New EU rules for deforestation-free products: Great for forests, a double-edged sword for smallholders
The proposed new regulation to curb EU-driven deforestation aims to reduce the EU’s climate and deforestation footprints. However, while large companies with integrated mills may be able to produce deforestation-free commodities with relative ease, low capacity smallholder suppliers in the tropics may find it much more difficult to demonstrate compliance. Big buyers may react by shifting to lower risk regions, or even substitute materials, rather than work with local farmer suppliers in areas of ongoing deforestation. Nature Positive Farming is a simple tool to help companies engage, rather than withdraw, balance conservation and development goals, and achieve the aim of the Regulation without unintended side-effects.
Forests and many other natural ecosystems are disappearing at an alarming rate as more and more land is cleared for agriculture and forestry. According to the Intergovernmental Panel on Climate Change (IPCC) an estimated 11% of anthropogenic greenhouse gas emissions are caused by deforestation for new agriculture and forestry, while the associated negative impacts on biodiversity, human livelihoods, good governance, and rule of law are widely known and recognized.
Many initiatives have been launched to curb deforestation and conversion of natural ecosystems, including company policies and declarations, or multistate and joint company-state agreements. No-deforestation is an integral part of net-zero emission strategies and science-based targets for climate and nature, for companies involved in primary production, and those sourcing from and financing this sector. So far, these initiatives have been largely voluntary and aspirational.
That is now changing – and it’s changing dramatically and fast. The European Union, the world’s largest integrated economic market, is seriously stepping up its efforts to combat deforestation. The European Commission has proposed a regulation that, if adopted, will require all importers of palm oil, soy, wood, cocoa, coffee and beef, as well as derivatives and products made from these commodities, to trace materials to the point of origin with enough precision to demonstrate that the commodity is legally produced and it has not been grown (or raised, in the case of beef) on land deforested after December 2020.
The regulation is likely to be extended to other natural ecosystems and to other commodities driving deforestation (such as rubber), over the next few years. The EU’s proposed regulation is a game-changer as it will shift focus beyond the voluntary no-deforestation commitments of the handful of more visible brands (a reaction to very effective environmental and social campaigning), to fundamentally change the way financial institutions and the governments of producer-supplier countries operate.
However, should importers seek to comply with this regulation by shifting to source the same commodities from regions where forests have already been cleared for production, and from smallholder farmers to large plantations with integrated processing facilities that can afford to comply, the anticipated benefits of preventing deforestation may not materialize. In a worst-case scenario, conversion of forests for commodity production may continue unabated, as exports from deforestation fronts end up being redirected to less discriminative markets.
Smallholders play a critical role in the production of many agricultural and forestry commodities. For instance, smallholders account for 70% of global production of coffee, and 10% of global oil palm production. Yet there is evidence that deforestation attributable to smallholders has been on the increase in recent years. Smallholder producers – especially those at the forest frontiers – are typically faced with a range of challenges, which has prevented their transition to production systems that meet the standard requirements of voluntary certification schemes, which would be the typical route to enter sustainability markets in line with the EU regulation. Engaging with smallholder producers at forest frontiers is vital for curbing deforestation rates while helping secure their livelihoods.
The HCV Network’s Nature Positive Farming (NPF) tool can help to achieve the intent of the regulation – reduce ongoing loss of forests for commodity production – while avoiding unintended consequences if smallholder producers at forest conversion frontiers are unable to meet the regulations. The tool is designed to help companies implement their No Deforestation, No Peat, No Exploitation (NDPE), and High Conservation Value (HCV) protection commitments by supporting smallholder suppliers transition to no-deforestation production, rather than excluding them from their supply base.
NPF is an innovative, early engagement, and participatory tool used to help farmers make short-term decisions on protecting forests and other High Conservation Values in exchange for support. Following verification, their produce can enter deforestation-free supply chains. As a result, the tool may also help importers of commodities to the European Union (and other green markets or jurisdictions) to comply with the proposed regulation and to conform with global social and environmental responsibility norms. Nature Positive Farming may also act as a minimum standard, enabling mixed products certified under mass balance claims to meet EU requirements.
Read more about Nature Positive Farming here.
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