EUDR: challenges and opportunities for Brazilian agribusiness

The European Union’s Deforestation-Free Regulation (EUDR) represents a significant milestone in the international trade of agricultural commodities. Scheduled to come into force on 30 December 2025 for large operators and traders and 30 June 2026 for micro and small businesses, the regulation establishes that products such as soy, beef, coffee and timber may only be imported into the EU if they are demonstrably not associated with deforestation after 31 December 2020, regardless of their legality under the laws of the producing countries.

Brazil, classified by the European Union as a “medium-risk” country for deforestation, faces unique challenges in this context. While Brazil’s Forest Code allows legal deforestation under certain circumstances, the EUDR adopts a “zero deforestation” approach — creating a gap between the laws that could significantly impact Brazilian exports to the European bloc.

The logistical and documentation complexity required by the regulation raises concerns about additional costs, exclusion of small producers and possible opportunistic movements in the market. A ship carrying 80 tons of soybeans, for example, may contain grains from hundreds of different farms, each with dozens of plots that would need to be tracked individually.

Given this scenario, questions arise about the effectiveness of the measure in achieving its environmental objectives and about the economic and social impacts on production chains. To discuss these issues, we spoke with Rodrigo Lima, managing partner at Agroicone, a consultancy specializing in sustainability in agribusiness. With 21 years of experience in international negotiations on trade and sustainable development, Lima holds a PhD in International Economic Relations Law from PUC-SP and has extensive expertise in WTO regulations, the Paris Agreement and other multilateral forums. He is also one of the professors of the course Agriculture and Environment, promoted by Insper Agro Global — classes for the next group start on August 25th.

How will the EUDR affect the main production chains in Brazilian agriculture?

The European Union’s goal with the EUDR is to control deforestation in production chains, focusing on the carbon impact and biodiversity loss — important and unquestionable objectives from a multilateral perspective. The problem is that, as proposed, the regulation becomes complex to comply with and brings a lot of uncertainty to market operators. The EUDR defines zero deforestation as of December 31, 2020, regardless of whether it is legal or illegal. At the same time, it requires operators to obtain reliable information on compliance with relevant environmental legislation. This creates a contradiction: Brazil has the Forest Code, which allows legal deforestation, but the EU does not accept any type of deforestation. This is the first critical point of the discussion.

What is the main logistical challenge in meeting EUDR requirements?

The issue is extremely complex from a traceability perspective. An 80-ton soybean ship can contain grains from many different farms. The EUDR requires information on a “plot of land” basis — each plot within a farm. If a farm has 25 plots of soybeans, this information needs to be brought by the importers and presented to the European authorities. This is not trivial, even with all the technology available today, such as AI, the Internet of Things, and blockchain. It is a very complex logistical issue, especially because we do not sell soybeans in containers or pretty bags like coffee — we sell them on ships. Segregating grains at this level is practically impossible, except for companies that have completely dedicated and controlled logistics routes.

How does the risk classification system impact Brazil?

Brazil was classified as a medium-risk country — the entire country has the same level of risk. This means that European importers, when looking at any region of Brazil, will require a series of documents to avoid being inspected and fined. The problem is that the European Commission does not define in detail which documents are required. There is no standard template that the operator can fill out. This causes enormous uncertainty in the market. For example, if a producer has labor lawsuits in court, is that a problem? Having a lawsuit for overtime is different from having slave labor, but the regulations are not clear. They only say that all the rules must be followed.

Is there a risk that the EUDR will not achieve its environmental objectives?

This is my main concern. As it stands, the EUDR may not contribute to reducing deforestation, but rather simply exclude regions, areas and producers from the possibility of exporting to the EU. It is as if the regulation were fulfilling its intended purpose, but in fact it is not. The chance of creating leakage is real — producers excluded from the European market will continue to sell to China and other countries. In addition, there may be opportunistic movements, with importers using risk as an argument to negotiate lower prices.

How does the EUDR impact small and medium-sized producers?

Small producers are the most vulnerable. Around 2 million of the 2,5 million cattle ranchers in Brazil are small producers. In the livestock sector, the problem is even more complex because of indirect suppliers — those who produce calves and do not sell directly to meatpacking plants. Imagine an indigenous producer in the Amazon who produces quality coffee and could open up a market in Germany. If the importer perceives a high risk in the region or a lack of adequate documentation, he simply will not buy. Excluding producers from the chain is like washing one's hands, pretending to achieve the objective without actually doing so. In practice, the European Commission “outsources” this obligation to operators who, in turn, will demand documents and practices from exporters.

Is Brazil prepared to meet the requirements of the EUDR?

We have the Rural Environmental Registry (CAR), which is an important instrument of the Forest Code. If it worked properly, it would be a valuable tool for verifying the environmental status of properties. The problem is that, 13 years after the approval of the Forest Code, we still have flaws in its implementation. São Paulo, Pará, Mato Grosso and Espírito Santo have made more progress in validating the CAR, but there is a lack of coordination at the federal and state levels. Last December, the Ministry of Agriculture launched the Agro Brasil+ platform, which can help organize information on deforestation, slave labor and other issues. This shows that we need to evolve in order to provide credible information to the international market.

Can the EUDR drive innovation and improvements in the sector?

Yes, it can bring indirect benefits. One example is the “Chinese cattle” — the Chinese health requirement to only buy animals slaughtered up to 30 months old. This is transforming Brazilian livestock farming, encouraging better pasture management, increased productivity and reduced emissions. The EUDR could have a similar effect, forcing Brazil to be more transparent and organized. The problem is that it is being done only with the “stick”, without the “carrot”. If there were incentives, such as prizes for producers who prove sustainable practices, it would be much more effective.

How will the issue of deforestation be present at COP30 in Belém?

It will be central. Land use is the largest sector that emits greenhouse gases in Brazil, and the main mitigation action is to end deforestation. But it is important to clarify that deforestation has multiple vectors — it is not just agriculture. Around 32% of deforestation in the Amazon occurs on unallocated public lands. There is organized crime, drug trafficking, illegal mining. COP30 is an opportunity to show that agriculture is impacted by climate change, but it also offers solutions. We need real implementation: recovery of degraded areas, integrated systems, bioinputs. These are transformations that can boost agriculture as a solution for food and energy security.

These complex issues regarding environmental regulation and international trade are addressed in the Agriculture and Environment course at Insper, where you teach. How does the course engage with these topics?

The course addresses exactly the issues we discussed today — climate, biodiversity, and international trade agendas. I analyze trade barriers and how Brazil is or is not prepared to face them. The EUDR is a very compelling example of how environmental requirements have definitively reached international trade. In the course, we discuss how to manage these demands, have adequate documentation, and be able to demonstrate compliance. It is essential to understand that this is not a passing trend — it is the new reality of global agribusiness. The course is an opportunity for professionals in the sector to delve deeper into these issues that are crucial to the future of Brazilian agriculture.

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