However, compliance with the EU Deforestation Regulation (EUDR) varies significantly across soy-producing countries.
This uneven progress was a key concern during a recent webinar hosted by Innovation Forum, where industry leaders stressed the importance of leveraging the one-year postponement to bridge the gap.
Formal ratification of EUDR delay
The Council of the EU has officially adopted the regulation to postpone EUDR implementation by one year, allowing third countries, member states, operators, and traders to meet due diligence obligations.
The regulation mandates that certain commodities and products sold in the EU or exported from the EU are deforestation-free. This includes products made from cattle, wood, cocoa, soy, palm oil, coffee, rubber and some of their derived products.
Susanne Fromwald, general secretary at Donau Soja, pointed out the stark differences in the preparedness of some soy producing countries.
Serbia has minimal government support for small farmers, making EUDR readiness low. Meanwhile, Ukraine is progressing well, with 600,000 tons of soy certified as deforestation-free, she reported.
The postponement thus provides crucial breathing room for countries and companies struggling with compliance.
Palm oil sector: Diverging perspectives on the delay
The delay has also stirred mixed reactions within the palm oil industry.
Some environmental advocates argue the postponement weakens Europe’s environmental leadership, risking further biodiversity loss. Michelle Desilets, executive director of Orangutan Land Trust, decried the fact that the regulation does not include certain ecosystem types such as savannas and wetlands.
On the ground, some feel that the EUDR will make very little difference to deforestation, as the expansion of palm oil in SE Asia is now on a downward trend. It was argued that most of the future forest loss will not be due to plant-based commodities, but from mining of minerals like nickel and gold.
However, industry representatives see the extension of the EUDR as a chance to fortify compliance systems.
Ruben Brunsveld, deputy director EMEA at the Roundtable on Sustainable Palm Oil (RSPO), argued the delay allows for “more time for real conversations” with stakeholders and for the development of robust traceability mechanisms.
While a sizable portion of palm oil producers are already certified under RSPO, with 93% of palm oil production certified as sustainable, the challenge remains to integrate smallholders into compliance frameworks.
Mansuetus Darto, founder of Indonesia’s Palm Oil Smallholder Union (SPKS), noted farmers need clearer guidance and support to navigate EUDR requirements. Without it, smallholders risk exclusion from lucrative EU markets.
Traceability and transparency at the core
Traceability is at the heart of EUDR, but achieving this across sprawling soy and palm oil supply chains is no small feat.
Heleen Van Den Hombergh of the International Union for Conservation of Nature (IUCN) NL and the Collaborative Soy Initiative noted the high investment required for physical segregation and traceability, which smaller producers cannot shoulder alone.
A key challenge lies in the technical requirements of EUDR compliance, such as polygon mapping and geolocation data collection.
Wei Peng, global head of sustainability at Louis Dreyfus Company, also stressed the need for targeted support: “Smallholders often lack the technical expertise to meet EUDR standards. It’s up to stakeholders like us to enable compliance through financial and technical assistance.”
Without such intervention, there is a risk that companies may favor producers with the lowest compliance costs, sidelining smallholders.
Mass balance models, which allow for the mixing of certified and non-certified materials, were cited as a viable interim solution by Brunsveld. However, he cautioned that misunderstandings around these models need to be addressed to avoid unnecessary disruptions.
Global markets and the risk of leakage
With Europe representing only a fraction of global soy and palm oil imports, the risk of market leakage - where non-compliant products are diverted to regions with less stringent regulations - remains high, said the experts.
Peng pointed though to growing Chinese interest in deforestation-free soy, offering hope that global markets may align with EU sustainability goals.
Domestic consumption trends in Indonesia and India further complicate matters, with much deforestation-driven palm oil feeding local markets.
Desilets emphasized the need for a holistic, global approach: “EU regulations must be part of a broader international movement to influence domestic market behavior.”
The road ahead: multi-stakeholder collaboration
Industry leaders agree that the delay must not lead to complacency.
Will Schreiber of the Retail Soy Group called for immediate action: “The delay is not an excuse for inaction. Companies [should use this time] to conduct dry runs, improve governance, and pressure supply chains to transform.”
Collaboration across sectors, governments, and civil society will be critical in ensuring smallholders are not left behind. Brunsveld suggested RSPO’s book-and-claim system as a mechanism to provide direct financial support to smallholders, promoting inclusive growth.
Integrated approach
The success of EUDR hinges on balancing regulatory stringency with practical, inclusive solutions.
Schreiber stressed the importance of addressing root causes: “EUDR is a start, but it won’t solve deforestation alone. Financial instruments like payment for ecosystem services are needed to make conservation more viable than conversion.”
Van Den Hombergh also urged companies to consider an integrated approach.
“Don’t treat EUDR in isolation. Combine it with other EU regulations, such as due diligence and sustainability reporting, to create robust company policies. Use the delay to build systems that are future-proof and address multiple sustainability goals.”
Fromwald highlighted the need for stable regulatory frameworks: “Regulatory uncertainty punishes frontrunners who have already invested in compliance. Clarity is key to ensuring fair competition.”
