São Paulo (Reuters) – A proposal from the European Commission that brings some flexibility to the law that prohibits the import by the European bloc of commodities linked to the destruction of forests frustrates Brazilian agribusiness exporters who have prepared to be ready to meet the requirements as early as 2025, evaluated experts from Rabobank.
According to analysts at the Dutch bank, who carried out a detailed study on the topic, many Brazilian companies, including those in the soybean sector, made investments to comply with the rules and capture immediate rewards for complying with the legislation.
However, in the commission’s proposal released last week, flexibility was included to give small businesses another 12 months of adaptation, in addition to not foreseeing fines for any operator throughout the first half of 2026.
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In the case of soybeans and bran, due to the large size of the trading companies involved in the negotiations of these products, the postponement for the smaller companies does not bring benefits to the sector in Brazil, which had considerable costs in logistics and in the segregation of cargo to the EU, in order to comply with the law.
“I think it’s a very significant problem, especially because those who made the investment and adapted were there looking for the possibility of capturing a better premium to gain access to the European market. The fact that there is no fine (…) already somewhat eliminates the possibility of having this more favorable premium for the European market”, said Marcela Marini, a specialist at Rabobank.
The European Union accounted for just under half of Brazil’s soybean meal exports last year.
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The initial exemption from the fine for those who fail to comply with the rules, according to the most recent proposal for the law to come into force in 2025 and not be postponed for another year, would only be valid if approved by the European Parliament.
A decision on how the rule will be implemented is expected in the coming weeks. If the new proposal is not confirmed, the legislation will come into force at the end of 2025, without flexibility, as expected when it was postponed last year.
Financial losses
According to a study by the bank to which the Reuters had access, a further postponement could generate financial losses for those who prepared to deliver EU requirements on time, further resulting in fears about complementary projects.
For Brazilian beef exports, the entry of the law at the end of 2025 with flexibility would represent “much more frustration”, due to not obtaining a return on investments on time, “than an opportunity” to gain time, said analyst Wagner Yanaguizawa.
“This bonus that was being expected should not occur in this short term”, he said.
In the Brazilian coffee sector, which has the product’s main destination in the EU, the law must come into force during a period in which global supply is restricted and prices are historically high, recalled analyst Guilherme Morya.
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He highlighted that the possibility of there being no fine initially, if this aspect is confirmed, could on the other hand help the sector to learn the processes with less stress.
“I think it will be a good homework for us to understand what it will be like, it will provide some relief in this situation. It will be mandatory to comply with the rule, but there will not be a fine for the first six months”, he said.
He recalled, for example, that the 27 EU countries have different inspection capabilities, according to the study. Although harmonization of European systems is expected, the scope of the law makes the task complex, and countries with more institutional capacity tend to import more quickly and at a lower cost.
