The regulation could disproportionately affect the poor and the vulnerable, new research cautions, urging more financial and technical support to mitigate the challenges ahead.
© Shutterstock/Yaroslav Astakhov | An African smallholder farmer dries coffee beans.
The European Union Regulation on Deforestation-free Products (EUDR), currently undergoing a 12-month phasing-in period, is set to apply to most traders starting the end of 2025.
In a new report, UN Trade and Development (UNCTAD) explores the regulation’s potential impact on six commodity-dependent African countries, the compliance challenges they face, and what needs to happen next to foster resilient and inclusive growth.
The Common Fund for Commodities provided financial assistance to support the research and analysis.
The report comes ahead of the Third UN Conference on Landlocked Developing Countries (LLDCs) taking place in Turkmenistan, which is part of broader global push to unlock the potential of these economies for a more equitable and prosperous future.
But first, what is EUDR and why does it matter?
The EUDR, adopted in 2023, seeks to curb deforestation associated with the production and consumption of seven agricultural commodities, namely cattle, coffee, cocoa, oil palm, soya, rubber and wood.
The regulation will apply by 30 December 2025 to medium- and large-sized operators and traders, and to small and micro businesses beginning 30 June 2026.
By then, traders must put in place a due diligence process, notably including detailed traceability information, to ensure that the concerned commodities and related products are legally produced and not at the cost of recent deforestation.
Failure to comply with the regulation could lead to penalties such as fines, product confiscation or restricted access to the EU market.
The stakes are high for some African economies
Agricultural commodity exports remain central to Africa’s trade landscape, generating over $92 billion for the continent in 2023. More than a quarter ($26.2 billion) of that revenue came from the European Union, a leading destination for such exports.
In 2023, coffee alone accounted for 45% of Ethiopian merchandise exports to the EU, and a more striking 64% for those of Uganda. In both LLDCs, coffee as a key cash crop – now among the commodities targeted by EUDR – support the livelihoods of millions, most of them smallholder farmers.
For landlocked Central African Republic, EUDR-affected share of exports could amount to 35.6%, with the wood sector – the country’s largest employer and top economic contributor – bearing the brunt.
The joint report also notes EUDR implications for other African economies heavily reliant on a limited number of agricultural commodities, pointing to rubber exports from Liberia, cocoa and palm oil from Sierra Leone and Liberia, and soya from Togo.
It flags rising concerns over non-tariff measures such as EUDR, along with existing international standards and growing protectionist tariff measures, which could dampen growth across vulnerable and structurally weak economies, including LLDCs.
Barriers to compliance loom large
While the new regulation signals a key step to making EU supply chains more sustainable and deforestation-free, its implementation can be an added strain on vulnerable economies, especially smaller producers lacking the necessary means, institutional and technical capacity, as well as financial and human resources to comply.
Ethiopia, for instance, will likely incur significant costs in areas like farmers’ certification, administration and reporting, as well as building the traceability systems and geolocation infrastructure needed for EUDR compliance.
In Uganda, traceability requirements could pose a major challenge to the country’s fragmented coffee supply chains – highly informal in nature and sprawling along 1.8 million smallholder farming households. Currently, traceable coffee is only possible with an estimated 10% of Ugandan producers.
“The EUDR is a necessary move in the right direction, in light of rapid biodiversity loss and extensive environmental degradation,” says Paul Akiwumi, director for Africa, least developed countries and special programmes at UN Trade and Development.
“But for vulnerable economies, the confluence of weak productive capacities, overdependence on low value-added commodities and changing global regulations could jeopardize their trade and development prospects — if proper support measures and technical assistance are not in place.”
Mitigation measures and policy recommendations
As EUDR implementation nears, the report recommends a range of measures and policy actions to mitigate the potential disruptions to commodity trade from vulnerable economies, and the regulations’ broader implications for sustainable and equitable development.
It calls on the European Union to scale up targeted financial and technical support to vulnerable economies.
These include providing grace periods, establishing grants facility for compliance costs, providing compensatory measures and helping countries tackle trade-related obstacles through the “Aid for Trade” mechanism.
For economies likely impacted by the EUDR, it is vital to form regional collaboration platforms and collectively negotiate, including in the context of their negotiations with the EU on Economic Partnership Agreements.
Meanwhile, to combat deforestation in the long term, countries need to focus on policies that drive economic diversification and sustainability – the most viable path to ensuring resilience and shared prosperity in commodity-dependent developing countries.
“To move up the value chain, a more proactive role by the State is essential,” Mr Akiwumi adds, “This involves strategically reinvesting revenues from the commodity sector into initiatives that diversify production and stimulate broader, more sustainable economic growth.”