Norwegian soy processor, Denofa, has raised concerns that the impending implementation of the EUDR could block its access to the EU single market, jeopardizing the company’s long-standing trade relationships.
The regulation, set to take effect at the end of the year, threatens to sideline Denofa, despite its strong record in sustainable and deforestation-free soy imports, it maintains.
Denofa, which has imported soybeans from Brazil to Europe for over two decades, warned that Norway’s status outside the EU could result in regulatory complications.
As part of the European Economic Area (EEA), Norway generally aligns with EU policies, but the country is considered a ‘third country’ until EEA adoption of the EU Deforestation Regulation (EUDR) is complete.
Without this adoption, Denofa’s ability to register traceability data through the EU’s TRACES system is limited, which it claimed is effectively barring the company from participating in the new deforestation-free certification process.
There is currently no indication that these formalities will be sorted out in time, said Hans Petter Olsen, CEO of Denofa. As it stands, the company will, in practice, not be able to compete on equal terms on the EU market once the EUDR gets implemented, he reported.
Denofa’s predicament is paradoxical given Norway’s pioneering efforts in sustainable soy consumption, he continued.
That country has maintained national non-GMO regulation since the 1990s, necessitating a comprehensive traceability system for all imports. When soy production in Brazil became linked to Amazon deforestation, Denofa leveraged its existing systems to ensure deforestation-free, ProTerra-certified soybeans.
Responsible sourcing is crucial to Denofa both ethically and commercially, giving it a competitive edge, and allowing it to guarantee that its soybeans did not contribute to deforestation, Olsen explained.
Caught in technical limbo
Under the EUDR, companies must register as ‘First Receivers’ in the TRACES system to verify the non-deforestation status of their goods. Currently, only EU-based firms can obtain this status, leaving Norwegian companies like Denofa in regulatory limbo.
Until the EEA adopts the regulation, responsibility for registering Denofa’s soybean imports falls to EU-based buyers, adding complexity and liability.
Its customers in Sweden, the Netherlands, or elsewhere are unlikely to be willing to shoulder this additional administrative burden or risk, Olsen noted.
“Losing access to our products could compromise the quality and sustainability of soybean supplies in the EU.”
To mitigate the risk, Denofa has lobbied Norwegian and EU policymakers for solutions, including the possibility of establishing a Swedish subsidiary to bypass the TRACES restriction. However, Olsen warned that this workaround would entail unnecessary costs and administrative strain.
Political solutions sought
“We’ve urged Norwegian officials to expedite EEA adoption or pursue bilateral agreements with the EU. Our preferred outcome is for the EU to amend the TRACES rules, allowing non-EU companies to register directly,” Olsen told us.
Norwegian authorities acknowledge the issue but have not provided a concrete timeline for resolution.
The 12-month EUDR extension offers hope, but Olsen remains cautious. “Even if the EEA acts swiftly, Norway’s parliament must ratify the decision, which could delay implementation beyond the transition period.”
The company has also engaged extensively with trade organizations and NGOs across Norway and Sweden to seek support.
“Additionally, we have reached out directly to EU politicians through formal correspondence, though we have yet to receive any response.”
Should no resolution be reached, Denofa faces tough decisions: “The absolute worst case would be to shut down the production facility in Norway, where we have been operating since 1912, but we hope it won’t come to that,” remarked Olsen.
Denofa’s case illustrates broader concerns about the unintended consequences of the EUDR on non-EU suppliers. “It’s hard to believe the EU’s goal is to exclude companies like ours that have pioneered deforestation-free soy.”
