What impact will EU deforestation law have on Brazilian soy trade with EU?

ABIOVE represents traders and processors responsible for exports, while APROSOJA represents large soybean landowners. Both associations have been vocal about the industry's readiness and the implications of the European Union Deforestation Regulation (EUDR).

ABIOVE told us that the Brazilian soy industry has long been preparing to comply with environmental legislation. “Regarding the EUDR, there are several actions underway. The main one is to persuade the EU Commission and national authorities to recognize controls and systems that companies in the sector already have for verifying legality and zero deforestation, along with the Brazilian government's official monitoring systems that generate information used by companies,” the organization said.

Brazilian soy companies, according to the trade group, have been enhancing their chain of custody controls and creating export corridors compliant with the EUDR given that the law requires segregation of soybeans, meal, and oil to ensure zero deforestation in shipments to the EU.

"Finally, together with other sectors, we are defining relevant Brazilian legislation and formats for proving compliance."

ABIOVE also commented that while it believes the EU rules are noble in their intent they were drafted and approved without fully grasping their implications on supply chains. “The EUDR fails to account for the unique realities of each production chain and country.”

The organization advocates for the EU rules to align with existing national laws rather than surpass them, as it claims that smaller producers and businesses may struggle to meet EUDR's stringent requirements, potentially harming them.

In June, the US requested that the EU delay​​ the implementation of the EUDR until 'substantial challenges' were addressed, with the White House citing a lack of clear guidance from the EU as the reason for the requested delay. ABIOVE said it understands that shelving the law is not an option and that the decision rests with European legislators. However, it noted ongoing uncertainty regarding the procedures and inspections that regulatory bodies will use for oversight.

Azael Pizzolato Neto, president of APROSOJA in the state of São Paulo, acknowledged the work done by traders on logistics to ensure the necessary traceability for EUDR compliance. 

He stressed the robustness of the country’s own deforestation laws: “I want to emphasize that Brazil has one of the most modern and restrictive environmental legislations globally. This alone should provide peace of mind to European buyers and establish our product as sustainable. The European market needs to respect our legislation, especially since it is more restrictive than the European counterpart.”

APROSOJA has been strongly critical of the EUDR, however, referring to it as trade protectionism disguised as environmental preservation. “Brazil is an agri-environmental powerhouse capable of supplying the European market. We have grown tired of disguised protectionism, particularly from a market that is becoming increasingly irrelevant to the soy complex,” Pizzolato Neto told FeedNavigator.

And while EU importers and feed companies​​ have voiced concerns about a potential shortage of soy​​ for formulations, citing the uncertainty created by the EUDR and the lack of price quotes for soybeans starting next year, the APROSOJA representative remarked that any issues related to the supply of sustainable soy into the EU will be down to EU inefficiency and not as a result of non-compliance by Brazilian soy farmers. 

Brazil's rural producers will continue to produce and preserve the environment despite hardships, he asserted, and will do so out of conviction, not convenience. The question remains whether Europeans are prepared to compete and pay a fair price for Brazilian soy, commented Pizzolato Neto.

"We fully support the free market and free enterprise. Any market has the right to choose which product to buy. However, imposing restrictions on a production chain, which should be free to produce in compliance with local legislation, is different. Therefore, we believe the European market can choose from a range of soybean qualities and specifications, and it should pay accordingly. Legal soybeans adhere to local legislation and are sustainable, while certified soybeans can meet any specific requirements, provided the buyer is willing to pay a fair price," he added.

Azael Pizzolato Neto's comments were translated from the original Portuguese using DeepL.​