal initiative holding the purpose of mitigating deforestation associated with the EU’s consumption and production practices. While this regulatory evolution emerges on one side as a bold and positive step forward in guaranteeing a supply chain free from deforestation, the other side of the coin reveals a myriad of challenges particularly impactful for small stakeholders in trade-dependent economies.

Therefore, by zooming in on the repercussions of the EU regulation in the context of Ivory Coast, particularly highlighting the obstacles faced by small-scale farmers in the cacao sector, the pertinent question arises: In light of the Green Deal commitment of “leaving no one behind”, will the EUDR contribute to the exacerbation of inequalities, particularly affecting the most vulnerable groups whose livelihood are often intricately tied to their integration in the global supply chains.

As part of United Rising’s mission to uphold sustainable practices, we believe these questions should not be left unanswered. Addressing these challenges is crucial for achieving equitable and sustainable outcomes.

Understanding the Key Principles of the EU Deforestation-Free Regulation

On 29 June 2023, Regulation (EU) 2023/1115 on deforestation-free products entered into force, as part of a broader regulatory landscape objectives of the European Green Deal, the EU Biodiversity Strategy for 2030 and the Farm to Fork Strategy.

In light of the critical issues that deforestation brings with it, the EUDR imposed strict due diligence rules targeting any operator or trader who wishes to place these seven commodities: cattle, wood, cocoa, soy, palm oil, coffee, rubber, and their derived products, such as chocolate, leather, paper, furniture, etc.

The Regulation on deforestation-free products repeals the EU Timber Regulation and companies are granted an implementation period of 18 months, starting from 29 June 2023. Moreover, special measures and an extended adaptation period are specifically offered benefits to small and micro businesses during the transition. Ultimately, before authorization for distribution in the EU market or export of the relevant products, operators are required to perform due diligence – involving thorough information gathering regarding the production.

EUDR Extraterritorial Reach and Impact

The EUDR is the perfect example of the extraterritorial reach that the EU can have, as the regulation extent its application extends its application to products whether they are within the EU or located in third countries. This mechanism acts as leverage – offering a significant influence in implementing domestic law, norms and capacity-building programs in third-world countries – particularly EU-bound cocoa exports from countries such as Ivory Coast and Ghana. For instance, in Ivory Coast the ARS 100 law, for the durability of cocoa production in Ivory Coast and Ghana, was officially operationalized by the “Conseil Café- Cacao” recently on January 2024.

While the influence of the EU appears pivotal in contributing to the global mitigation of deforestation, in practice it presents fundamental challenges, especially for trade-depended countries – risking drifting out of the market. The EUDR presents possible unintended effects of the regulation on vulnerable groups in producer countries, such as small farmers, Indigenous peoples, and rural communities. This prompts a fundamental question at the heart of this blog post – more precisely, whether will be EUDP be a policy tool marked by the cycle of “policy creation euphoria and implementation disappointment”.

EUDR Challenges: Is it truly a Sustainable and Equal Legal Framework?

In May 2023, I had the chance to contribute to the work of a fintech, called Panelys, on a cacao traceability program in Ivory Coast. Working in this context, allowed me to further grasp the discrepancy between the overarching goal of the EUDR and the on-ground challenges in the implementation. Here, I realized the opportunities but also challenges that could comprise the exclusion of smallholders from high-value supply chains of commodities covered by the regulation.

The economy of Ivory Coast highly relies on cocoa production and serves as a critical source of income, creating employment opportunities and contributing to poverty alleviation in rural regions. The European Union market represents one of the largest and most lucrative markets for cocoa products – leading to an urgent call for the country to comply with the Union’s due diligence standards.

Lack of Market Accessibility and No Minimum Price

A trip to a plantation of Tiassalé (IC)

Due presence of certain systematic illegal practices such as the expansion of illegal crops and abuse of human rights such as forced labour, it is fundamental to underscore and address the lack of a holistic approach that aims to tackle the root of the issue and not only the symptoms.

While the EU, acknowledge some paramount causes of unsustainable practices such as the weak enforcement of legal and regulatory framework or lack of quality education, it fails to explicitly acknowledge one of the key pressures that small farmers face: a low fairtrade minimum price of the cacao brought by big corporations from which they are dependent. Small operators in third countries would incur expenses to implement compliance procedures that meet the new regulations; nevertheless, these expenses are reflected in the prices of the products. While the general assumption is that the increase in product prices would serve as a “price premium” for complying with deforestation-free requirements and a sustainable income, the increase in the prices does not necessarily mean that incomes of small-holders will increase to the same extent. Farmers often receive a poor share of the final product value generated from forest-risk commodities. Indeed, the general production pattern shows that farmers receive only between 3 and 7 per cent of the retail price of the chocolate.

Building on these current dynamics, if these key challenges are not seen, the EUDR will inadvertently function as a deterrent excluding smallholders from the market due to the associated burden of high transaction costs. Given limited alternative income opportunities, there is a high risk that this will counterproductively lead to illegal deforestation for subsistence purposes. Despite the disadvantages for smallholders being acknowledged in the EU impact assessment, the Union declares that though “the long-term impacts on third countries being expected to be positive, initial short-term impacts caused by EU operators shortening/simplifying supply chains, reducing their number of suppliers and/or switching to lower-risk supply chains may particularly impact smallholders”

A regulatory Imperialism?

Countries such as Indonesia have accused the EU of ‘regulatory imperialism’ aimed at increasing costs and barriers for the agricultural sector – a key source of export revenue for trade-depend countries. Unfortunately, the current EUDR do not specify comprehensive measures which foster agricultural sovereignty in the hands of small stakeholders which shall meet the EU requirements. Additionally, the regulation does not mandate operators to invest efforts in including smallholders and providing them with the key and necessary support to comply with due diligence requirements. This results in incentives that reinforce existing inequalities between small-scale producers and large-scale firms taking over the monopoly of crops, and hindering small farmers’ market access – therefore, reinforcing the unsustainable participle cycle of production.

During a visit to a plantation in Tiassalé, along the outskirts of Abidjan’s capital, I was able to witness the significant role that cacao farmers can assume in environmental sustainability and conservation efforts by engaging in agroforestry, crop diversification, composting, and other environmentally friendly practices. The secret? A true democratic food system that empowers rural communities, enabling them to exercise their environmental stewardship.

Traversing Regulatory Complexity: Obstacles and Proposed Solutions

When addressing the compliance challenges, it is fundamental to adopt a grassroots lens to the application of the EUDR – understanding the complexity of practical challenges as part of the transition. During my stay at Panelys, some key addressed challenges were prevalent and part of their paramount  Sustainable Development Goals such as SDG 1 (no poverty), and SDG 10 (reduced inequalities). These issues are externalities that need to be addressed, as fundamental factors that influence compliance with the EU standards.

Obstacles

One of the primary challenges revolves around capacity building and traceability. While these require technological solutions, the on-field reality presents complexities such as the lack of technological infrastructure, expertise in data collection, and verification mechanisms. Moreover, practical aspects, are often overshadowed such as the accessibility of the cacao plantations due to the lack of infrastructure.

Cacao Fruit in the Plantation of Tiassalé (IC)

Capacity building requires the integration of educational initiatives to pass on the importance of compliance with the EUDR compliance standards and the functioning of the traceability toolkit. Small-scale forest users and community-based organizations, are often ill-prepared for the administrative intricacies related to a sustainable use of crops – underscoring the need for tailored support mechanisms.

Furthermore, the prevalence of illiteracy and integration within the local costumes plays a big role in communication. This involves engaging with community influencers and tailoring approaches to align with cultural sensitivities. The dynamics of the market can create an additional layer of difficulty due to some intermediaries exerting pressure on producers to lower prices, resulting in tension in the transition process.

Ultimately, the amalgamation of these challenges necessitates an investment that cannot be borne by the domestic stakeholder but should be also integrated into the regulatory strategy of the EU.

​​Bridging the Compliance Divide: Towards Solutions

The EU green initiatives, enclosed in the Green Deal and EUDR, mark a significant stride toward the mitigation of climate change. While the regulation presents both opportunities and challenges, addressing the deforestation leakage requires a holistic approach that underscores the interconnectedness of supply chains and the global impact of market-driven decisions.

As part of our mission to empower the key stakeholders at the forefront of our socio-environmental challenges, we believe that it is critical to address the intertwined issues of poverty, equity and deforestation, especially for trade-dependent countries. Ultimately, upholding the slogan “leaving no one behind” requires a true internalisation of the challenges faced by vulnerable groups, central to creating a sustainable framework that is not only environmentally responsible but also socially equitable. It is time that we acknowledge how imperative it is to promote a sustainable and inclusive value chain – encapsulating targeted incentives for small stakeholders. This entails a further paradigm shift, such as improving access to credit, establishing a direct minimum price for the farmers, and not only a percentage over the commodities.

Sources