European Union Deforestation Regulation (EUDR) and Agrifood Supply Chains: New Due Diligence obligations and a new liability framework for sector operators

The European Union’s growing focus on the green transition and the sustainability of production supply chains is driving the progressive development of EU environmental legislation. This has resulted in increasingly stringent requirements for the agrifood sector, particularly in relation to traceability, transparency and the accountability of economic operators.

One of the most significant developments is Regulation (EU) 2023/1115, adopted by the European Parliament and the Council in May 2023 and commonly known as the European Union Deforestation Regulation (EUDR). The Regulation governs the placing on the EU market and the export from the EU of certain commodities and products associated with deforestation and forest degradation.

The EUDR forms part of the broader framework of EU green transition policies and is consistent with the objectives of the European Green Deal and EU strategies on biodiversity and sustainable food systems. It pursues two aims: minimising the EU’s contribution to global deforestation and forest degradation, and reducing greenhouse gas emissions and biodiversity loss worldwide.

The EUDR’s most significant innovation is its shift away from a control model based primarily on documentation and subsequent checks towards a system of preventive controls. These cover both the origin of certain commodities and products and the environmental conditions under which they are produced.

The EUDR places responsibility for these preventive checks on economic operators in the agrifood sector, distinguishing between the following categories and assigning each different, proportionate obligations:

• upstream operators, namely those who place an EUDR-relevant commodity or product on the EU market for the first time or export it to non-EU markets;
• downstream operators, namely those who place on the EU market or export to non-EU markets an EUDR-relevant product manufactured using EUDR-relevant commodities that have already been covered by a due diligence statement or a simplified declaration;
• traders, namely those who, without being upstream or downstream operators, make EUDR-relevant commodities or products available on the EU market.

Commodities and Products Covered by the EUDR

The Regulation applies to the placing on the EU market and the export from the EU of only the following commodities: cattle, cocoa, coffee, oil palm, rubber, soya and wood.

Its scope also extends to certain products expressly listed in Annex I to the Regulation that contain, have been fed with (in the case of cattle), or have been made using any of these seven commodities.

Accordingly, the EUDR does not apply simply because a product belongs to the agrifood sector. Its applicability depends on whether the product falls within one of the specific commodity or product categories expressly listed in the Regulation.

Prohibition on Marketing Non-Compliant Products

The EUDR’s core requirements are set out in Article 3. Under that provision, relevant commodities and products may be placed or made available on the EU market, or exported from the EU, only if three conditions are met.

First, the relevant commodities and products must be deforestation-free. This means that the commodities—whether considered in their own right, as components of relevant products or, in the case of cattle, as commodities used to feed the animals—must originate from land that has not been subject to deforestation after 31 December 2020. In the case of products containing wood, the wood must have been harvested without causing forest degradation in the forest of origin after 31 December 2020.

Second, the relevant commodities and products must have been produced in accordance with the relevant legislation of the country of production.

Third, the relevant commodities and products must be covered by a due diligence statement or, where applicable, a simplified declaration.

These requirements are cumulative. Failure to meet any one of them precludes the lawful placing or making available of the relevant commodities and products on the EU market, as well as their export from the EU.

Importantly, the Regulation does not merely require the commodity or product concerned to comply with the legislation of its country of origin. To be lawfully marketed, it must also satisfy the EU requirements relating to deforestation.
In effect, by adopting the EUDR, the EU legislature has extended environmental oversight across international supply chains, with significant implications for all EU businesses sourcing from producers outside the Union.

New Due Diligence Obligations: From Traceability to Risk Assessment

To ensure compliance with the three conditions laid down in Article 3, the EUDR establishes a mandatory due diligence system for upstream operators.

The system consists of three stages and is designed to enable operators to verify, before placing products on the market or exporting them, that all commodities and products covered by the EUDR meet the applicable requirements.

First, the upstream operator must collect specific information about the products, quantities, suppliers and country of production, as well as the geolocation data for the plots of land from which the relevant commodities originate.

The upstream operator must then conduct a risk assessment, applying the criteria set out in the EUDR to determine whether the relevant commodities or products may be non-compliant with the Regulation.

Finally, if the risk assessment does not establish that there is “no or only negligible risk” of non-compliance, the upstream operator must take appropriate risk-mitigation measures to bring the risk down to that level.
In other words, the EU legislature makes the placing of these commodities and products on the market conditional on a prior finding that the risk of non-compliance is “no or only negligible”.

Once the upstream operator has established that there is “no or only negligible risk” of non-compliance in relation to the commodity or product concerned, it must submit the standard due diligence statement or, in specific cases, a simplified declaration. The commodity or product may be placed on the EU market or exported from the EU only after the relevant statement or declaration has been submitted.

Traceability Systems and the Role of Digital Technologies

The EUDR places particular emphasis on tracing the commodities used in relevant products. Businesses concerned must therefore be able to establish the precise geographical origin of those commodities.

Digital technologies are particularly important in this regard. Geolocation systems, satellite-based tools, digital supply-chain management platforms and blockchain-based solutions can all make a significant contribution to collecting, storing and verifying the specific information required under the Regulation.

The EUDR therefore creates interesting development opportunities for the agrifood technology sector, encouraging the adoption of innovative tools to manage environmental compliance.

However, using technological tools to pinpoint the origin of relevant commodities and collect other useful data does not, in itself, guarantee compliance with the Regulation. Data obtained through such tools must still be carefully assessed for reliability, verifiability and consistency. Responsibility for carrying out these checks remains with the parties subject to the obligations laid down in the EUDR.

Allocation of Obligations Along the Supply Chain – The Intervention of Regulation (EU) 2025/2650

A key issue for businesses operating in the agrifood sector and using commodities covered by the EUDR or products listed in Annex I is identifying which economic operators are subject to the obligations introduced by the Regulation and how the related responsibilities are allocated among them.

Regulation (EU) 2025/2650 amended the EUDR framework, drawing a clear distinction between upstream operators, downstream operators and traders.

Under the amended rules, the obligation to submit a due diligence statement, whether standard or simplified, rests exclusively with upstream operators. Downstream operators and traders are subject to different obligations, depending on their role in the supply chain and the size of their business.

This revised allocation of obligations makes it essential to determine correctly the role played by each economic operator within the supply chain.

Not every business that handles a product covered by the EUDR is subject to the same requirements.

Correctly identifying the role of each economic operator dealing with commodities or products covered by the EUDR is also essential when drafting commercial contracts. Such contracts should clearly set out the parties’ duties to cooperate and share information, the relevant compliance warranties, and the consequences of any breach or irregularity relating to the EUDR.

Inspections, Liability and Penalties

Under the EUDR, enforcement is entrusted to the competent authorities of the Member States. Their responsibilities include verifying compliance with EU-level requirements, the accuracy of statements, the adequacy of due diligence procedures adopted by operators subject to those requirements, and the conformity of the relevant commodities and products.

The Member States are also responsible for determining the penalties applicable to breaches of the EUDR and setting their severity. These may include, among other measures, fines, confiscation, temporary exclusion from public procurement procedures and public funding, and bans on placing the relevant commodities or products on the market.

As regards the Italian legal framework, on 4 November the Italian Parliament approved the “Coltivaitalia” bill, which delegates to the Government the task of bringing national law into line with the EUDR, including by establishing the relevant inspection and penalty framework. The implementing legislation is expected to designate the Ministry of Agriculture, Food Sovereignty and Forestry as the competent national authority and to establish a system of penalties consistent with the EU principles of effectiveness, proportionality and dissuasiveness.

Upcoming Deadlines

The application of the EUDR has been postponed in stages to give businesses in the EU more time to prepare for the new anti-deforestation requirements. Following the initial postponement under Regulation (EU) 2024/3234, Regulation (EU) 2025/2650 further deferred the deadlines and provided for the EUDR to apply in stages, according to the following timetable:

• 30 December 2026: the Regulation will apply to medium-sized and large enterprises, as well as to micro and small enterprises operating in the wood and wood-products sector that were already subject to the previous EU legislation;
• 30 June 2027: the obligations will be extended to natural persons and micro and small enterprises established by 31 December 2024, which will therefore have an additional six months to adapt to the EUDR framework;
• 30 December 2027: the framework will also apply to the new products added to Annex I by Commission Delegated Regulation (EU) 2026/2102.

This timetable should give businesses in the EU time to plan and implement the necessary adjustments, including by organising traceability systems, conducting supplier checks and establishing internal procedures to ensure that their products comply with EU anti-deforestation legislation

Why the EUDR Represents a Turning Point for the Agrifood Sector

The significance of the EUDR goes far beyond the introduction of new documentation requirements. It marks a substantial shift in EU legislation governing production supply chains and international trade relations.

Under the EUDR, environmental compliance becomes a mandatory legal condition for placing certain commodities and products on the EU market and exporting them from the EU to non-EU markets.

Traceability therefore becomes central. The Regulation requires complete, reliable and verifiable information to be shared more extensively throughout the supply chain, with a tangible impact on relationships between producers, importers, processors, distributors and retailers.

The simplifications introduced by Regulation (EU) 2025/2650 seek to reconcile the EUDR’s environmental objectives with the need to ensure that the obligations imposed on individual economic operators remain proportionate and manageable, including through the use of increasingly innovative technological tools.

The implementation of the EUDR will bring about a significant transformation of the European agrifood market and is likely to affect how all businesses operating in this market are organised, regardless of their position or role in the supply chain. The challenge will be to make EUDR compliance an integral part of production supply chains, while balancing environmental protection, legal certainty and economic competitiveness.

de Capoa Law Firm
Anna Ballerini