14 May 2024
by James McCulloch

UK Forest Risk Commodity Regulation (UKFRC) and EU Deforestation Regulation (EUDR): Frequently Asked Questions

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Find the answers to frequently asked questions on businesses being required to comply with forthcoming deforestation, or "due diligence", regulations in the UK and EU.

The UK Government is bringing forward its Forest Risk Commodity Regulation (UKFRC), while the EU Deforestation Regulation (EUDR) has already been introduced.

Both sets of regulations seek to minimise deforestation or forest degradation worldwide.

Full details of, and accompanying guidance documents for, both sets of regulations are not yet available.

The Agricultural Industries Confederation (AIC) - the UK trade association for agricultural supply businesses including animal feed manufacturers and crop commodity merchants - has collated the following commonly asked questions and answers to help provide some clarity and guidance on the issues that its Members and other industry stakeholders are raising.

This resource will be routinely updated as more information becomes available.

For further information on both sets of regulations, AIC Members can view a webinar held in February 2024 by clicking below.


UK Forest Risk Commodity Regulation (UKFRC)

What is the UKFRC and why is it needed?

In 2021, the Department for Environment, Food and Rural Affairs (Defra) announced that provisions under the Environment Act would introduce a due diligence requirement on certain forest risk commodities.

This would prohibit larger companies from using agricultural commodities that have not been produced in line with local laws in the countries where they originate. This followed two government consultations in both 2020 and 2021.

After a pause in implementing the legislation, Defra has now signaled its intent to do this before the next UK General Election.

What products will be in scope?

Defra has confirmed that the following products will be in scope:

  • Non-dairy cattle products (beef and leather)
  • Cocoa
  • Palm
  • Soya

Dairy products will be separately in scope where they are derived from animals fed on a diet that contains a forest risk commodity, such as soya or palm kernal expeller.

Are products derivatives, by-products and co-products of these commodities in scope?

Raw or primary forest risk commodities and all products derived from these commodities will be regulated. This includes products that may currently be considered as "waste products" or "by-products":

  • Soy hulls
  • Palm Kernel Expeller
  • Hides from a bovine animal

Which businesses will be in scope of UKFRC regulation?

Organisations using these commodities in UK supply chains with a global turnover of over £50 million are in scope of the UKFRC regulation.

Organisations whose use of the regulated commodities does not exceed the annual volume threshold of 500 tonnes may submit an exemption.

How is AIC working with the authorities to ensure that the concerns of its Members are being addressed?

AIC has had regular contact with the Defra teams which are working on this UKFRC regulation.

Engagement to date has included AIC participating in workshops and feeding in to consultation exercises, as well as holding constructive one-to-one meetings with policymakers.

Defra has indicated that there will be the need for continued engagement with industry representatives to help with drafting the guidance which will accompany the legislation.

When will the secondary legislation for UKFRC be laid?

The laying date for the UKFRC Statutory Instrument was expected to be by the end of April 2024, with government ministers saying that the regulation is "imminent" when answering recent questions in Parliament.

After the secondary legislation is laid, how long will it take for the regulation to come into force - and will there be a transition period?

Defra has suggested a three-month period for the regulation to come into force, which AIC feels is ambitious.

Defra has indicated a transition period of "at least" six months, although this could be longer.

Given this, the earliest effective date for the implementation of the UKFRC regulation would be February 2025.

Will Defra provide guidance on how businesses can demonstrate compliance with UKFRC?

Defra has committed to providing comprehensive guidance on the type and scope of evidence that businesses in scope will be expected to provide in its annual compliance reports.

It is not yet clear whether this guidance will be published at the same time that the secondary legislation is laid.

Will UKFRC effectively mean a ban on certain imports?

The UKFRC regulation is not a ban on importing forest risk commodities in scope.

It will require businesses in scope to submit an annual compliance report that products in scope - soya, palm and their derivatives (e.g. co-products) - have been produced in accordance with local laws.

Given this, AIC does not see any immediate impact on availability of certain commodities as a result of the implementation of UKFRC.

Which competent authority has been appointed to implement UKFRC?

AIC understands that a competent authority has been appointed by Defra to implement the regulation, but there has been no confirmation of which agency this is.

Does the scope of UKFRC include co-products and derivatives of the commodities listed?

Yes, co-products - such as palm kernel expeller, palm fatty acid distillate (PFAD), soya hulls etc - are all in scope.

Given that the UKFRC brings embedded commodities into scope, how will food companies demonstrate compliance?

Food and drink manufacturers and their trade bodies have expressed concerns over requirements to report on all embedded goods (e.g. poultry fed on soymeal or processed products), notably on imported products.

Will businesses in Northern Ireland need to comply with UKFRC, EUDR or both?

As drafted, businesses based in Northern Ireland will have to comply with both UK and EU legislation.

AIC is aware that the UK Government and the EU Commission are still discussing the details of implementation.

Might the UK Government consider aligning UKFRC with EUDR?

Despite requests from some parts of the UK supply chain, Defra has reaffirmed that it will not seek to align UKFRC with EU Deforestation Regulation

What are the key differences in the scope of UKFRC and EUDR?

The table below succinctly sets out the key differences in scope between UKFRC and EUDR.

 
Illegal deforestation
Legal deforestation
Illegal conversion
Legal conversion
 Direct  
 Embedded  
Assurance mechanism
Cut-off date
Geo-location data
Entry into force
EUDR  
X X X   X   X X X 2025
UKFRC  
X   X   X X X     TBC

What steps do agri-supply businesses need to take to comply with the UKFRC?

Agri-supply businesses in scope will be required perform due diligence to make a judgement on forest-risk commodity sourcing and the integrity of their supply chain.

They will need to map their supply chain and assess the risk of illegality, creating a risk management plan. This plan will need to be actioned in order to mitigate identified risks to a level as low as reasonably practicable.

Businesses will need to submit an annual report on this due diligence activity. Defra have stated that information that must be included will be detailed in published guidance.

Is AIC working on an assurance scheme or standard in this area to support the industry?

AIC is planning to develop a voluntary standard requiring Participants to demonstrate to auditors that the commodities they "use" have been produced on land that is legally occupied or used.

The standard could be used for a range of in-scope commodities, such as soyabean meal, palm oil and derived products.

The standard would be of value to AIC Members to help them demonstrate compliance with UK FRC regulation.

EU Deforestation Regulation (EUDR)

The EUDR information hub is available on the FEFAC website.

What is the EUDR and why is it needed?

Under the EU Deforestation Regulation (EUDR), any operator or trader who places commodities - such as soya, beef, palm oil, wood, cocoa, coffee, rubber - on the EU market, or exports from it, must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation.

Relevant goods must also be covered by a due diligence statement and be produced in accordance with applicable local laws.

When was the EUDR introduced?

EUDR was introduced in June 2023. As of 30 December 2024, the key articles of the EUDR will apply, leaving a short adaptation and preparation period. 

The regulation (2023/1115) can be found on the European Commission website.

What steps do agri-supply businesses need to take to comply with the EUDR?

Prior to placing relevant commodities on the EU market, agri-supply businesses must carry out mandatory due diligence to ensure these products are deforestation-free and legally produced (based on a cut-off date of 31 December 2020).

Critically, companies must provide geo-location co-ordinates for commodities providing traceability and evidence that they have not been produced on recently deforested land. 

How is AIC working with its European partners and authorities to ensure that Member concerns are being addressed?

AIC is an active member of the European feed industry federation FEFAC, and is engaged with a number of FEFAC group working on EUDR.

FEFAC has joined forces with the European association of trade in cereals, oilseeds, rice, pulses, olive oil, oils and fats, animal feed and agrisupply - COCERAL - and FEDIOL, the European vegetable oil and proteinmeal industry association, to represent the combined interests of the agri-supply sector with the various EU decision making bodies.

It has been reported that EUDR has been the subject of some recent challenges from ministers of a number of EU member states. What is the current state of play?

At the Commission AGRIFISH Council meeting held on 26 March 2024, the Austrian delegation presented a paper.

This identified a conflict of interest between EUDR and the promotion of extensive farming practices in the EU, an increase in the administrative burden in developing a new system for the traceability of cattle, and a lack of confidence in the information system the EU is building to manage the geolocation data.

To address these points, the Austrian paper called for: 

  • An extension of the implementation period; 
  • A reduction of the administrative burden; 
  • A general exemption for producers of relevant commodities in low-risk countries; 
  • In general: reduce the number of certificates in the EU.

Out of 27 EU member states, 20 agricultural ministers supported the Austrian position and requested the Commission look at how to mitigate the undesired effects of EUDR.

At the beginning of May, EU Farm Commissioner Wojciechowski wrote to European Commission President Ursula von der Leyen on EUDR implementation challenges, calling for deferral of date of entry of the EUDR.

To date, there has been no official response from the Commission who continue to state that the full implementation date will remain at 1 January 2025. 

When might there be greater clarity from the EU Commission on how the regulation will be implemented?

The EU Commission has committed to the publication of an updated question and answer document by June 2024, which is expected to include information on the legality framework.

Further guidance documents may not be available until later in 2024.

What are feed industry representative organisations doing to try and alleviate concerns about potential impacts on the soyabean meal market?

There is concern that the lack of clarity over EUDR is affecting the market for soyabean meal, particularly for contracts from January 2025 onwards, and it is true that for EUDR, many uncertainties remain.

European trade association FEFAC, of which AIC is a member, has written to David Clarinval, EU farm minister, expressing concern at the impact of EUDR uncertainty on feed security.

FEFAC calls on the EU Council to focus on delivery of a functional IT system as a matter of urgency and to consider phasing in traceability requirements over a period of time.

FEFAC also recommends making use of existing traceability tools, such as the FEFAC Soy Sourcing Guidelines, as part of this transition.

Visit the FEFAC website for more detail.

What action does AIC recommend feed compounding Member businesses take to manage these uncertainties?

There is no doubt that whilst EUDR will not be implemented in Great Britain (it will apply in Northern Ireland), similar impacts to those seen in EU will be seen in UK.

AIC would recommend feed compounders remain in regular contact with their soya suppliers. AIC will provide further clarity on EUDR as soon as this becomes available.

Author

James McCulloch

James McCulloch

Head of Animal Feed, AIC

Email:
[email protected]
Phone:
01733 385253

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