EUDR Compliance: Understanding Your Company’s Position In Food & Beverage

Introduction

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This is the second blog in a series exploring the impact of the European Deforestation Regulation across various industries. We kicked the series off with the wood and forestry sector, and now we’re turning our focus to the food and beverage industry.

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The series follows the release of our updated and comprehensive playbook on the EUDR (EU Deforestation Regulation (EUDR) Playbook: Transitioning to Deforestation-Free Supply Chains). While the playbook provides valuable insights, we recognize that each industry faces unique challenges.

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The regulation covers different commodities, but for companies in the food and beverage industry, these are the ones particularly important: meat, dairy products, confectionery, coffee, edible oils, and soy products. Understanding their role under the EUDR is vital for ensuring compliance in this sector.

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Due Diligence Requirements

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The EUDR mandates companies to electronically submit due diligence statements to a centralized deforestation registry managed by the European Commission. These statements are subject to review by both the Commission and national authorities. To facilitate compliance, an online Registry System has been established to guide operators and traders through the process of preparing and submitting their due diligence statements.

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Key Components of a Due Diligence Statement: Each due diligence statement must include:

• Company and Product Information: Details about the operator and the specific products.
• Production and Sourcing Data: The country of origin and geolocalization of all land plots where the raw materials were sourced.
• Reference to Existing Statements (if applicable): To prevent redundant submissions and improve efficiency, businesses can cite previously submitted due diligence statements that already contain the necessary geolocation details.

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Leveraging Existing Due Diligence Statements: Non-SME businesses that trade or export products incorporating regulated materials may refer to existing due diligence statements already on record. However, they must verify that the original submission was properly conducted.

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Consolidating Shipments Under a Single Statement: To streamline compliance, companies can submit a single due diligence statement covering multiple shipments or batches. However, they must ensure that the due diligence process applies to all included products.

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Understanding Your Company's Role in the Supply Chain

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Under the EUDR, companies fall into one of two categories based on their function in the supply chain:

• Operators: Entities responsible for placing regulated products on the EU market for the first time, including importers, manufacturers, and primary processors. They have the most extensive due diligence obligations, including data collection and risk assessments.
• Traders: Businesses that buy and sell EUDR-regulated products without introducing them to the market for the first time. While their compliance responsibilities are lower, they must ensure their suppliers adhere to EUDR requirements.

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Compliance Scenarios

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Scenario 1: Domestic Cattle Supply Chain

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• A small EU rearing/fattening farm (SME upstream operator) raises and sells live cattle (HS 0102 29) to a meat processing company. As the first to place live cattle on the EU market, the farm must conduct due diligence and submit a due diligence statement in the EU’s Information System. 

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• The meat processing company slaughters the cattle and produces two products: fresh or chilled beef (ex HS 0201) and raw hides and skins of cattle (ex HS 4101).The meat processor slaughters the cattle, producing beef (ex HS 0201) and raw hides (ex HS 4101). As a non-SME downstream operator transforming relevant products, it must submit due diligence statements for both, referencing the farm’s statement after verifying compliance.

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• The meat processing company sells the beef to a large supermarket chain, which distributes it to customers. Since the meat was already placed on the market, the supermarket is a non-SME trader but must still submit a due diligence statement, referencing the processor’s.

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• Meanwhile, the meat processor sells the hides and skins to a tannery, which processes them into leather (HS 4107). The tannery is a non-SME downstream operator, as it transforms a relevant product into another relevant product and places it on the EU market. It must submit a due diligence statement after verifying the processor’s compliance.

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• Finally, the tannery sells the leather to an SME leather goods manufacturer, which produces and sells shoes. Since shoes are not listed under EUDR, the manufacturer has no obligations. However, if it had imported the leather from outside the EU, it would need to submit a due diligence statement with geolocation data for the leather’s origin.

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Scenario 2: Domestic Cattle Supply Chain (2)

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• An SME cattle farm (SME upstream operator) in the EU produces and raises live cattle (HS 0102 29) and produces fresh or chilled beef (ex HS 0201), selling some locally and exporting the rest outside the EU. Since it places beef on the EU market and exports it, the farm must submit two due diligence statements—one for each market—regardless of its SME status. As the first operator to place a relevant product on the market or export it, due diligence is required for both actions.

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• In addition, the cattle farm feeds its animals soymeal (HS 1208 10), which is another relevant product. The farm must ensure that this soymeal is deforestation-free. 
  
  • If the soymeal has already undergone due diligence earlier in the supply chain (i.e., it was already placed on the EU market), the farm can use supporting documents (e.g. invoices, reference numbers, or any other relevant information from the feed retailer) to confirm that the soymeal is deforestation-free. This evidence must cover the entire lifetime of the cattle, up to a maximum of five years.
  • If the farm imports soymeal from outside the EU, it becomes an SME upstream operator for soymeal and must conduct full due diligence, submit a statement, and include its reference number in the customs declaration. These documents then serve as proof that the cattle feed meets EUDR requirements.

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Scenario 3: Coffee Supply Chain

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• A non-SME coffee roaster imports bulk coffee beans (HS 0901) into the EU from a third country. As a non-SME upstream operator placing the product on the EU market for the first time, it must conduct due diligence to ensure the coffee is deforestation-free and legal before placing it on the market. If the coffee roaster places batches from the same geolocation over time, a single due diligence statement can cover them for up to one year, provided that due diligence has been carried out for all products intended for the market.

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• The coffee roaster sells the coffee beans to a large wholesale distributor and to an SME coffee shop.
  
  • The SME coffee shop (SME trader) is not required to conduct due diligence, but it must keep records of its suppliers, any operators or traders it supplies, and the reference numbers of any existing due diligence statements. 
  • The large wholesale distributor (non-SME trader) must submit a due diligence statement to the Information System. It may refer to previous due diligence statements by including reference numbers but must first confirm that due diligence was compliant.

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• The wholesale distributor ships roasted coffee beans to a supermarket chain (non-SME trader), which sells them to consumers, so it must submit a due diligence statement for the roasted beans. It also may refer to existing due diligence statements with the relevant reference numbers but must first confirm that due diligence is compliant. If the coffee roaster places batches from the same geolocation over time, a single due diligence statement can cover them for up to one year.

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*There are four chains of custody models; however, the mass balance and book & claim models—that allow mixing with unknown or non-deforestation-free commodities—are not permitted, ensuring only segregated, deforestation-free products enter or leave the EU market. That’s because commodities must be traceable to their production plots, and each batch must meet strict traceability requirements. 

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Scenario 4: Cocoa Supply Chain

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• An SME cocoa buyer (SME upstream operator) imports cocoa beans (HS 1801) into the EU for the first time. The cocoa buyer must exercise due diligence and submit a due diligence statement for the cocoa beans to the EU Information System before placing them on the market. 

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• The cocoa beans are sold to a large cocoa processor (non-SME downstream operator), which processes them into cocoa mass/liquor (HS 1803), cocoa butter (HS 1804), and cocoa powder (HS 1805). As the large cocoa processor transforms the cocoa beans into new products, it must submit its own due diligence statement. However, it can refer to the previous due diligence statement submitted by the cocoa buyer by including the relevant reference number. The processor must also verify that due diligence was properly conducted upstream.

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• The processed cocoa mass/liquor, cocoa butter, and cocoa powder are sold to a small chocolate manufacturer (SME downstream operator), which processes them into chocolate and drinking cocoa powder (HS 1806). The chocolate manufacturer is not required to submit a new due diligence statement because the products are made entirely from the cocoa. Instead it must keep a record of the reference numbers of the due diligence statements previously submitted. 

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• The small chocolate manufacturer sells these products to a large supermarket and also exports chocolate. When exporting chocolate, the manufacturer must also include the reference numbers when lodging the customs declaration.

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• The supermarket chain (non-SME trader) sells the chocolate and drinking cocoa powder to consumers, so it must submit a due diligence statement for these products. Since the products have already been subject to due diligence, the supermarket can refer to the existing due diligence statements from the cocoa processor, but it must verify that due diligence was conducted correctly.

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Scenario 5: Soy Supply Chain

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• A large oilseed crushing facility imports bulk shipments of soybeans (HS 1201) into the EU. As a non-SME upstream operator, it is placing soybeans on the Union market for the first time and must submit a due diligence statement for the soybeans in the EU Information System before placing them on the market. If the soybeans are imported in multiple shipments from the same geolocations, they can be covered by a single due diligence statement for up to one year.

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• The oilseed crushing facility processes the soybeans into soymeal (HS 1208) and soy oil (HS 1507), so it is also a non-SME downstream operator and must submit a due diligence statement. Since these products are made from the soybeans, the facility can refer to the due diligence statements previously submitted. However, if any additional soybeans, not previously subject to due diligence, are used, the facility must exercise full due diligence on those products .

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• The oilseed crushing facility sells the soymeal to a feed mill, which blends it with other ingredients to produce compound feeds (HS 2309) for livestock. Since compound feed is not a relevant product under the EUDR, the feed mill has no obligations.

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• The soy oil is sold to a non-SME food manufacturer and to an SME enterprise, both of which refine the oil and make a variety of products like margarine or sauces. As these products are not relevant under the EUDR, they don’t have obligations.

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Leveraging Technology for EUDR Compliance

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To effectively meet EUDR requirements, businesses must embrace digital solutions that simplify data collection, verification, and reporting. In response to this need, Finboot and OpenAtlas have partnered to introduce a cutting-edge integrated solution for EUDR compliance. This collaboration combines MARCO Track & Trace, a no-code/low-code blockchain platform, with OpenAtlas’ VANTAGE-X remote sensing technology.

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Geolocalization and satellite monitoring tools like OpenAtlas VANTAGE-X provide verifiable data on commodity origins, enabling businesses to track crops and confirm deforestation-free sourcing. MARCO Track & Trace, in turn, secures and validates this data, establishing a transparent and tamper-proof chain of custody that ensures regulatory compliance.

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MARCO Track & Trace for EUDR Compliance

• Certification Verification: MARCO Track & Trace enables businesses to confirm supplier certification at the point of transaction, ensuring alignment with EUDR standards.
• Verified Trade Claims: The platform generates authenticated, traceable claims about products exchanged between companies and trading partners.
• Seamless Data Sharing: It facilitates the transfer of essential raw material data, including geolocation, harvest date, species, product classification, and other critical details.

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Beyond EUDR compliance, the platform enhances interoperability across regulatory frameworks, optimizing data utilization for seamless compliance with EUDR, CBAM, ESPR, and beyond.

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Conclusion

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Although full EUDR implementation may seem distant, the complexity of its requirements calls for immediate action. Many companies are realizing that compliance preparation takes longer than expected, with unforeseen challenges emerging along the way.

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By understanding your role in the supply chain and leveraging advanced digital tools, your business can not only meet compliance requirements but also drive greater transparency and responsibility in the wood and forestry industries.

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Have any questions? Our team is here to help—reach out to schedule a meeting and discuss your compliance needs.

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Extra Resource
Finboot supports businesses every step of the way in achieving EUDR compliance; based on our expertise, we’ve created a checklist of essential actions that companies should already be implementing. Are you on track? Download our EUDR Playbook to find out.

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