Deforestation Regulation Updates: What Agri-Supply Chains Need To Know
In this episode of The AIC Podcast, AIC Head of Policy and External Affairs Ed Barker and AIC Head of Animal Feed James McCulloch discuss the latest developments in UK and EU deforestation policy and what they mean for agricultural supply chains.
We cover:
- The latest updates to the European Union Deforestation Regulation (EUDR) and what businesses should know ahead of implementation.
- What EUDR means for Northern Ireland, including regulatory oversight, supply chain challenges and the practical implications for importers and feed businesses.
- The UK Government's plans for a Great Britain Forest Risk Commodity (GBFRC) regime and how it could differ from, or align with, EUDR requirements.
- Key questions around compliance, due diligence, imports, enforcement, competitiveness and the treatment of products linked to forest-risk commodities.
- How AIC is working with government, Northern Ireland authorities and industry partners to help shape policy and support Members as further details emerge.
This episode is ideal for feed businesses, commodity traders, importers, merchants, processors and others involved in agricultural supply chains who want to understand the latest regulatory developments on deforestation, trade and supply chain compliance.
This episode is ideal for feed material producers, processors, importers, storage operators, and businesses involved in the feed and wider agricultural supply chains who need clear, practical guidance on assurance, compliance, and feed safety.
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Transcript
Wendy Welcome to the AIC podcast, where we share practical guidance and insight for Members and help the industry understand how the agri food supply chain works. I'm Wendy Ford, I'm the AIC Communications manager, and today I'm joined by Ed Barker, AIC Head of Policy and External Affairs, and James McCulloch, AIC Head of Feed. We recently covered EUDR on the podcast before, but there have been a number of developments recently. James, can you start by explaining what's changed since we last spoke?
James Commission produced their simplification package in May June time. and I guess the immediate thing to say is there were not that many direct implications of that for, certainly for the, UK feed sector, there were some amendments made to the annex, of relevant products, mainly around palm derivatives, but nothing specific that we use in feed. And there were some amends to, the responsibilities of downstream operators sort of simplifying, their requirements to comply with the regulation and then some quite useful ideas around, demonstrating what legislation you would have to comply with in terms of country of origin legislation, to demonstrate that the commodities had been legally produced. So I think that was about it, wasn't it, you know.
Ed Yeah. I don't think we're expecting anything different, really. Obviously we've been talking to a number of people in Europe from FEFAC and politically it looks like is very much coming in on the first of January. You know, it's a question we get asked the most, is it still going ahead and all the signs suggest that really is going forwards now. I mean, where are we mid mid-July? Obviously it has been delayed twice already, but to do it for a third time I think would be a big political climb down, to admit that it's not ready for a third year in a row, but that pressure will come. There's no doubt about it, but I think we do have to be realistic about the fact that this is more likely than in previous iterations, which is why it's so relevant now for us, for Northern Ireland as well.
Wendy So one thing we've talked about before is whether the scope of the regulation could evolve over time. James, you mentioned compound feed isn't currently included. Should businesses see that as settled, or is there a chance the scope could widen in the future?
James Yeah, I think the only sort of, feed related comment I'd make just to sort of helps understand maybe where the commission might go in the future as far as the annex is concerned, is that they had considered including compound feed within the annex, and chose not to. I mean the sort of methodology they use to determine whether to include things or not, frankly, was a pretty spurious, but nonetheless, they have not included compound feed in the annex, but in the working document, it says, for the time being. So it suggests that they may. Well, look, I think there's a revision clause for the annex or for the whole regulation in a sort of a two years down the line, in which case I'm guessing we might expect to see some further amendment to the annex when the regulation is reviewed and the revision clause is taken advantage of really.
Wendy Let's look closer to home. What do Members in Northern Ireland need to know following the government's announcement?
James So yeah. I mean the UK government made an announcement in June on their approach to deforestation across the UK. So there's two elements to that. I mean, the first thing I guess is that they've confirmed that EUDR will be implemented in Northern Ireland. And clearly we're anticipating that that implementation date will be the first of January twenty twenty seven. And they indicated that the competent authority for, certainly the feed, components or commodities in scope, would be the Department for agriculture, Environment and Rural Affairs (DAERA), so that was a useful clarification, as to their intentions as far as EUDR in Northern Ireland is concerned.
Ed Yeah. I suppose looking ahead now is this is going to come under the microscope a lot more in terms of the supply chain. We're going to have inevitably lots of questions from not just members but also the whole sector businesses. you know, we forget that EUDR is more than just soya and palm. Obviously, we're PKE because we focus on it from a feed perspective, but it's timber, it's cocoa, it's coffee, it's a lot of products in scope. And so all of those businesses relevant in the supply chain are going to have to start thinking about this. And I'm a bit worried that authorities in both the UK and Northern Ireland aren't prepared for the volume of questions and correspondence they're going to get coming their way because supply chains are very technical. The requirements are very exacting, and so I think on us and the industry, it's going to be really important that we start thinking through all those potential questions and that inevitably, when those questions come, that there's a way in which authorities can be nimble and provide answers pretty quickly, but, yeah, to we really haven't left ourselves a lot of time to be able to resolve that. Really?
Wendy Yeah, I think that highlights just how many moving parts there are in this process. James, can you give us a couple of real world examples of where businesses are already identifying practical complications?
James Yeah, I think that late announcement and therefore the imminent implementation in, under six months time is probably the major concern for Members in Northern Ireland in terms of preparation, access to the IT system, obviously engagement with the competent authorities. I mean, there are certain issues which are sort of idiosyncratic to Northern Ireland trade for instance, it's quite common for vessels to arrive off the coast of Ireland and partially discharge in Dublin and then carry on up to Belfast or Carlingford or wherever it might be and then discharge the rest of the cargo. So EU compliance of that cargo clearly will be managed by two different competent authorities, one in the south, one in the north, which creates a complication. The other one, which is interesting is that mixed consignments of products. So for instance, soybean meal and soy hulls might be loaded onto the same vessel, and soybean meal is within the scope of EUDR, whereas the soy hulls are not. So again, that adds another sort of complexity of to how to manage. I mean, e ud r is applied at the point of import. So, you know, the challenge there is if there are any concerns or requirements or question marks around soybean meal, then does that hold up the supply of hulls as well? So there's, quite a number of things that certainly our members and NIGTA have already laid at the door of their competent authority, say we need answers to these things pretty quickly.
Ed Yeah, we shouldn't forget as well that as far as we're aware, Northern Ireland is the only place that has a mandate to implement EU deforestation regulations that isn't an EU member state. And as a result of that, it's in a very unique position with regards to having that guidance in place, because it's going to be reliant on the commission for a lot of areas in terms of, implementing and effectively translating all those requirements into a domestic legislative proposal, and we shouldn't forget that, not least because of the way in which it will inevitably influence whatever comes in for the rest of the UK in future.
Wendy Alongside Northern Ireland implementation. The UK government has also set out its intentions for a future Great Britain deforestation regime. What's the relationship between EUDR and Northern Ireland and the proposed GB Forest Risk Commodities Regulation, also known as GB FRC, which is another acronym to add to the world of acronyms.
James Yeah.
James G... g b f r c which is I think what they're going to are going to call it. So GB forest risk commodities regulations. I mean the announcement that was made around EUDR in Northern Ireland was made at the same time as the intentions for bringing forward a deforestation regulation in GB, which we know was first sort of muted and remains pegged within the Environment Act of twenty twenty one. And I think our view is that the necessity to make an announcement on EU D R basically brought into sharp focus the fact that an announcement on GB would have to be considering how best to minimise the divergence of a GB F R C, and EU DR applicable in Northern Ireland, but without having to reopen the Environment Act. I mean, that's I think how we're reading it isn't it?
Ed Yes. effectively because we have to break down a few things. the Environment Act in the UK outlines provisions for bringing in a UK policy on deforestation or what they call forest risk commodities. And it is quite specific in some of the things that it can and cannot do since the Environment Act was published, we had EUDR that was brought in Europe. And that is different in how it applies. So the challenge for Defra and policy makers will be how to implement something that's still within the scope framework, of the Environment Act. And that's not an easy thing to do because it doesn't make allowances. For example, it talks about legality. It doesn't talk about deforestation at all in the Environment Act. It's also very clear that it's a due diligence process on business. In other words, business is undertaking a due diligence type assessment. There's nothing in it about at point of import controls checks. And I think that's going to be a fundamental difference that we'll see in the difference between the two. So it's going to be interesting if I can call it that. As to how Defra are going to connect if you like EU D R with the UK legislation, it's almost like two gauge systems that aren't quite the same, and I think there's a role probably for us as AIC to help think, you know, practically about how we can see that brought in, but we're pretty sure looking at things it will, we can't have an imports control system. The other consideration behind all of this, of course, is resource. We've heard, from our partner equivalent organisations in Germany and France that quite a considerable amount of money has had to have been found in order to develop an authorisation, a competent authority, an IT system to enable the EU D R to happen. So that is a consideration as to actually how much appetite there is within Defra and within cabinet to spend on this.
James Yeah, I think I mean, certainly the feedback we've had to date from from Defra and a sort of a public webinar that they held on it and a sort of Q&A session is confirming what you've just said. I think, they're not anticipating any import control. It's basically relying on a due diligence report submitted by businesses and, you know, sort of in arrears. In other words, you know, a year down the line, they are anticipating that that due diligence report for first places on the market. So in other words, those that are bringing those commodities into GB for the first time, will require evidence which is similar to or the same as evidence that might be required under EUDR. So in other words, geolocation, data, evidence of legality, etc., etc. what's not entirely clear at the moment is what the requirement will be for so-called downstream operators, because that's one of the major simplifications in EUDR and that the requirements for downstream operators, i.e. compound feed manufacturers, farmers and others, are much reduced in that may not have to, submit due diligence statements, but may have to hold evidence, of, compliance from your supplier. So in other words, if you're a feed compounder and you're buying your soya or your palm from an importer. Then there will be a requirement for you to hold information from that supplier that the material is compliant. but the question is to what you may have to submit or whether you have to register as an operator. that remains, I guess unclear, and I think will certainly, be part of the consultation process that, Defra anticipate, later on in the sort of summer / autumn on the GB FRC proposals.
Wendy Let's talk embedded commodities. If the scope for GB FRC is effectively going to be the same as EUDR, does that mean embedded commodities are in or not? And what does this mean for imports of products that are fed on soya?
James So the proposal, to sort of more closely align GBFRC with EUDR, extends to the scope of commodities. So in other words, we know that EUDR is operating with a positive list in the annex of relevant commodities and products derived from those commodities. So it looks likely that, the UK government's going to do the same thing, which raises the question Around the inclusion of embedded commodities in imported foods. So pork, poultry, eggs, etc., because they are not included within the scope of EUDR. So the question remains, and again, I'm anticipating some opportunity to respond to this as far as consultation is concerned, is how imports of prawns or poultry from Thailand might be managed, given that under the regulations, they would not need to have been fed feed that would be effectively, demonstrably deforestation free. I think that's the question and B then the implications for competitiveness of UK livestock farmers really.
Ed It's a question that we get a lot from farmers, consumer groups, NGOs and others is about what does this mean? Not just for the direct import of the commodity, but like you say, the imports of pork, poultry, dairy, any sort of other products that are themselves consuming these products, and don't have to comply with an EU Deforestation requirements. And had we been sort of going ahead under what we'd been expecting under the UK proposals. This was actively something government really did look at, you know, it was something they wanted to look at through the whole supply chain to report on. So that would have been, taken account of. But now that we look to be adopting more of an EU approach, this now in the UK could well completely fall off the radar completely. And I think that is a risk. I think far, particularly when we're looking at competitiveness, particularly in livestock, from a number of different areas. This is one of them. And from farming representative groups I am sure will be saying we'll be pointing this out and saying it's a real potential competitiveness loss, and ultimately could be one of those things that we just outsource production to other countries that don't have this requirement in place. and we've seen it before and it would be a pretty big mistake if it was allowed to happen again.
James Yeah. And I think it is fair to say, a general expectation that if commodities are needing to comply with deforestation regulation, then it is expected that they will be traded at a premium. So that that again is the point.
Wendy We've definitely covered a lot of ground today. And there are certainly a lot of unanswered questions. But listeners will naturally want to know kind of, you know, what happens next. What are AIC's immediate priorities over the coming months?
James I think our immediate priority to which we've already done is to. Request a face to face meeting with Defra to better understand their, announcements and the detail of what they've announced, clearly their announcement is perhaps created more questions than answers. And also to understand their intentions as far as consultation, a in terms of timing and B, the scope of the consultation, because that's going to be very, very important, I think, from Northern Ireland member standpoint, engaging with, with NIGTA and with, DAERA is vital and probably we need to be also having discussions with Department of Agriculture, Food and the Marine (DAFM) in Southern Ireland because as we've just indicated, the sort of, there's a whole Ireland trade of these commodities. and, you know, existing, and so some coordination between those competent authorities is going to be required. And then more close to home, you know, in terms of Members, clearly there'll be briefings, there'll be, I guess we'll do more webinars once more detail becomes known, and clearly as Members do, they can pick up the phone and ask us questions. We'll do our best to, we'll do our best to answer them.
Wendy I think we'll leave it there for today. There's still a lot we don't know, but hopefully this has helped explain what's changing, what isn't, and what Members should be watching out for over the months ahead. So thank you, James and Ed, for your time today and for sharing your expertise.
Wendy Members can find further updates, guidance, and resources on the AIC website and through our Member communications. Thank you for listening, and we'll be back with another episode soon. If you found this useful, please share it with a colleague and check the show notes for links and definitions. And again, thank you for joining us.
Wendy Views and opinions expressed in this podcast are those of the hosts and guests and do not necessarily reflect any organization they represent. This content is for informational purposes only and should not be considered professional advice. Listener discretion is advised. Thank you.
Author
Wendy Ford
Wendy Ford is Communications Manager at AIC, creating and overseeing the content published on AIC's website, emails, Member briefings, print publications, and social media.
