From 1 January 2025, beef, cocoa, coffee, palm oil, rubber, soya, timber and products derived from them will require confirmation that they were not obtained in connection with deforestation or forest degradation. Businesses are indignant at yet another bureaucratic burden, while at the same time the homework is falling behind at EU level.
The European Union's Deforestation Regulation came into force as long ago as 29 June 2023. Its aim is to reduce the risk that products linked to deforestation and forest degradation might be sold on the EU market or exported from it, and thereby to reduce the EU's contribution to deforestation and forest degradation worldwide. The regulation is due to start applying to large and medium-sized companies, as well as to those covered by the EU Timber Regulation, from 30 December 2024, and to small and micro-enterprises from 30 June 2025. This means that from 1 July 2025 absolutely every company will have to be able to meet the regulation's requirements in respect of the various products derived from timber, palm oil, soya, cattle, cocoa, coffee and rubber (for example, tyres, furniture, chocolate, cardboard and paper).
Calls for a postponement
As early as 25 March 2024, the Confederation of European Forest Owners called in a joint statement for the regulation's application to be postponed and for practical solutions to be found for its implementation and operation before it takes effect. Forest owners, while supporting the regulation's overall objective, believe that the new verification requirements cannot be met, because preparation of the underlying conditions is running late and there are currently many practical uncertainties. A European Commission meeting was held on 24 September at which the outstanding questions were due to be addressed, yet it is still unclear whether, and to what extent, this will succeed. After the regulation came into force, the European Commission began preparing the underlying arrangements (including the country benchmarking of deforestation risk and a digital information system) and practical guidance on those parts of the regulation that remain open to interpretation. In most cases the documents are late, while in those cases where they have been submitted, those involved consider the provisions they contain to be too strict and impractical. Europe's forest owners hope that their concerns will be taken into account and that the call to postpone the regulation will be heeded. Otherwise, implementation of the regulation may fail to achieve the goal of reducing global deforestation to a minimum, the bureaucratic burden created will be disproportionate, and it will hinder forest owners and other market participants in managing their forests sustainably. Pressure on the European Union to either delay or review the Deforestation Regulation is still continuing. Despite the concerns voiced by the parties involved, the European Commission is still pressing ahead with implementing the regulation as previously planned, indicating that its entry into application (that is, on 30 December 2024) cannot be postponed.
The homework has not been done
Sandijs Lūkins, Baltic region market and development manager at the international better land management organisation Preferred by Nature, points out that fewer than 100 days remain until the regulation takes effect, yet there are still many questions at both European Union and Latvian level.
"Although the management of large companies and organisations is aware of the new requirements, smaller players had, have and, it seems, will continue to have many questions about meeting the directive's requirements — all the more so if no country deforestation risk assessment has been carried out at EU level and no guidelines for implementing the regulation have been drawn up. Although Latvia has not officially designated the authorities responsible for meeting these regulatory requirements (there is no such government decision), the European Commission has been informed that in Latvia the competent authority for timber will be the State Forest Service. For the other products — cattle, soya, cocoa, coffee — it could be the Food and Veterinary Service. That would be logical and understandable, since both bodies have the relevant expertise," S. Lūkins says in response to the question about the responsible authorities in Latvia. He draws attention to the fact that in Latvia this regulation is mostly viewed through an agricultural and forestry prism, even though very significant requirements apply to producers and traders working with coffee, cocoa, soya and their products, as well as to those importing and selling car tyres containing natural rubber.
"The main problem is that in many third countries forests are cleared and turned into fields in order to produce these commodities. The regulation was created to prevent that risk, but so that it does not apply only to countries outside the EU, these requirements are also being extended to growers and producers of the relevant products within the European Union," S. Lūkins explains.
The existing arrangements meet the requirements
Latvia's forest owners view the new requirements very cautiously, and S. Lūkins shares that position, noting that the objectives are clear but the mechanism for putting them into practice is not.
"In theory Latvia should be in the group of low deforestation risk countries, because there is a supervisory authority — the State Forest Service — which issues felling permits and monitors whether forest regeneration is carried out in areas where timber has been harvested," S. Lūkins points out, adding that the most significant difference from the information currently given in a felling permit is the requirement to state the coordinates of the relevant harvesting sites. "Many countries do not have competent authorities of the kind Latvia has in the State Forest Service, and they have no felling permits either, or these take the form of some peculiar notification," S. Lūkins says of the difference. He is convinced that the system operating in Latvia ensures legal timber harvesting and rules out deforestation risks as such.
Mazes of coordinates
The greatest confusion about the regulation seems to be caused by the requirement to enter coordinates into an EU system that has not yet been released for public use, even though many forest sector companies are already receiving requests from buyers to share coordinates and the origin of timber. The initial system envisaged that a converter might be needed to enter the coordinates, but the State Forest Service promises to solve this problem, and forest owners will receive, in addition to the felling permit, data with coordinates that can be used in the aforementioned EU system.
"This is an important issue, because coordinates have to be entered both by the forest owner, for the relevant timber harvesting site, and by the cattle farmer, for the areas where the animal in question has grazed," S. Lūkins explains, acknowledging that there are several significant nuances to the coordinates question. "A small forest owner selling standing timber from a felling site can authorise a logging company (for example, in the purchase and sale contract) to enter the coordinates of the relevant timber harvesting site into the EU system, while the buyers of the roundwood assortments obtained from that felling site receive the relevant system reference," S. Lūkins says of the solution. He adds, however, that the forest owner would have to enter the coordinates of the felling site themselves if they wish to sell ready-made roundwood assortments.
"Timber harvesting in Latvia takes place only with an appropriate State Forest Service felling permit, which is traceable. That means the location of the particular harvesting operation is known. The only novelty is that geographic coordinates will have to be added," S. Lūkins continues. Stating the harvesting coordinates may be more complicated for selective felling than for clear felling. That said, it may be that in this case the coordinates of the entire property can be entered. In that event, care will have to be taken to indicate the areas in which economic activity is permitted and not to mark the part of the property where logging is not allowed. There is also the question of woody overgrowth on agricultural land, cleared from ditches and farmland, and the coordinates for it.
"The need to state coordinates could well cause the biggest problems and headaches for sellers of cattle, particularly small ones — sellers of a single bullock, say — in indicating where it has grazed. This can be handled using the Rural Support Service's maps of agricultural land in use and the coordinates of the areas for which support has been applied for," says S. Lūkins. Ultimately, in his view, there are also mobile devices these days with sufficiently accurate GPS receivers, from which the relevant coordinates can be read off on a Google map, for example.
The big must check the small
Although small companies must be able to meet the extended requirements of the regulation from 1 July 2025, since they mostly supply their products to large companies, according to S. Lūkins the large companies will have to carry out documentary traceability and satisfy themselves as to where the particular industrial product or raw material was obtained — namely, that the area has not been deforested. Concerns are being voiced that large companies might simply not want to buy products from small ones in order to avoid problems, which could lead to a redistribution of the market. The regulation provides that companies must carry out a risk assessment for each product in order to establish the possible risk of non-compliance with the regulation's requirements, and must also mitigate risks by conducting independent surveys/audits, gathering additional documentation or working with suppliers, as well as carrying out a comprehensive risk assessment that takes into account whether the goods have been produced in accordance with applicable local legislation, while unambiguously respecting the principle of free consent of indigenous peoples. The aim of these requirements is to guarantee that goods placed on the EU market have not been obtained from land or areas where forest degradation or deforestation has taken place since 31 December 2020.
In mid-August, Fairtrade International called on the European Commission to take account of the situation that has arisen, namely that the forthcoming law on combating deforestation will harm small producers. Fairtrade International said it was "deeply concerned" that some producers "would be excluded from the opportunity to take part in the European market or pushed out of supply chains, not because they farm on deforested land, but because they will find it difficult to identify, collect, manage and submit the necessary data". The organisation called on the European Commission to "address the shortcomings of the regulation and help the millions of smallholder farmers at risk".
There will be benefits too
The question of timber products of Russian or Belarusian origin reaching the European market remains highly topical. "Often a product supposedly manufactured in, say, China is in fact of Russian origin. Countless flows of such products have already been halted, but new companies are being opened almost daily, and such activities continue. Not only do our companies suffer from the unfair competition this creates, but by buying products of such origin European purchasers are paying for the war in Ukraine without having the slightest idea of it," S. Lūkins acknowledges. In his view, it is precisely in this context that the Deforestation Regulation can be a very useful tool for combating such flows, because supervisory authorities in European countries will have the opportunity to trace them and act accordingly. That said, it may not be an immediate solution.
Minister: the European Commission must admit its failure
"The implementation of the Deforestation Regulation is a serious failure on the part of the European Commission, because the regulation has been adopted but the European Commission has not completed all the work needed for the regulation to be set in motion," is how Minister for Agriculture Armands Krauze assesses the situation. He stresses that Latvia has very strict statutory rules on deforestation and that, moreover, converting (transforming) forest land into agricultural land is next to impossible — quite the opposite, in fact: in Latvia there is agricultural land on which forest has grown up. "What deforestation can we talk about in Latvia when in the 1920s forest covered roughly 25% of our territory, whereas now it is already more than 52%, close to 53%?" A. Krauze asks rhetorically. In his view, it is not really appropriate for EU member states to report into the system in question while in third countries the relevant data will be obtained with the help of satellites. The regulation was drawn up in a broader European and global context, in which many countries have problems with the transformation of forest land into land needed for producing agricultural output or raising livestock.
"Unfortunately, the solutions for preventing deforestation have gone in the wrong direction — towards introducing new bureaucratic obstacles (burdens) for European producers, even though the aim was to combat deforestation at global level," A. Krauze concludes. He acknowledges that Europe has an IT system in which the relevant data is to be collected, but it has not been fully presented, the guidelines have not been approved and so on, and therefore the only solution is to change — to move back — the deadline for implementing the regulation. "Latvia already has good IT systems; we will be able to provide the relevant data once the European Commission has done its homework," A. Krauze replies to the question about Latvia's ability to submit the required data.