Protecting the most vulnerable forests and farmers
In the coming months, U.S. lawmakers are hoping to push through landmark legislation that would make it illegal to import products linked to illegal deforestation. But they must ensure that well-intentioned lawmaking is also good lawmaking by establishing protections for the millions of small-scale farmers who are the backbone of production.
In December, Congress reintroduced the FOREST Act (H.R. 6515 and S. 3371), which is designed to hold countries accountable for agricultural products that are destroying forests all over the world and halt imports of agricultural products linked to illegal deforestation.
“Companies and governments are increasingly making commitments to end deforestation within their supply chains and borders,” said the lawmakers when introducing the bill in 2021, adding that the “elimination of commodity-driven deforestation is good for the environment and good for business.”
The bill represents a major step in advancing mandatory supply chain due diligence, including traceability, for several commodities and products commonly linked to deforestation and human rights and environmental abuses.
These aims should all be encouraged.
Halting illegal deforestation and nature loss is essential to protecting people and wild places, tackling international crime, and addressing the climate crisis. However, good intentions do not always translate into good law. Congress should ensure that smallholder farmers are not impacted negatively. Similarly, there are lessons to be learned from a law on deforestation in the European Union (EU).
The EU deforestation regulation, which will come into force this year, aims to ensure that businesses identify, prevent, and mitigate their adverse impacts on human rights and the environment across their supply chains. That includes guaranteeing that products do not contribute to deforestation.
The law will first apply to multinational companies in late 2024. Firms will be required to screen their global suppliers through annual due diligence frameworks, which must be provided to member states where the products are sold with a guarantee that they have not caused deforestation.
Companies that break the law will face fines and see their products suspended from the EU market.
Most of the world’s producing countries are unlikely to enact new legislation to combat deforestation and reduce exposure to Regulation on Deforestation-free Products (EUDR) regulations in the one-year outlook.
However, it is less clear what thought has been given the law’s effects on the roughly five million — mostly west African — smallholders who are responsible for producing 80 percent of the globe's cocoa. Elsewhere, almost two-thirds of global coffee production occurs on 12 million farms of less than five hectares, while around 30 percent of global palm oil production results from the work of smallholders.
Despite promising financial support for smallholder farmers, the EU did not cover production in its impact assessment, and there is little clarity on what support will be offered.
“The enforcement of the due diligence process could transfer higher costs for farmers already struggling to achieve a living income,”
Other experts warn that the new import regulations, and the associated costs, will encourage traders to source from fewer smallholders or move sourcing to lower risk areas.
Compliance is likely to favor larger commercial farms over smallholders in supply chains, since the compliance costs will be greater for goods sourced from many smallholders with complex value chains than from one large producer.
Indeed, 'high risk' producer countries are far more likely to suffer from high levels of existing poverty. Farmers in such countries will need targeted support to ensure that they do not face being shut out of their respective markets.
“Compared to bigger or large-scale farmers who may have some advantages in terms of finances, there is the risk that smallholder farmers will probably be left out,”
“I think that there needs to be a lot more done to support the smallholder farmers, especially those who are not in cooperatives and don’t have any idea about what is happening with this Regulation,” she adds.
Lawmakers in Congress need to avoid turning a well-intended law on deforestation into something that benefits multinationals at the expense of small farmers.