If the EUDR is delayed, key stakeholders will have a whole extra year in which to comply with the regulation. This would be a boon for many businesses, who were struggling with the complexity and cost of compliance in the short time frame available to them. However, for others, who were already compliant with EUDR, it has been frustrating to see their efforts not rewarded.
Although, there is one area where stakeholders are all in the same boat, as it has yet to be finalised: country benchmarking.
How does this benchmarking work? When will the status of each country be revealed? And how significant an impact will it have on compliance?
What is country benchmarking?
The country benchmarking system will classify countries, or parts of countries, as having either a high, standard or low risk, which assesses the risk of commodities sourced from there being linked to deforestation. The EU Commission is obligated to keep a dialogue with any country classified as ‘high risk,’ in order to help them reduce their risk levels.
The classification will be decided on the rate of deforestation and forest degradation in the relevant country; rate of the agricultural land expansion for relevant commodities; and production trends of relevant commodities and products.
The assessment may take into account evidence from the country concerned, including its regional authorities, local communities, civil societies, and indigenous people, as well as evidence from NGOs and operators, with regards to effective covering of emissions and removals from agriculture, forestry and land use.
It may also take into account whether the country has agreements or laws in place towards reducing deforestation and complying with the Paris Agreement, the transparency of its data, and whether it has had sanctions imposed on the import or export of relevant commodities by the UN Security Council or the Council of the European Union.
If the delay in the EUDR does go ahead, these classifications are due to be revealed by 30 June 2025.
Why hasn’t it been finalised?
Being classified as ‘high risk’ can be politically challenging. According to sustainability advisor Nicko Debenham, “it is believed that a lot of the work has been completed but there appears to be a reluctance of the commission to publish the risk levels, possibly due to the political implications of countries being declared high risk”.
Will knowing country classifications make compliance easier?
The risk level of a country affects how it performs due diligence. When sourcing from low-risk countries, for example, operators are only obligated to collect data, not assess and mitigate risk as you would have to do in due diligence for commodities from standard and high-risk countries.
According to Fanny Gauttier, public affairs lead in Europe for Rainforest Alliance, the commission is making an effort to categorise most countries as low risk.
“If most countries fall into the ‘low risk’ category, companies will benefit more largely from the simplified due diligence procedure, meaning they won’t have to do the risk assessment and mitigation,” she told us.
“However, they’ll still have to make the biggest effort, which is collecting geodata and ensuring traceability, and while they’ll face less controls by authorities when sourcing from those countries, they won’t be fully exempt – as national competent authorities have to control at least 1% of the operators sourcing from low-risk countries every year. Companies should ensure they use different data sources to conduct their due diligence.”
The frequency of inspections in high-risk countries is also significantly higher, with 9% chance of inspection. This is only 3% for standard risk countries and 1% for those deemed low risk.
Which countries will have which risk levels?
At this point, all potential risk levels are speculative, as the classifications have not been released. However, educated guesses can be made.
In the EU itself, predicted Debenham, most countries will be low risk, with a few classified as 'standard' risk. There is a small chance that the Scandinavian countries could be classified as high risk, but Debenham thinks this is unlikely.
There is a lot of uncertainty around Latin American countries’ potential classification, he suggested, especially as different regions in countries can have different classifications.
“Technically regions within countries can be rated also so some countries like Brazil could have different ratings. I believe most tropical origin countries will be either standard or high risk,” he told us.
“[It is] hard to say,” which soy-producing countries will be given which classification, Susanne Fromwald, senior advisor and project manager at the organisation Donau Soja, told FoodNavigator “as it depends on the methodology of the benchmarking. Some countries or regions have problems with deforestations, others with legality.”
Will it affect some commodities more than others?
According to Rainforest Alliance’s Gauttier, the benchmarking is unlikely to target specific commodities, as the methodology does not single them out, but looks at the level of risk in a country as a whole.
However, some commodities could benefit from being more significantly based in low-risk countries than others. “In Europe we don’t see so much risk of deforestation for soya after 2020,” Donau Soja’s Fromwald told us. Thus, soy grown in Europe may have an advantage, if key European countries are given classifications of low risk.
