EUDR: a challenge or an opportunity for the competitiveness of the European livestock sector?

The European Union Deforestation Regulation (EUDR), which requires that commodities and derived products placed on the EU market be “deforestation-free“, was introduced to reduce the contribution of European consumption to global deforestation and forest degradation. The sectors concerned include cattle, soy, cocoa, coffee, palm oil, rubber and timber. For the cattle sector, this means that beef, hides, and other derived products may be marketed in the European Union only if accompanied by a traceability system that demonstrates they originate from land that has not been subject to deforestation after 31 December 2020. Operators must also conduct due diligence, collect the geographical coordinates of the plots of origin, and retain all documentation necessary to demonstrate compliance. But what will be the real economic effects of the regulation? And will the EUDR provide a competitive advantage or impose an additional burden on European livestock farms?

The role of soy in livestock competitiveness

One of the most debated aspects concerns soy, which is included among the products covered by the EUDR. As one of the main protein sources used in animal feed production, any challenge to sourcing capacity can have repercussions across the entire livestock value chain, particularly in pig and poultry production. To be placed on the EU market, soy will have to comply with the requirements of the regulation. While there is already concern that the EUDR will trigger market disruption for soy purchases by EU companies, the requirements will, in either case, lead to higher supply-chain costs, with consequences for the production costs of European livestock farms. This is one of the main issues under discussion: whether such risks and costs may affect the competitiveness of European production compared with international competitors, and to what extent the market will be willing to recognise the added value of products that comply with the new requirements.

The cattle value chain will also need to adapt

Live cattle and beef products are also included among the regulated products. Farmers, together with processors and traders, will have to establish new systems capable of accurately documenting the origin of animals and demonstrating compliance with the regulation. At the same time, another crucial question remains open: how the competent authorities of the different Member States will concretely apply controls and enforcement activities, and whether they will have the necessary capacity actually to enforce the EUDR. A uniform application of the rules will be essential to ensure a level playing field within the European market.

Over the past decades, European farmers have had to compete with imports from countries characterised by lower production costs, often linked to differences in land availability, environmental regulations, and regulatory systems. With the entry into force of the EUDR, all operators wishing to place products covered by the regulation on the EU market will have to comply with its requirements, regardless of the country of origin or any deforestation. This means that EU-based cattle value chain operators will need to invest in complying with a regulation designed for countries with recorded deforestation. This could, at least in part, change the dynamics of international competition, although its actual effects will need to be assessed over the coming years.

Europe starts from a favourable position, but there will also be costs

European cattle production already benefits from highly developed identification and traceability systems, for example used by the Common Agricultural Policy. Each animal is individually identified, animal movements are recorded, and farms are subject to established sanitary and veterinary controls. In several exporting countries, by contrast, full traceability back to the individual farm of origin is still under development. This does not mean that products from those countries are necessarily associated with deforestation, but rather that demonstrating compliance with EUDR requirements may require significant organisational and technological investments.

European cattle production will nevertheless face new administrative obligations. Updates to IT systems, collection of geographical coordinates, document management and greater integration of information throughout the value chain will be required. For this reason, many agricultural organisations have called for a gradual implementation of the regulation, recognition of existing systems and support measures, especially for smaller farms. The European Commission has meanwhile introduced some simplification measures and postponed the application of the regulation to give operators more time to prepare for the new obligations.

Sustainability as a competitive factor

One of the most interesting aspects concerns the changing concept of competitiveness itself. Whereas products were once compared primarily on price, increasing importance is now being given to transparency, origin, environmental sustainability, and the ability to document the entire production chain. In principle, this shift could favour European cattle production, since many of the traceability and documentation systems required by the EUDR are already embedded in the EU production model. At the same time, imported beef would need to comply with additional due diligence requirements. In practice, this potential advantage is largely offset by the regulation’s requirements for deforestation-free soy. European livestock producers will need to source EUDR-compliant soy, which is expected to carry a price premium. In contrast, poultry producers in countries such as Thailand, Ukraine, or Brazil supplying markets outside the EUDR framework will not face the same obligation. Consequently, the regulation may increase production costs for EU livestock sectors without providing a corresponding competitive advantage over international competitors.

The regulation could nevertheless reshape international trade patterns by increasing compliance costs for products entering the EU market and favouring value chains that are already fully traceable and able to meet European requirements. At the same time, there is a risk that part of global trade flows will be redirected to markets with less stringent standards, reducing the overall effectiveness of regulation in curbing deforestation. The extent to which these effects materialise will depend on several factors, including the consistent implementation of the regulation across Member States, operators’ ability to adapt, the availability of compliant feed ingredients, and consumer response.

The real challenge will be rewarding those who produce better

The EUDR could make European livestock production less competitive. Much will depend on the market’s ability to economically recognise the investments farmers make in traceability, food safety, animal welfare, and environmental sustainability. If the new obligations result only in higher administrative costs, the risk is that they will increase burdens on businesses without generating competitive benefits. If, on the other hand, these guarantees are valued throughout the supply chain and recognised by consumers, the regulation could help strengthen the European production model, based on quality, safety and transparency. The EUDR therefore represents a change that goes beyond purely regulatory aspects: competitiveness will increasingly depend not only on production costs, but also on the ability to demonstrate how a food product was produced and what impact it had on the environment.

These issues will be at the centre of the next meeting of the Sustainable Livestock Intergroup, scheduled for 9 July, from 10:00 to 11:30, at the European Parliament in Strasbourg.