Beef and forestry exporters are breathing a sigh of relief at the news that the EU has deferred the implementation of the European Deforestation Regulation by one year.

The Regulation requires companies trading in seven key commodities (and products derived from those commodities) to prove that those goods/products have not contributed to deforestation. To prove that goods/products have not contributed to deforestation, the Regulation requires geolocation coordinates for the place of production to demonstrate that they were not produced on land deforested since 31 December 2020.

The Regulation was set to take effect from 30 December 2024 for most operators but will now take effect from 30 December 2025.

Recap

The Regulation prohibits the import into the European market of cattle, cocoa, coffee, palm oil, rubber, soy, and wood, and products made from those goods, unless they meet three conditions:  

1. The goods/products have not contributed to deforestation or forest degradation.
2. The production or manufacturing process complied with the applicable laws of the country where they were made (land-use rights, forest management, labour, tax and/or human rights laws, as well as environmental regulations).
3. The goods/products are covered by a due diligence statement.

Due diligence requirements

The due diligence process involves three main steps:

1. Gathering detailed information about the products and where they were produced (including geolocation data) and evidence of deforestation-free status and legal compliance.
2. Conducting an annual risk assessment based on criteria such as country risk levels, forest presence, and supply chain complexity.
3. Implementing risk mitigation measures as needed, which may include independent audits or gathering additional information.

Implications for New Zealand exporters

New Zealand exporters will be directly caught by the Regulation if they export goods into the European Union or indirectly caught if they supply European Union customers. New Zealand’s primary exposure is its beef exports, although wood and wood exports are also affected. Providing geolocation data is challenging for New Zealand beef farmers and exporters because beef animals often move locations during their lifecycle and beef farms can cover large areas of land, making the provision of a single geolocation point difficult.

The Regulation also covers both legal and illegal deforestation, meaning that beef grazed on land where trees have been harvested since 31 December 2020 cannot be exported to the European Union unless the land is subsequently replanted.

Companies exporting directly to the European Union face fines of up to 4% of turnover if they fail to comply with the Regulations, as well as seizure of commodities and products. New Zealand businesses caught indirectly are not liable for failure to comply but are likely to see European markets dry up unless their goods and products comply with the Regulation.

Get in touch

If you have any questions about the Deforestation Regulation or what it could mean for your business, contact one of the experts below.