Major agriculture producers, including Brazil, are pushing back against new European Union (EU) regulations that require proof of crops being grown on non-deforested land, citing increased food production costs.
Brazil, a top exporter of coffee and soybeans, criticized the ban as potentially conflicting with World Trade Organization principles. Brazil aims to boost trade outside the EU, especially within the BRICS bloc (Russia, India, China, South Africa). Compliance with the rules involves establishing complex traceability in production chains, impacting a wide range of products and potentially raising agricultural costs during a period of food inflation.
The regulations have broader implications as compliance expenses could be passed on to consumers globally. To adapt to these rules and ensure access to crucial EU markets, companies and farmers are making adjustments. Though costly, adherence to the rules ensures customer service. However, the regulations are viewed by some as adding pressure on producers, particularly smaller, less advanced ones, favoring larger and more developed regions with advanced technologies.
The EU’s aim is to combat climate change and biodiversity loss, promoting a level playing field. Deforestation regulations took effect on June 29, allowing suppliers 18 to 24 months to adjust. This timeline poses challenges, given the varying traceability levels in place. Ivory Coast and Ghana, leading cocoa producers, are considering a pricing mechanism to account for additional costs, on top of the existing Living-Income Differential.
The new rules also impact the beef industry, requiring cattle tracking from birthplace, posing challenges for countries like Brazil with complex cattle movements. Argentina’s soybean exporters and Vietnamese coffee producers also anticipate issues. The latter faces difficulties due to small household farms and a lack of precise origin tracing.
While the EU regulations are designed to address critical environmental concerns, they also carry economic implications for agricultural producers worldwide. The pushback highlights the tension between sustainability goals and the practical challenges and costs faced by the agricultural industry.