How the EUDR can support Brazil’s path to zero deforestation

The European Union Deforestation Regulation (EUDR), effective from June 2023 and set to be enforced from December 2025, aims to ensure that products entering the EU market—such as soy, beef, coffee, cocoa, palm oil, rubber, and wood—are not linked to deforestation after December 31, 2020, regardless of whether the deforestation is legal or illegal in the country of origin. For Brazil, a major exporter of these commodities, the EUDR presents both opportunities and challenges in supporting its goal of achieving zero illegal deforestation by 2030, with potential to move toward zero overall deforestation. Below is an analysis of how the EUDR can support Brazil’s path to zero deforestation, grounded in available evidence and critical examination of the regulation’s implications.

Opportunities for Supporting Brazil’s Zero Deforestation Goals

1. Economic Incentives for Sustainable Practices
   The EUDR shifts market dynamics by prohibiting EU imports of products tied to deforested land, creating economic pressure to adopt deforestation-free supply chains. Since the EU is Brazil’s second-largest trading partner, accounting for 16% of its total trade and over a third of its EUDR-covered commodity exports, this regulation incentivizes Brazilian producers to align with sustainable practices to maintain market access. For example, by requiring geolocation data and traceability, the EUDR encourages transparency in supply chains, which can deter deforestation-driven practices like illegal land acquisition for cattle or soy production. André Lima, Brazil’s Secretary for Controlling Deforestation, notes that this shift in economic incentives can support rural landowners in complying with Brazilian environmental laws, reducing the pressure to deforest legally or illegally.
2. Strengthening Existing Environmental Policies
   Brazil has committed to zero illegal deforestation by 2030 under the fifth phase of its Action Plan for the Prevention and Control of Deforestation in the Amazon (PPCDAM) and is developing similar plans for the Cerrado. The EUDR aligns with these goals by reinforcing the enforcement of Brazil’s Forest Code, which allows limited legal deforestation but requires reforestation or compensation. The regulation’s due diligence requirements can accelerate the implementation of tools like the Rural Environmental Registry (CAR) and national traceability systems, enhancing monitoring and compliance. For instance, Brazil’s technological capabilities, such as georeferenced data on forested and agricultural areas, can assist EU operators in meeting EUDR standards, potentially positioning Brazil as a leader in sustainable commodity production.
3. Encouraging Sustainable Agricultural Intensification
   Over the past 40 years, Brazil has increased agricultural production by 385% while expanding agricultural land by only 32%, thanks to intensive farming techniques and technological innovation. The EUDR’s restrictions on deforestation can further incentivize investment in research, development, and innovation (RDI) to boost productivity on existing agricultural land, reducing the need for forest clearing. This aligns with Brazil’s potential to expand crops on degraded pasturelands or through double-cropping, supporting both economic growth and environmental protection.
4. Support for Local and Indigenous Communities
   The EUDR requires compliance with local laws, including those protecting Indigenous and traditional communities’ rights. In Brazil, where deforestation often involves land grabbing and violence against these communities, the regulation’s emphasis on legal compliance can strengthen protections for vulnerable groups. By promoting traceability, the EUDR can help ensure that commodities are not sourced from illegally cleared lands, supporting Brazil’s efforts to combat such practices and reinforcing the rights of Indigenous peoples and smallholder farmers.
5. Global Market Competitiveness
   Compliance with the EUDR can enhance Brazil’s reputation as a sustainable producer, opening new markets beyond the EU where demand for deforestation-free products is growing. IBAMA president Rodrigo Agostinho highlights that global consumers increasingly demand transparency about the environmental impact of products, and the EUDR’s requirements can help Brazilian agribusiness meet these expectations, ensuring long-term competitiveness.

Challenges and Considerations

1. Tensions with National Sovereignty
   Some Brazilian authorities, particularly in the Ministry of Agriculture and Livestock, view the EUDR as an imposition that infringes on national sovereignty. They argue that it disregards Brazil’s existing efforts to combat illegal deforestation and imposes a one-size-fits-all approach without sufficient consultation. This perception could hinder cooperation unless the EU engages more collaboratively with Brazilian stakeholders.
2. Compliance Costs and Smallholder Burden
   The EUDR’s due diligence requirements, including geolocation and traceability, pose significant costs for producers, particularly smallholders who lack the resources to comply. Without adequate support, such as capacity building or financial assistance, these producers risk being excluded from EU markets, potentially exacerbating social inequalities. Paulo Lima from Solidaridad emphasizes the need for special care to protect smallholders during this transition.
3. Legal vs. Illegal Deforestation Distinction
   Brazil’s Forest Code permits some legal deforestation, which conflicts with the EUDR’s blanket ban on all deforestation post-2020. This discrepancy creates challenges for producers operating legally under Brazilian law but unable to export to the EU. Reconciling these frameworks will require dialogue to ensure that the EUDR supports, rather than undermines, Brazil’s legal frameworks.
4. Limited Scope Excluding the Cerrado
   The EUDR’s definition of “forest” excludes significant portions of the Cerrado savannah, a biodiversity hotspot where 70% of EU soy import-related deforestation occurs. This gap limits the regulation’s impact on Brazil’s overall deforestation rates, as the Cerrado faces significant agricultural pressure. Future reviews of the EUDR, expected within two years of its enforcement, may expand its scope to include “other wooded land” like the Cerrado, but until then, its effectiveness in Brazil is constrained.
5. Risk of Trade Diversion
   If compliance proves too costly, Brazilian producers may redirect exports to markets with less stringent regulations, such as China or Africa. This could undermine the EUDR’s global impact and weaken incentives for deforestation reduction in Brazil. The EU’s Article 30, which promotes cooperation with producer countries, could mitigate this by providing technical and financial support to ease compliance.

How the EUDR Can Be Optimized to Support Brazil

To maximize the EUDR’s support for Brazil’s zero deforestation path, the following actions are critical:

• Enhanced Cooperation via Article 30: The EU should leverage Article 30 to provide funding, technical assistance, and capacity-building programs, particularly for smallholders and local communities. Collaborative initiatives, like the EU’s €70 million “Team Europe” program, can help Brazil strengthen traceability and sustainable land-use practices.
• Alignment with Brazilian Policies: The EU should engage in dialogue to align EUDR requirements with Brazil’s Forest Code and PPCDAM, recognizing legal deforestation allowances while supporting Brazil’s illegal deforestation goals. This could involve accepting Brazilian traceability systems as EUDR-compliant, reducing administrative burdens.
• Support for Smallholders: Programs like payments for ecosystem services or REDD+ (Reducing Emissions from Deforestation and Forest Degradation) can provide economic incentives for smallholders to adopt sustainable practices, ensuring they are not disproportionately impacted.
• Expanding Scope to Include the Cerrado: The EU should prioritize the EUDR’s review to include the Cerrado, addressing a significant gap in its current framework and ensuring comprehensive coverage of Brazil’s deforestation hotspots.
• Clear Guidelines and Verification: The EU must provide clear, accessible guidelines on compliance, addressing uncertainties around deforestation maps, data protection, and supply chain verification. This will reduce anxiety among Brazilian exporters and facilitate smoother implementation.

Conclusion

The EUDR can significantly support Brazil’s path to zero deforestation by creating economic incentives for sustainable practices, strengthening environmental policies, and promoting transparency in supply chains. Its emphasis on traceability and legal compliance aligns with Brazil’s goals of eliminating illegal deforestation by 2030 and can encourage broader shifts toward sustainable agriculture. However, challenges like compliance costs, sovereignty concerns, and the exclusion of the Cerrado require careful management. Through collaborative efforts, financial support, and alignment with Brazil’s existing frameworks, the EUDR can become a powerful tool to accelerate Brazil’s progress toward zero deforestation, benefiting both the environment and the country’s global market position. Critical engagement with Brazilian stakeholders and a nuanced approach to implementation will be essential to ensure the regulation achieves its intended impact without unintended consequences.