Why Sustainability and Traceability Matter More Than Ever

by Dr Rachael Ramsey, Head of Science & Research

Sustainability and supply-chain traceability of agricultural products is increasingly important for agricultural businesses. Farmers, food producers, and the wider agricultural supply chain are under increasing pressure to provide better evidence about the environmental footprint of their products.

A particular area of focus has become demonstrable evidence on where products are from and how they were produced. Linked to this, is knowing whether deforestation (and therefore land-use change) took place within their production. Whilst this is directly relevant to certain commodities, it is especially relevant to imported feed ingredients for animals on farm. There are two major frameworks that will influence and shape how agri-food businesses will have to measure and report their environmental impact in coming years.

The first is the EU Deforestation Regulation (EUDR), which is designed to ensure that products coming into the EU market are not associated with deforestation. This sits alongside the recently published GHG Protocol’s Land Sector and Removals (LSR) Standard, which provides an approach for the accounting of greenhouse gas (GHG) emissions and carbon removals associated with agricultural, forestry, land use, and land-use change.

Though these frameworks overlap in scope and underlying data, they are designed for different purposes and the requirements are different. Additionally, for UK farmers and supply chains, there is a key distinction; EUDR applies to Northern Ireland but not Great Britain.

Understanding the EUDR

EUDR is a legal due diligence requirement that applies to businesses producing, importing, processing, trading and/or exporting seven specific commodities: cattle, cocoa, palm oil, coffee, rubber, wood, and soy (and products made from these such as wooden furniture or chocolate) on the EU or Northern Ireland market.

In Northern Ireland this can include the farmers, if they are the first in the chain of supplying a product that is in scope of the regulation, i.e. the selling of live cattle on the market in Northern Ireland or the EU, or for exportation. For products included within the requirement, operators need to demonstrate that the product is deforestation-free since 31 December 2020, has been produced according to the relevant laws in the country of production, and that the product has the appropriate supporting due diligence information.

What is the LSR Standard?

The GHG Protocol’s LSR Standard is different from the EUDR in that it approaches land-use change and deforestation in terms of carbon accounting, and it is not legislative. The 2026 Standard, sets out guidance on how companies should account for GHG emissions and carbon dioxide (CO2) removals, including those associated with land-use change from deforestation. Additionally, the LSR Standard does not use the same cut-off for deforestation as EUDR. For annual crops and other shorter-cycle products, land-use-change emissions are generally assessed over a 20-year period from the present.

From 1 January 2027, a company maintaining compliance with the GHG Protocol’s voluntary LSR framework must apply the reporting requirements. So while EUDR essentially considers whether an in-scope product such as soy meets the requirements in order to be sold at market, the LSR Standard considers how emissions associated with land use and management practices are calculated and reported.

Simply put, EUDR is primarily concerned with market access, whilst the LSR Standard is concerned with supporting market credibility, trust, supply chain transparency, and environmental sustainability credentials.

What will be different in Great Britain?

The UK Government is developing its own Great Britain Deforestation Regulation, built on existing frameworks and regulation, rather than adopting EUDR directly. The intention is to follow EUDR legislation closely and the proposed rules would cover broadly similar commodities (wood, cattle, cocoa, coffee, palm oil, rubber, soy, chocolate and furniture), require businesses with an annual turnover of greater than £1 million to collect similar traceability and geolocation information, and to show that a product was produced in accordance with local laws. The UK Government has said it intends to move towards a deforestation-free standard by 2027.

Crucially however, the proposed deforestation regime in the UK only states that forest clearance was legal under local laws, whereas the EUDR states explicitly that in-scope products are to be deforestation free within the specified time period. This means that a product could satisfy the proposed regime in Great Britain but still fail EUDR compliance if (locally legal) deforestation had taken place after the 2020 cut-off date.

However, Northern Ireland is different because of its unique position under the Windsor Framework. This framework means that EUDR itself will apply in Northern Ireland as part of the agreements made to support NI’s access to the EU single market. Which means that UK businesses placing an in-scope product (such as soy) on the NI or EU market must comply with EUDR. Farmers in Northern Ireland can therefore potentially fall within the requirements of the EUDR. For example, sales of live cattle can be relevant to EUDR legislation but dairy products (such as milk) are out of scope.

Where does carbon accounting factor in?

There is some overlap between the EUDR and the LSR Standard in terms of data needs. Both the EUDR legislation and the LSR Standard look for traceability and what happened on the land that was used to produce that specific commodity.

However, whilst EUDR requires supplier details and specific geo-location information of the land used for the product, the LSR Standard traces the product to a specific sourcing region where more specific land-use change factors are then used. If this is not available, broader factors (country-specific) may be needed.

This means that meeting the compliance requirements of one, does not reliably mean that the requirements of the other are also met.

An example: Soy meal in purchased animal feed

For many Agrecalc users, a familiar example is purchased feed containing soybean meal. From the farmers perspective, the information available may simply be a docket showing the amount purchased, feed type and nutritional value and perhaps its country of origin.

However, for carbon accounting, the origin of that soy can affect how its land-use change emissions are calculated as depending on where it was grown, a more specific land-use change value may be available. If the only information available is a country or region of origin, a broader emissions factor may need to be used.

An example might be in entering feed ration data into Agrecalc as ‘soyabean meal, Any origin’ or ‘soyabean meal, Brazilian’. Though the amount of feed being used has not changed, the data behind the value has.

It is important to state that farmers are not expected to investigate the origin of the soy beyond the information they hold from the supplier. That responsibility sits with companies, processors and suppliers who are accountable for finding better traceability information. The farmer buying meal that is already at market is not accountable under EUDR for that soy simply because it is being fed to their livestock.

Carbon tools should be able to make use of this data in time.

What does this mean for carbon accounting longer term?

Farm carbon tools increasingly find themselves sitting in the space between data collected on farm and the increasing requirements of processers, retailers, and supply chain business to report emissions to emerging carbon standards such as the LSR Standard.

This does not mean that these farm level tools will also be required to become part of a wider EUDR compliance tool suite. However, it does mean that carbon tools will need to make better use of emerging and more granular detail around product origin and traceability relevant to agricultural carbon accounting once it becomes available, and land-use traceability requirements become more cohesive alongside improvements to calculation methodologies.

Watch this space.

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