Navigating EUDR: What Every Food Startup Must Know

The fate of the European deforestation regulation (EUDR) is sealed. It’s moved to 2026. This grants additional time for brands to adapt their sourcing and traceability practices for ingredients and packaging. EUDR isn't just about compliance; it's about making sure your ingredients and processes are sustainable. Let’s explore how you can innovate sustainably, even with limited resources!

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What is the EU deforestation law?

The EU Deforestation Regulation (EUDR) aims to combat deforestation by making sure that food and beverage products entering the EU market are deforestation-free.

The regulation covers a range of commodities, including palm oil, cattle, soy, coffee, cocoa, timber, and rubber, as well as derived products like chocolate, paper and furniture.

Businesses will need to carry out due diligence to ensure their products meet these requirements, including collecting geolocation data to prove the products' origins and legality.

Regarding the timeline, the regulation took effect in June 2023 and the enforcement to startups was planned December 30, 2024. Because of the appeal by EU Commission, the enforcement has been postponed to December 2025.

As our CEO says, "It's quite counter-intuitive for early stage food and beverage brands to take direct responsibility about their supply chains. – But EUDR requires exactly that!"

Why does EUDR matter for food and beverage brands?

From a global perspective, EUDR is a great progress towards combating a big environmental challenge: deforestation. It aims to protect forests and promote sustainable land use, by placing stricter requirements on commodities linked to deforestation.

From a food industry point of view, EUDR will impact a wide range of businesses, including startups and SMEs who may rely on these commodities in their products or supply chains.

Who is affected by EUDR?

While the regulation is a positive step toward sustainability, it presents challenges for various stakeholders:

• Suppliers and producers who rely on the above mentioned crops or derivatives may face difficulties in complying with the new requirements. There's a risk they could be squeezed out of supply chains if they can't meet the standards.
• Startups and SMEs might find it challenging to ensure compliance due to limited resources as it requires investing into new traceability systems or an extra due diligence.

Societal and financial consequences of EUDR

On a societal level, the regulation aims to promote fair practices, protect indigenous land rights, and ensure that products consumed in the EU do not contribute to global deforestation.

Its financial consequences can however have a severe effect on smaller brands. If your food or beverage brand doesn't comply with the EU deforestation regulation, you could face significant legal penalties, including:

• penalties of up to 4% of their annual EU turnover
• restricted market access within the EU
• loss of consumer trust and negative publicity

Given that the regulation impacts a market valued at €470 billion annually, the financial implications for non-compliance are quite substantial.

 

 

4 Steps to EUDR compliance when launching a new product

If you are looking to launch a new product, these steps below ensure compliance.

1. Ingredient sourcing: Ensure that all ingredients are sourced from deforestation-free and legally compliant sources. This includes gathering documentation and geolocation data.
2. Supply chain management: Choose contract manufacturers and suppliers who are already compliant with EUDR or are willing to work towards compliance. Maintaining a transparent supply chain is key.
3. Due diligence: Conduct thorough due diligence to ensure compliance. This includes submitting a due diligence statement electronically to the European Commission's registry.
4. Packaging: Consider the impact of packaging materials, ensuring they also comply with the regulation's sustainability requirements.

Let's take an example:

Let’s say a brand launching a line of delicious, premium asian flavored Ready-to-Eat (RTE) soups, featuring imported ingredients like soy sauce and meat, packaged in cardboard boxes.

With the new regulation, the brand needs to make sure that both the ingredients and the packaging must have a proof to be deforestation-free.

 

 

Now, let's break it down: 

Ingredients

• Sourcing: The brand needs to source soybeans from plantations that are certified as deforestation-free and comply with the local laws of the country of origin. The same applies for the soy sauce. The brand must work with a supplier that traces the geolocation data of the soy plantations to prove the beans' origins and ensure compliance.
• Traceability: Brands need to establish a transparent supply chain and work closely with suppliers to track the beans from farm to factory. This involves thorough due diligence, including verifying the certification of suppliers and ensuring no deforestation is associated with the saybean production.

Packaging

• Sustainable Materials: If the brand uses paper or cardboard for packaging, it must ensure that these materials are sourced from deforestation-free suppliers. The regulation covers not only the product itself but also the associated packaging materials.
• Documentation: They must gather documentation to prove that their packaging materials are sourced responsibly and do not contribute to deforestation.

Production

• Ensure compliance: When choosing a contract manufacturer, the brand should verify that the manufacturer complies with the EUDR requirements and is able to provide documentation for the sourcing of raw materials and traceability for all ingredients and packaging materials.

How can Agilery help?

Agilery assists brands in navigating the EUDR. From ingredient traceability to ensuring compliance throughout the supply chain. 

Here are the most common areas of support: 

• If you develop a new recipe with Agilery, we automatically source ingredients from suppliers that have proven traceability systems in place.
• If you are already producing and your manufacturer is not equipped to comply, we can help you set up a new production with a compliant co-manufacturer throught proper due diligence.
• If you offer a range of products, we can pinpoint those impacting your compliance and streamline the process of collecting and verifying product data from suppliers.
• If you need help with handling due diligence for EUDR compliance of new or existing manufacturing/supply partners we can make a thorough check and submit the document to the European Commission's registry.
• If you are looking for a new food co-manufacturer we can map all compliant options across Europe matching your specific needs.

Certifications to look for with farmers and suppliers

• Rainforest Alliance Certified: This certification ensures that farms meet comprehensive standards for environmental, social, and economic sustainability, including deforestation-free practices and biodiversity conservation.
• Fair Trade Certified: Fair Trade certification focuses on ethical practices, fair wages, and sustainable farming. While its primary focus is on social aspects, it also covers environmental criteria like preventing deforestation.
• Organic Certification (e.g., EU Organic, USDA Organic): Organic certifications often require environmentally friendly practices, including restrictions on land clearing and promoting biodiversity.
• RSPO (Roundtable on Sustainable Palm Oil) Certification: For products containing palm oil, RSPO certification ensures that the oil is produced sustainably, with a focus on preventing deforestation and protecting biodiversity.
• UTZ Certified: UTZ (now part of Rainforest Alliance) offers certification for coffee, tea, cocoa, and hazelnuts, focusing on sustainable farming practices, including deforestation prevention.

Certifications to look for with packaging companies

• FSC (Forest Stewardship Council) Certification: FSC certification ensures that forest products are sourced from responsibly managed forests that provide environmental, social, and economic benefits, including preventing deforestation.
• PEFC (Programme for the Endorsement of Forest Certification): PEFC certification promotes sustainable forest management and ensures that wood-based products are sourced from forests managed with respect to ecological, social, and ethical standards.

General certifications to pay attention to

• ISO 14001: This is an international standard for environmental management systems, helping organizations improve their environmental performance through more efficient use of resources and reduction of waste, including measures to prevent deforestation.
• B Corp Certification: While B Corp certification is broader, covering social and environmental performance, it indicates a company’s commitment to sustainability, transparency, and ethical supply chain practices. Sedex: Sedex provides a platform for managing and improving the performance of suppliers, including labor standards, health and safety, and environmental practices, such as deforestation.

Generally, certifications demonstrate compliance with the EU Deforestation Regulation, build transparency and traceability in their supply chain and build consumer trust by showcasing a commitment to sustainability and ethical practices.

Traceability systems for Food Startups and SMEs

Navigating compliance can be tricky, but choosing the right traceability system doesn’t have to be! Let’s explore how to keep your products on track (literally)!

For startups we recommend a combination of these two methods for traceability on small scale:

• Manual Batch tracking: For startups on a tight budget, implementing a basic traceability system can begin with detailed record-keeping and batch tracking, then scaling up with digital tools as the business grows.
• Partnering with a Compliant Partner: Collaborating with co-manufacturers, co-packers and suppliers that have the needed systems in place. 

If you already have a range of products on the market and are planning to scale up soon, here's a list of traceability systems with an average cost between 500 - 5000 CHF for year. 

• Provenance: Ideal for startups and small businesses due to its user-friendly interface and relatively lower cost. It uses blockchain to provide transparency and authenticity in the supply chain. This system is great for building consumer trust by showcasing the origin and ethical sourcing of products.
• TE-FOOD: Designed for smaller-scale operations, the system uses QR codes to offer affordable and accessible traceability solutions. It's a good fit for startups that want to track the journey of their food products from farm to table without heavy investment.
• FoodLogiQ: A cloud-based platform suitable for small to medium-sized food businesses. It offers a straightforward way to manage suppliers, ingredients, and product traceability, making it easier for startups to ensure compliance with food safety and sustainability standards.
• TraceGains: Another cloud-based solution, TraceGains is accessible to SMEs and helps in managing supply chain documentation, ensuring ingredient traceability, and verifying supplier compliance, all of which are crucial for new and growing food brands.

Traceability systems you should look for with Suppliers/Manufacturers:

• IBM Food Trust: This blockchain-based system is more suitable for larger manufacturers and suppliers due to its comprehensive and robust features. It provides end-to-end traceability, ensuring secure and transparent tracking of products through the entire supply chain.
• SAP Integrated Traceability: Ideal for larger suppliers and manufacturers, SAP offers a comprehensive solution for tracking products and materials throughout the supply chain. It's particularly useful for companies dealing with complex supply chains and needing to comply with multiple regulations.
• Oracle Supply Chain Management: Designed for large-scale operations, Oracle SCM provides extensive tools for tracking and managing the flow of goods. It's a fit for manufacturers looking to ensure responsible sourcing and production on a large scale.
• Kezzler: Using IoT technology, Kezzler provides item-level traceability and is better suited for suppliers and manufacturers who require detailed, real-time tracking of products throughout the supply chain.

Ways to minimise traceability costs

• Contractor Due Dilligence: Make sure that you collaborate with suppliers man producers who already have established traceability solutions in their processes.
• Implement Incrementally: Start small with a pilot project. Begin with a basic, less expensive system, and expand as the business grows. This allows you to spread out costs and learn as you go, avoiding large upfront investments.
• Use standard GS1 barcodes and QR codes: They are more affordable and widely recognized. Alternatively use ERP or Inventory Management Systems, because some include basic traceability features.
• Use Open-Source Solutions: Some open-source software solutions offer basic traceability features that startups can use without the high costs associated with proprietary systems. While they might require some technical expertise to set up, they can significantly reduce costs.
• Apply for Grants or Subsidies: Some governments and organizations offer grants, subsidies, or funding to support food safety and traceability initiatives. Startups can explore these options to help cover the costs of implementing a traceability system.

More resources 

European Commission: https://environment.ec.europa.eu/topics/forests/deforestation/regulation-deforestation-free-products_en and https://green-business.ec.europa.eu/deforestation-regulation-implementation_en