The European Union’s regulation on deforestation-free products (EUDR) is set to enter into force at the end of 2025, after a one-year delay. Experts say this tool is needed to address deforestation within the bloc’s commodities supply chains, but experts say the EUDR, unless revised, may come with unintended consequences.A shift of deforestation-linked commodities from the EU to nonregulated markets (known as leakage) could undermine the EUDR, while smallholder farmers could be sidelined to more easily meet the regulation’s goals, worsening social problems, risking land use change and even causing harm to ecosystems beyond forests.Experts propose a range of measures to address these problems in advance of EUDR implementation, including direct forest protection, inclusion of other vulnerable ecosystems in the legislation and greater efforts by government and companies to help smallholders adapt to regulatory requirements.
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Set to enter into force Dec. 30, 2025, the European Union’s deforestation-free products regulation (EUDR) aims to halt the bloc’s contribution to global forest loss.
Experts Mongabay spoke to agree the EUDR promises to become a landmark legislative tool for curbing commodities supply chain-related deforestation at the international level. But those analysts also warn of “unintended consequences” built into the law that could imperil the initiative’s objectives and effectiveness and in some cases raise the risk of further deforestation or land use change spreading to other ecosystems.
Once it is implemented, the EUDR requires producers of a wide range of commodities — including cattle, cocoa, coffee, palm oil, rubber, soy and wood — prove their products are not being sourced from land deforested after Dec. 31, 2020.
EUDR implementation was delayed in 2024 when transnational companies and commodity producing nations complained to the EU of being unprepared for the law. That hiatus raised widespread concerns the delay might be used for “watering down” the statute.
But the postponement could also allow time for potential EUDR defects to be addressed. The Rainforest Alliance, for example, which has supported the law from its inception, “definitely saw the unintended consequences from the start,” says Fanny Gauttier, the NGO’s European public affairs lead.
Prime among those unintended consequences, she says, is the possibility of the EUDR accidentally excluding many of the world’s smallholder farmers. Other experts point to the potential “leakage” of commodities once destined for EUDR nations being shipped to unregulated markets. Add to that land use change in ecosystems beyond forests.
A Rainforest Alliance team member during a smallholder farmer training session in Ghana. The organization has backed the EUDR as an important tool in promoting traceability in supply chains, says Fanny Gauttier, but it has also flagged potential negative unintended consequences that need to be addressed. Image by Rainforest Alliance.
The risk of market leakage
According to EU data, the bloc’s consumption of agricultural products contributes roughly 10% to global deforestation, mostly tied to palm oil and soy production. A 2021 report by WWF states that the demand for goods in the EU was responsible for around 16% of tropical deforestation resulting in 203,000 hectares (502,000 acres) of lost forest.
A major concern among experts is that once enforced, some sellers in tropical nations and elsewhere will simply bypass the EU and find new unregulated markets in which to sell their commodities rather than incur the costs for EUDR compliance.
“This is probably the biggest risk, because that would essentially mean that the legislation is not having the desired effect on the ground,” he says.
The degree to which market leakage may be a problem is likely to vary by commodity. The EU’s palm oil market, for example, is relatively small and expected to decline in the future there as the oil’s use as a biofuel winds down. That’s why some experts question if the EUDR will make a significant dent in global palm oil-driven deforestation.
Researchers also note that while EU demand for palm oil is declining, global demand is booming. Indonesia, already a major producer, plans to become a significant source of palm oil for biofuels, as does Brazil.
In a paper published this year, researchers assessed the impact of market leakage on palm oil and soy supply chains. They found that EU restrictions alone are unlikely to drive any major emission reductions from deforestation in both supply chains. “If other countries were to adopt similar restrictions, there could be a larger impact,” says Brinda Yarlagadda, an Earth scientist at the Pacific Northwest National Laboratory and lead author of the paper.
She says she believes the policy itself is not enough to significantly curb global deforestation and that “direct forest protection, stronger financing for conservation and broader partnerships with the folks on the ground could be a more effective approach than this sort of indirect mechanism.”
Another recent paper focused on timber and found that market leakage could ultimately weaken the EUDR’s effectiveness due to trade shifts to other noncompliant markets. Similar studies suggest market leakage will lessen the impact in other supply chains such as cocoa.
Producers “are able to shift trade patterns and essentially circumvent the EUDR to continue to deforest and move those products elsewhere to some degree,” says Craig Johnson, an independent researcher and lead author on the timber paper. “It would require a policy almost at the [commodity] source to really have a much more meaningful impact on deforestation.”
A palm oil plantation in Indonesia. Market leakage — sellers shifting EU-bound commodities to other less regulated markets — could undermine the effectiveness of the EUDR in some supply chains. Image by Ryan Woo/CIFOR via Flickr (CC BY-NC-ND 2.0).
The risk of ecosystem spillover
The EUDR, which exclusively regulates deforestation, could inadvertently increase risk for ecologically sensitive and important non-forest ecosystems, says Matthew Sielski, senior policy adviser of deforestation and trade at The Nature Conservancy. This could happen as commodities producers shift pastures and croplands from EUDR-regulated forestlands to unregulated ecosystems, opening the door to ecosystem spillover.
That’s why, almost from its inception, NGOs and experts lobbied for inclusion of other ecosystems, such as grasslands and wetlands, in the legislation. (Those ecosystems are included in possible future EUDR regulatory updates).
The EUDR’s “greater regulatory oversight on forests could potentially result in [commodities] production moving to other natural ecosystems,” notes Sielski, who cites an example where Brazil’s Amazon Rainforest will be covered by the EUDR, but much of the nation’s Cerrado biome, a vast savanna that stores significant amounts of carbon and has high biodiversity, is not covered by the legislation.
These two biomes already offer a clear example of ecosystem spillover: In recent years, deforestation has trended downward in the Brazilian Amazon, while spiking in the adjacent Cerrado. One reason is a major disparity between land use regulations: Brazil’s 2006 Amazon Soy Moratorium, along with the nation’s 2012 Forest Code (stipulating Amazon landowners conserve up to 80% of their property in native vegetation, while Cerrado landowners need only conserve 20-35%), has led in part to displacement of vast soy plantations and cattle ranches from the Amazon biome to the Cerrado.
In 2024, a group of NGOs called on the European Union to include the Cerrado within the EUDR to prevent spillage.
Agricultural expansion in the Cerrado savannah biome in Bahia state, Brazil. The EUDR could inadvertently cause ecosystem spillover, as beef and soy producers move their operations from the Amazon’s EUDR regulated forests to the Cerrado’s far less regulated grasslands. The Cerrado holds large stores of carbon underground. Leading campaigners are calling for EUDR inclusion of other biomes. Image by NASA Johnson via Flickr (CC BY-NC-ND 2.0).
‘Smallholder blind’
Another sticking point is the risk of smallholder exclusion. Experts worry that the EUDR, by requiring source traceability using GPS plots and proof of land tenure, could result in smallholder farmers unable to meet these requirements being cut from transnational supply chains, devastating their livelihoods and potentially increasing deforestation.
This could especially impact important smallholder-sourced sectors such as cocoa and coffee, particularly if the onus is put on smallholders to plot, map and prove their land ownership.
A farmer spreads cocoa beans for drying in Ghana. The vast majority of cocoa is produced by smallholder farmers. Image courtesy of Rainforest Alliance.
“There are tons of regulatory barriers that will increase [under the EUDR] and farmers will need to have the tools to do that, the support to do that and know-how to do it,” says Janne Bemelmans, a postdoc researcher, at UCLouvain in Belgium.
Government and trade bodies have raised these same issues. Most recently, the Indonesian government flagged “serious concerns” that the EUDR will impose a large administrative burden on smallholders.
“The [EUDR] provisions on smallholders are really scarce,” notes Rainforest Alliance’s Gauttier. Despite some action to increase support to smallholders, she says the legislation is “basically smallholder blind.”
“The EUDR has really pushed companies to work on traceability, to build an understanding where their material comes from,” explains Marieke Leegwater, international program coordinator for palm oil at the Solidaridad Network. “What you see is the operators importing large volumes [of oil organizing] their value chains now in a way that they reduce buying from smallholders because it brings in more complexity.”
What this will ultimately mean for smallholder livelihoods is unknown, but without support, experts say smallholders will struggle to meet compliance. If left out of big corporate supply chains, smallholders may go their own way, increasing likelihood of their shifting to other crops not covered by the EUDR. In some cases, this could increase the risks of deforestation and also child labor.
“It’s the marginalized groups, ethnic minorities and women’s groups, who will face the largest potential exclusion,” says Martin Greijmans, senior program officer at the Regional Community Forestry Training Centre for Asia and the Pacific. He says he believes that in the palm oil, rubber, and coffee supply chains in countries such as Vietnam, Indonesia, Malaysia and Thailand, the impact will fall on smallholders who “cannot demonstrate that they’re legally producing and where they have no clear [land] tenure.” Similar land tenure issues are likely to arise with traditional and Indigenous landholders in Brazil.
Rubber agroforestry in Indonesia. Concerns are that the deforestation definition used by the EUDR could negatively impact farmers practicing agroforestry, leading to their exclusion from EU commodity supply chains, impacting their livelihoods. Image by Tri Saputro/CIFOR via Flickr (CC BY-NC-ND 2.0).
Exacerbating these smallholder concerns is the possibility the EUDR will take an equally blind approach to agroforestry, according to Meine van Noordwijk, distinguished research fellow at World Agroforestry.
He worries that the current EUDR deforestation definition, if implemented, will result in agroforestry systems being labeled as noncompliant or as high-risk areas. That would exclude established smallholder practices that, in some cases, can be more beneficial for crops and local biodiversity.
In a 2025 paper, van Noordwijk and colleagues found that EUDR maps claim there is 12% more forest globally than shown by national data, with some of that forested area under agroforestry production. This data discrepancy could result in “collateral damage” to agroforestry farmers, particularly for commodities including coffee, rubber, and cocoa.
“If you care about where your coffee, cacao, rubber, etc., comes from, you would quickly see that for some commodities, agroforestry is an important part of the production systems that you’re trying to regulate,” he says. The blindness of the EUDR to farms utilizing agroforestry systems could add to the market leakage problem and undermine deforestation risk reduction.
In Ethiopia, for example, large portions of the economically vital coffee crops are produced beneath a forest canopy. But the EUDR’s “deforestation definition may fail to capture the ecological diversity and functional value of Ethiopia’s coffee-based agroforestry system,” says Markos Makiso, a PhD candidate at Wachemo University, Ethiopia. “Even if [the EUDR] has a positive impact or a positive objective, it may also be exacerbating some risks, some inequalities, rather than promoting sustainable development.”
Gauttier agrees that EUDR implications for agroforestry pose “really a key risk. … I think everything lies on how you can ground truth satellite data and how companies are ready to invest in verifying the data they receive,” she adds.
“I think this [smallholder and agroforestry] topic has been off radar for quite some time, and now there is more attention to this, and that’s a good thing,” she says.
Cocoa farmers in Ghana. The EUDR may negatively impact smallholders in the supply chains of transnational companies. More support is needed to ensure farmers can comply with regulations, say experts. Image by Rena Singer/ USAID Land via Flickr (CC BY-NC-SA 2.0)
EUDR: The ‘greening’ of Europe’s supply chains
Whether these many potential problems will be addressed in the final version of the EUDR is unclear. In fact, there are fears that the current political climate could stymie the legislation’s progress, with implementation facing further delays or the law undergoing changes that weaken oversight. This uncertainty also casts doubt on future protective measures, such as extending the EUDR beyond forests to other ecosystems.
However, experts agree that while far from perfect, the EUDR is extraordinary in its potential to reduce the EU’s deforestation footprint. They also say that solutions abound for existing regulatory shortfalls. Gauttier, for example, notes there are ways to ensure smallholders are included once the bill comes into force, with EU regulators continuing to support the development of national traceability systems for smallholders in source countries.
But ultimately, ensuring smallholder inclusion should be prioritized by companies, she adds. “It’s really for companies to do that work to ensure that their suppliers, and in particular their smallholder suppliers, have the support they need to collect the data that can help them remain included in supply chains to the EU.”
Crucially, these tracking and support mechanisms should be reflected in the price paid for commodities, ensuring farmers are paid a fair wage. “The price that is paid to farmers oftentimes doesn’t reflect, or is not commensurate to, the efforts that they have put in place to provide all this data to multiple different systems,” she adds.
Sielski likewise says that if the EU is to prevent deforestation-causing market spillage, it must explore ways to incentivize sustainable agricultural practices.
According to Bemelmans, the EU also needs to work more closely with local governments to help smallholders comply through financial support services and capacity building training.
At risk, Bemelmans adds, is the “greening” of Europe’s supply chains at the expense of smallholders and their livelihoods. It’s especially important the EUDR “support the producers … near the deforestation frontier, as they are the ones that need the most support to have a proper life.”
Forest-agriculture frontier in Brazil. The EUDR aims to reduce deforestation linked to a range of agricultural commodity products in the EU’s supply chain. Experts warn that it could come with multiple unintended consequences. Image by Kate Evans/CIFOR via Flickr (CC BY-NC-ND 2.0).
Banner image: A cocoa pod opened by hand. Exclusion of smallholder farmers from markets, a potential consequence of the EUDR, could result in loss of income leading to environmental harms but also exacerbate existing problems including child labor on cocoa farms. “These risks are known,” says Rainforest Alliance’s Fanny Gauttier. “That’s something that we have highlighted many times.” Image by Rainforest Alliance.
Citations:
Yarlagadda, B., Zhao, X., Iyer, G., Wild, T., Hultman, N., & Lamontagne, J. (2025). Emissions leakage and economic losses may undermine deforestation-linked oil crop import restrictions. Nature Communications, 16(1). doi:10.1038/s41467-025-56693-1
Johnston, C., Guo, J., & Prestemon, J. (2024). The European Union deforestation regulation: Implications for the global forest sector. doi:10.2139/ssrn.5066364
Azevedo, A. A., Rajão, R., Costa, M. A., Stabile, M. C., Macedo, M. N., Dos Reis, T. N., … Pacheco, R. (2017). Limits of Brazil’s forest code as a means to end illegal deforestation. Proceedings of the National Academy of Sciences, 114(29), 7653-7658. doi:10.1073/pnas.1604768114
Van Noordwijk, M., Dewi, S., Minang, P. A., Harrison, R. D., Leimona, B., Ekadinata, A., … Sayer, J. (2025). Beyond imperfect maps: Evidence for EUDR‐compliant agroforestry. People and Nature, 7(7), 1713-1723. doi:10.1002/pan3.70088
Van Noordwijk, M., Leimona, B., & Minang, P. A. (2025). The European deforestation-free trade regulation: Collateral damage to agroforesters? Current Opinion in Environmental Sustainability, 72, 101505. doi:10.1016/j.cosust.2024.101505
Urugo, M. M., Worku, M., Tola, Y. B., & Gemede, H. F. (2025). Ethiopian coffee: Production systems, geographical origin traceability, and European Union deforestation regulation directive compliance. Journal of Agriculture and Food Research, 19, 101695. doi:10.1016/j.jafr.2025.101695
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