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  • Industry warns against EU’s traceability plans to prevent deforestation – POLITICO - planetcirculate

    Industry warns against EU’s traceability plans to prevent deforestation – POLITICO


    The EU wants companies to trace the exact origin of the cocoa beans, soy and palm oil used in products they place on the EU market. Industry warns that’s a nearly impossible task — and will require huge investments.

    The European Commission has made geolocation and traceability requirements a core part of its proposal for legislation banning products linked to deforestation and forest degradation. The regulation — which still needs to be discussed among EU institutions before it becomes law — targets coffee, cocoa, soy, palm oil, cattle and wood, as well as derived products like leather and chocolate.

    In practice, that means mapping farms with exact GPS coordinates, checking that against evidence of deforestation using satellite images, going on the ground to assess the fields, tracing products digitally from farm to factory, and putting in place deforestation risk assessment and mitigation measures.

    Forcing companies to pinpoint the exact plot of land where a product was grown or harvested is key to the scheme, the Commission argues. Under its proposal, most companies would have 12 months to comply after the legislation enters into force.

    But industry groups say that’s unrealistic — particularly for commodities like soy and palm oil.

    “It’s going to be particularly difficult to trace palm oil to the specific plot of land because of the nature of our commodity,” Nicolás Pérez Marulanda, executive president of the Colombian Federation of Palm Oil Producers, said on a recent visit to Brussels where he met with EU officials to raise his concerns about the upcoming legislation.

    Mills that process palm oil typically buy palm fruit from a number of different farmers and blend them together, he said, meaning that a single batch of oil could contain fruit from areas designated at risk of deforestation as well as those considered risk-free.

    The lobbying push for laxer rules from all corners of the industry has been met with criticism from NGOs, which argue the EU’s new regulation will be toothless if companies don’t do a better job of cleaning up their supply chains.

    “If you don’t require traceability back to the plot of land … you are then leaving the door open for abuse of the system and for numbers to be tweaked, or corners to be caught in companies applying their due diligence,” said Jody Quirke, a climate and forest lawyer at the legal charity ClientEarth.

    “So, the more exact and precise the location, the better … and technology exists to make that happen.”

    Costly investment

    Industry groups say coffee and cocoa are easier to trace — setting a standard other commodities aren’t yet able to meet.

    “It is different for coffee or cocoa where you can trace the beans all the way … because you put them in different bags or use blockchain for example,” Pérez Marulanda said.

    Dutch chocolate manufacturer Tony’s Chocolonely, which has made transparency and traceability central to its business model, points out that it didn’t happen overnight.

    The company first had to map the farms where it was sourcing its cocoa, check they were not located in protected areas and monitor that no deforestation was taking place on the land around the farms using satellite imagery.

    “It took us a few years,” said Paul Schoenmakers, head of impact at the company. When it started setting up a traceable supply chain back in 2012 “everyone laughed at us.”

    Schoenmakers dismissed concerns from within the chocolate industry about the new EU rules, saying companies have “more than enough money” to make the required investments.

    “Companies need to take responsibility about what’s happening in their supply chains,” he argued, calling on EU legislators to “make sure that laggards feel the pressure that they move in the right direction.”

    “Yes, it takes time and effort and also money to do the GPS mapping, to set up your system, if you do the checks, the field trips … but it’s not disproportionate at all,” he said.

    The palm oil industry faces a tougher uphill climb when it comes to traceability, according to Bart Vandewaetere, vice president for ESG engagement at food giant Nestlé.

    “Traceability to plantation is possible but significant challenges still need to be overcome for it to be deployed at scale,” he said, pointing to a lack of transparency on producers’ exact location and the ownership structure of refineries, mills and concessions. “This information is often not available or may even sometimes be obscured by the use of shadow companies.”

    Nestlé says that 90 percent of its palm oil is already deforestation-free and that it sources 80 percent of its soy from low-risk areas.

    The exact origin of soybeans is however harder to trace, Vandewaetere added, saying Nestlé is currently only able to trace soybeans back to their crush site.

    Pérez Marulanda, who is working on a tracking system for palm oil in Colombia in anticipation of the new EU rules, argues that it is “very expensive” and would be more efficient to trace palm fruit back to its region, rather than by producer — but that wouldn’t be fully in line with what the EU is mulling.

    Large swathes of industry — including associations representing feed manufacturers, vegetable oil makers and oils traders — agree, arguing that “even if some farmers in producing countries can comply with this requirement, collecting geolocation data of smallholders and co-operatives faces important technical, logistical, legal, and governance challenges, which cannot be addressed by companies alone.”

    Creating a robust traceability system for palm oil in Colombia would cost between €20 million and €25 million, according to Pérez Marulanda. That’s only the initial investment, he added, pointing out that additional money would be needed to bring the sector into full compliance with the EU rules once they enter into force.

    Guaranteeing that products are free of deforestation will come at a price for European consumers, he warned.

    “We understand that European consumers are concerned with deforestation, with labor practices, human rights, we’re ready to be part of the solution,” he said. “But we all need to share the cost of having a more sustainable production.”

    This article is part of POLITICO Pro

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