The EU implementing its new Deforestation Regulation (EUDR) should be a good thing. However, unfortunately, things are rarely as simple and straightforward as they seem when it comes to environmental policy. These matters are complex and nuanced, and sadly, European Union regulators have come down on the wrong side of the fence.

The way the EUDR works is by enforcing a stringent set of rules on products like palm oil, cocoa, coffee, beef, rubber, and wood, in an effort to prevent them from causing deforestation in their supply chains. It is a bold and far-reaching piece of legislation which will demand complex and costly compliance from companies and their supplies.

Under the EUDR, companies will have to invest much more money in investigating the origins of all their ingredients to prove they did not cause deforestation. That will be extremely expensive, and companies are likely to pass those costs onto their ingredient suppliers, who are often poor farmers, or their customers, who are European citizens trying to feed their families.

A product like palm oil is ubiquitous, appearing in around half of household items and food staples found in supermarkets, ranging from toothpaste and makeup to pizza and biscuit bases. There is almost no product group which will be unaffected by these clumsy new rules, which lump new costs onto supply chains without thinking about who will have to pay those costs. A new study from Global Data suggests for palm oil, rubber, and its derivatives, the cost of the EUDR could come to a whopping $1.5 billion.1

These harsh new regulations won’t just hit European shoppers. They will also affect millions of the poorest farmers in the world in places like Malaysia. Even if we accepted that putting these farmers out of business was an acceptable cost for landing a sizeable blow against deforestation, the EU’s Deforestation Regulation would still not make sense. That is because addressing deforestation is not as simple as merely drowning in red tape products you do not like, which is the approach of the European Union.

But as the world economy struggles under the weight of inflation, the Ukraine war, supply chain interruptions, skyrocketing global commodity prices and so much more, attacking some of the poorest farmers in the world so that middle-class shoppers and diners in Europe can feel a bit better about themselves and their impact on the planet seems particularly inappropriate.

Of course, it is unlikely that that factored into the calculations of all those politicians in the European Union who enthusiastically threw their weight behind these new rules in record time. Those who regulate the lives of the EU’s 27 member countries from Brussels and Strasbourg are barely accountable to voters in Europe, let alone farmers in Malaysia. Put simply, they probably would note notice if smallholder farmers in Malaysia go bankrupt.

It is fair to say that is a very high price to pay for some green virtue-signalling. The European Union would do well to remember its place in the world. Europe is not the only continent in the world, nor even the most important. Putting up walls and closing itself off to the outside world is profoundly unhealthy.

Perhaps most damningly of all, the European Union, which professes to stand up for the interests of ordinary European citizens, is almost certainly about to make the cost-of-living crisis worse. Adding a whopping $1.5 billion to European grocery shopping bills, as the new research suggests their policy will do, will hurt the poor hardest, since they are the consumers who spend the largest percentage of their income on food.

Sadly, the EU’s Deforestation Regulation is about to backfire spectacularly. It is due to come into force at the end of this year, on 30th December 2024, so there is still time for the European Union lawmakers behind it to backtrack and make vital changes, or at least delay the implementation of the new rules until they are able to conduct further consultation and offset the negative effects.

If they do not take urgent action to do one of those things, it is poor Europeans struggling with the cost of living crisis, as well as poor farmers in Malaysia, who will suffer.

References

1 Global Data ( 2024)