Introduction

From December 2024, the European Union (EU)  will ensure that all products that enter its market come from deforested land. This means that Cameroonian cocoa, soap, or beauty products will have to ensure that they are produced without deforestation. To date, the EU Deforestation Regulation (EU DR) is one of the most ambitious in the world. Furthermore, the new EU deforestation regulation (EUDR) ensures that seven commodity products – soy, beef, palm oil, wood, cocoa, coffee, and rubber – all major drivers of deforestation across the world – will no longer enter EU markets if they are sourced from deforested areas.

The EU Deforestation Regulation in Brief

The EU deforestation regulation states that any product that enters the EU must come from an area that was not deforested in 2020. This means that both small and large producers will have to submit to this new regulation and ensure that their products are in conformity. So far, agriculture production accounts for about 80% of forest conversion. The growing demand for agricultural commodities drives deforestation, reducing efforts to adapt to climate change. The EU alone is responsible for importing products that account for about 13-16% of deforestation associated with global trade or 203,000 hectares of cleared forest and 116 million tonnes of CO2 released into the environment. The new EUDR is crucial in addressing the EU’s deforestation footprint as well as signaling to the private sector and other consumers that deforestation-free supply chains should be the new normal.

The new EUDR regulation will reduce the EU’s deforestation footprint and signal to the private sector and other consumer markets that products stemming from deforestation will not be accepted into the EU. The key to successful implementation of the EUDR lies in Article 30, which states that the EU will cooperate with commodity producers while assisting their compliance with new regulations. While the details for such implementation are still underway, it holds the greatest opportunity for countries like Cameroon whose SMEs may struggle to abide by the new regulation.

The Steps Involved in Trading Under the New EU Deforestation Law

There are several steps involved in trading under the new EUDR. While large firms have the legal and financial capacity to cope with additional bureaucratic procedures, smaller firms may struggle with additional bureaucratic procedures. Proving that materials do not come from deforested land involves some technical knowledge such as leveraging satellite technology to other forms of evidence that are not readily accessible by SMEs. Here are the steps to exporting under the new EUDR.

1. Businesses and producers must collect geolocation data of their production or farming area.
2. Deforestation-free and legal commodities must be kept separately from other goods when they are being exported to the EU. This will increase costs and compliance times for logistics companies.
3. The importer in the EU must perform due diligence before agreeing to purchase a product.
4. Large manufacturers of goods in the EU (eg chocolate manufacturers) must check that due diligence has been performed throughout their value chain.
5. Large retailers must check that due diligence has been exercised upstream in the supply chain before they sell products in the EU.

Implications for Domestic Export Procedures

Domestic export procedures in Cameroon are already lengthy and quite cumbersome. Very few producers export directly but rather use a raft of agencies that charge premium prices for exporting their goods to other countries. Cameroon has a total of 7 steps every producer must go through until their product is exported and this includes costly and time-consuming processes such as obtaining certificates for phytosanitary conformity.

We must recall that commodity producers still face significant barriers, including institutional, economic, and technological challenges when attempting to shift towards these alternative options. So, adopting the additional procedures in the new EUDR will eat into their profits or increase debt for SMEs who don’t have sufficient buffers to adapt to the new costs associated with the EUDR. Furthermore, the EUDR will become law after Cameroon has signed the Economic Partnership Agreement (EPA), which means that EU products will easily meet this legislation even as Cameroonian firms struggle to export to EU markets. Take a new cereal farmer who began farming in 2021 and has over 5 hectares, they will be unable to export to the EU, reducing the potential market for their products.

Implementing this Law Will not be so Easy

Enhancing traceability capacity is one of the most challenging aspects of this regulation. While directives provide some guidance, traders in countries like Cameroon are going to require some upskilling to effectively implement this regulation. Although agricultural commodities can be traced back to the area of production it is not clear that proving the area was not deforested will be an easy task. If local producers are not trained and equipped sufficiently with the skills to implement the EUDR, the environment will benefit at the expense of businesses.

“Enforcing this regulation will be costly and difficult for Cameroonian SMEs as commodity supply chains are often fragmented and involve multiple actors. Furthermore, the traceability requirements may be difficult to meet for farmers who do not have access to basic technological equipment or know-how but supply SMEs with vital inputs like plantain and cassava for flour”.

We must admit that there is an emergence of traceability and monitoring platforms for key commodities like beef, soy or cocoa, bringing together key stakeholders involved in the industry to establish effective traceability regimes. However, Article 30 should be used to improve the capacity of producer countries to comply with this regulation. If not, a significant portion of farmers can be excluded from global value chains regardless of how noble the reason. It is, therefore, important for local partners, governments, and NGOs to support the implementation of the EUDR. At CEPI, we are organizing a series of trainings in 2024 to explain the compliance steps that are involved in the EUDR.

Policy Recommendations

• Rendezvous clauses should be set to ensure that governments are supporting smaller producers.
• Cameroon producers have one more year to implement the EUDR as they must build the capacity to adjust to the new regulation. Failing to give producers more time will increase the cost of trade as they will have to rely on costly exporters.

Conclusion

The new EUDR will reduce deforestation across the world and force producers to adopt sustainable practices. However, producers and exporters have six months to build the capacity necessary to comply with the regulation. While the EU responds to its climate commitments, a renewed focus on the implications of the EUDR is important to protect local consumers. There is no perfect regulation, but the EUDR will reduce deforestation at the expense of small farmers in Cameroon. However, it could force greater parts of the population to acquaint themselves with relevant technologies to seize the opportunities latent in the EUDR.

 AUTHOR

Mrs. Sonia Kouam

Research Fellow, CEPI

Civil Administrator – Supreme State Audit (CONSUPE)

See the publication on “www.cameroonbusinesstoday.cm”  here; Article

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