While the EU regulation on deforestation-free products (EUDR) is an important step towards combatting deforestation globally, it will come at a cost to operators selling products on the EU market. And it may lead them to adopt sourcing strategies that exclude smallholder farmers from their supply chains. However, smallholder farmers’ inclusion in European supply chains is key to ensuring they are not left to sell to other markets at a lower price – thereby jeopardizing their livelihoods and, ultimately, forests. The optimal way forward is to allow them to benefit from access to the European market and to leverage the regulation as an incentive to keep forests intact. The timing for developing effective interventions is limited and should rely on the solutions that have already been tried and tested.
IDH has co-designed with the private sector a number of programs to ensure that the EUDR will not incentivize disengagement from areas with high deforestation risks, nor the exclusion of the most marginalized smallholder farmers from European supply chains. These solutions are designed through public-private collaborative processes, and aim to be replicated and brought to scale over the coming years.
