Last November, the European Parliament approved a proposal from the European Council to delay the implementation of the EU Deforestation Regulation (EUDR) by one year.
This extension shifts the compliance deadline for large operators and traders to 30 December, 2025, while small and micro enterprises are granted additional time, with their compliance deadline set for 30 June, 2026.
The EUDR has far-reaching implications for the supply chains of affected industries, particularly for the European compound feed sector, which is indirectly impacted.
What is EUDR?
On 29 June, 2023, the European Union introduced a landmark regulation aimed at combatting deforestation and forest degradation linked to the global trade in commodities such as soy, palm oil, cocoa, rubber, and others.
The EUDR has clear and ambitious objectives to ensure that the commodities consumed within the EU no longer contribute to deforestation or forest degradation, to reduce carbon emissions by at least 32 million metric tonnes annually, and to address deforestation caused by agricultural expansion for the production of key commodities.
It was initially scheduled to become applicable on 30 December 2024. However, the EU Parliament and the Council have recently agreed to the Commission’s proposal to delay its application by one year to give companies and authorities more time to better prepare for its implementation.
How is the feed sector impacted?
For many industries, including the compound feed sector, the EUDR introduces new regulatory complexities and operational challenges. While the feed sector is primarily impacted in an indirect manner—especially regarding the sourcing of raw materials like soybeans and palm oil—the regulation still imposes significant compliance burdens for companies involved in trading or reselling these commodities, as per The European Feed Manufacturers’ Federation (FEFAC).
One of the most pressing concerns within the sector is the availability of EUDR-compliant soybeans and soybean meal. As the regulation takes effect in 2025, there is a clear worry that market coverage for such materials will not be sufficient, which could lead to disruptions in supply chains.
“The main concern lies with soybeans and soybean meal, where the lack of sufficient market coverage of “EUDR compliant material” as of 1 January 2025 has been a key concern and a reason for postponement. In terms of economic impacts, our key suppliers indicate the need to recover extra costs linked to aggregating EUDR-compliant products via an additional EUDR market premium”, says a Spikesperson from FEDIAF to Milling and Grain.
Suppliers will need to recover the extra costs including adjustments to logistical systems and risk management processes. Furthermore, companies will face an increased administrative burden due to the requirement to submit due diligence statements to the EU’s central IT system, ensuring that their products are fully traceable and compliant.
The EUDR includes severe financial penalties for non-compliance, with fines that could amount to up to 4% of a company’s annual turnover.
In the lead-up to the EUDR’s implementation, FEFAC has worked closely with industry partners to assess the risks associated with potential supply chain disruptions. FEFAC has highlighted the importance of receiving timely guidance from the European Commission to avoid unnecessary delays and uncertainties. The organization has also worked with key partners to develop best practices for companies navigating the new regulatory landscape, particularly for sectors dealing with soy and palm products – which are available on their website.
Industry reactions..
The regulation is pushing the development of new traceability systems that may be specific to individual companies, creating a divergence from traditional models such as mass balance or segregation, according to FEDIAF. This is a significant shift for many companies that have become accustomed to sourcing products like soy based on their quality rather than the specific origin of the product.
The EUDR’s emphasis on creating EU-specific supply chains raises concerns over the additional costs that will come with such changes. Industry stakeholders are particularly concerned about the feasibility of establishing compliant supply chains for by-products like palm kernel expeller and palm fatty acid distillates. These products, due to their relatively low economic value, pose a challenge when it comes to ensuring compliance, creating additional strain on industries already facing tight margins.
…and recommendations
FEFAC has been clear in its guidance that while certification can be a useful tool for conducting risk assessments, it is not a guaranteed pathway to compliance. Instead, the focus should be on ensuring that all steps in the supply chain meet the necessary legal and environmental standards, particularly concerning the legality of production in source countries. FEFAC’s 2023 update to its Soy Sourcing Guidelines underscores the importance of sourcing “conversion-free soy,” which goes beyond simple forest protection to prevent land-use changes that contribute to deforestation.
From a broader perspective, the EUDR also brings attention to the risks associated with the EU’s heavy reliance on imported soybeans, which currently meet less than 10% of the region’s total demand. As a result, FEFAC has suggested that alternative feed options, particularly more circular feed solutions, should be promoted as part of the EU’s broader protein strategy. This would not only support sustainability goals but also help mitigate the risks associated with overdependence on imports from countries where deforestation is a serious concern.
While the EUDR is expected to come into force by December 2025, there is an evolving political landscape in the EU that may affect the timeline. Recent developments suggest a more supportive environment for addressing the concerns surrounding the regulation’s implementation. However, much of the focus now lies on clarifying some of the fundamental constraints within the regulation, particularly regarding sector-specific guidance. Businesses in the feed sector, above all, require legal certainty to navigate these complex regulations without incurring significant disruption.
