Soy traders are set to face a barrage of additional regulatory burdens as the EU considers expanding the scope of its new anti-deforestation laws.
Under the EU’s incoming regulation, businesses trading commodities including soy, palm oil and paper in the bloc will have to prove their supply chains are not linked to the illegal conversion of forests.
However, the EU is now considering the inclusion of savannahs, grasslands and wetlands.
New Trase analysis showed extending the scope of the rules would have “particularly big implications” for companies such as Bunge and Cargill, which currently source the majority of their soy exports from the Brazilian Cerrado and Pampas.
“Both are major exporters of soy to the EU and the companies most exposed to deforestation and conversion from this trade with the bloc,” researchers found.
The EU approved the historic deforestation-free law earlier this year. Legislators will decide whether to broaden its scope to ‘other wooden lands’ in its 2024 review, with grasslands and wetlands up for consideration in 2025.
However, trade experts warned it was “crucial that the EU applies a common cut-off date to all types of conversion to avoid incentivising rapid expansion into other vulnerable ecosystems while their potential inclusion is reviewed”.
While the UK is yet to roll out similar legislation, moves towards deforestation-free supply chains in the EU will also affect businesses trading in or with the UK.
The Grocer has recently reported that loo roll shortages could be on the horizon as tissue makers are “unprepared” for the coming regulations.