How the EU can prevent its deforestation-free law from being a half measure

As the EU shifts sustainable agricultural practices to protect nature and biodiversity, it ought to still look out for the small-scale producers and their livelihoods, writes Jonathan Mockshell.

Jonathan Mockshell is the project leader at the Alliance of Bioversity International & CIAT. 

Since the EU adopted a law banning goods linked to deforestation at the end of June, the timer has been counting the 18 months within which companies must comply.

But the ban only tells half the story, focusing on those responsible for importing and selling the commodities in question, such as coffee, cocoa and wood.

At the other end of the supply chain are those who produce them in the first place, a large majority of whom are small-scale producers.

To avoid any unintended impacts on those at the start of the chain, including some of the most resource-poor and vulnerable people in the world, the deterrent must also come with measures that enable these producers to shift towards sustainable and inclusive production.

As it stands, the EU law is designed to disincentive deforestation for popular commodities like palm oil, soya and cocoa. Without the regulation, the EU estimates its consumption and production of six products alone – cattle, coffee, palm oil, soya and wood – would be linked to almost 250,000 hectares of deforestation a year by 2050.

But truly protecting nature and biodiversity while simultaneously accounting for the hundreds of millions who rely on the forest for subsistence and livelihoods requires investment and incentives that accelerate a transition to transparent, sustainable agro-ecological practices.

One country implicated by the EU’s law is Peru, which is the world’s eighth-largest producer of cocoa, a sector that directly employs up to six million farmers worldwide. Around 90% of growers are smallholder producers who farm on less than five hectares.

Cocoa production can contribute to deforestation when farmers expand onto forested land to exploit more fertile soils. However, agroforestry models that combine cocoa with other complementary crops and trees can reduce the need for deforestation without compromising on cocoa yields.

For cocoa farmers to adopt these practices, they need financial incentives from the outset, for example, through premium prices linked to sustainability certification.  

However, our analysis of the agroecological principles employed in the Peruvian cocoa value chain found that almost 60% contributed to environmental sustainability outcomes only. This is compared with economic and social outcomes at 25% and 17%, respectively.

To succeed moves to support deforestation-free production must be designed to account for producers’ ongoing economic and social well-being and environmental goals.

This means that sustainability certification must not be prohibitively expensive for smallholder farmers or based on unrealistic metrics that do not apply to small-scale production.

It also means smallholders and farmer cooperatives need equal access to tools that can demonstrate their production’s provenance and sustainability, unlocking higher prices.

Digital tools, such as mobile apps and blockchain platforms, have created new possibilities for quickly and reliably tracing the origins of low-cost and easy-to-use individual commodities, meaning more farmers can verify the sustainability of their produce.

Lastly, farmers can be incentivised to avoid deforesting land through reduced transaction costs, meaning they have more capital to re-invest in agro-ecological production practices. For example, the cost of certification and verification can be streamlined via farmers’ cooperatives using digital systems that do not require each individual farmer to repeat the same process.

The EU is investing in research, such as the Private Sector Incentives and Investments (PSii) project, to develop the most effective mechanisms to fully support a transition from deforestation and towards more sustainable, agro-ecological approaches.

But when these products are typically exported by less developed countries to be consumed in developed economies, it is the duty of affluent blocs like the EU and others to support those at the sharp end of supply chains. And the most effective way to do this is with carrots and sticks.