The Impact of EUDR on Smallholders: Ensuring Compliance Without Exclusion
The World Bank warns that global deforestation could result in economic losses of $2.7 trillion per year by 2030. Despite this alarming projection, only 3% of companies assessed by Global Canopy have robust, fully implemented deforestation policies. Despite many efforts to stop deforestation, voluntary commitments haven’t been enough to deliver the results we need.
From Voluntary to Mandatory: EUDR Reshaping Corporate Accountability
The EU Deforestation Regulation (EUDR) marks a major turning point. It shifts the conversation from voluntary action to mandatory compliance, requiring companies to prove that products entering the EU market are deforestation-free, legally sourced, and fully traceable. This applies to high-risk commodities like cattle, cocoa, coffee, palm oil, rubber, soy, and wood—which together drive over two-thirds of global deforestation. For micro and small companies like those in MRTA’s portfolio, this will be enforceable from 30th June 2026.
As the second-largest importer of tropical deforestation-related goods, the EU is taking a bold step. By requiring strict checks and transparency, the EUDR aims to boost sustainable farming and make environmental responsibility a prerequisite for doing business in the EU.
Cocoa beans growing on one of MRTA’s “Restoration Champions’” farms in Ghana. Cocoa is grown in a mixed agroforestry model to nurture both crops and ecosystem. Source: Regeneration.
Deforestation-Free, But at What Cost? The Challenges for Smallholders
Over the past two years, Regeneration (through Rebuild and the Markets Readiness and Technical Assistance Facility) has been collaborating with agribusiness partners to strengthen smallholders’ capacity to comply with the EUDR and maintain their access to global premium markets. While the EUDR is a vital step toward protecting the world’s forests, our work has revealed significant barriers that micro- and small enterprises face in complying—putting them at risk of exclusion from key supply chains:
Financial Constraints: Traceability systems required for EUDR compliance are costly. While these expenses may eventually be reflected in commodity prices, in the short term, smallholders—80% of whom live below the poverty line—will bear the financial burden.
Access to finance remains a critical barrier to progress in the agri-food sector. Despite its importance to climate solutions, this sector receives just 7% of total climate finance—with Sub-Saharan Africa receiving only 8% of this.
Local financial institutions often impose prohibitive interest rates—typically ranging from 18–36%—while requiring collateral that most agribusinesses, especially smallholder farmers, simply do not possess. In addition, banks tend to view agriculture as high-risk, further discouraging lending.
Concessional finance is scarce and often supports later-stage enterprises (e.g., those with revenues of >USD 5m), bypassing the smaller aggregators, processors, and exporters who play a pivotal role in engaging thousands of farmers and building transparent, traceable supply chains. As a result, these vital actors—and the smallholders they serve—struggle to access the capital needed to meet compliance requirements and drive sustainable growth.
Without more inclusive, accessible financing models, key producing regions such as Kenya, Ghana, Rwanda, the DRC, and Burundi risk being left behind in the global shift toward climate-resilient agricultural systems.
Technological Hurdles: Many smallholders lack essential tools for EUDR compliance, including remote sensing, data analysis platforms, and even basic digital tools—with only 29% of the population in Sub-Saharan Africa having internet access.
Mapping and monitoring supply chains is especially tough for small agribusinesses like MRTA’s RCs, that work with thousands of smallholder farmers across multiple counties. Unlike large commercial farms, this fragmentation makes it far more resource-intensive and complex.
These efforts are further hampered by limited access to finance—among the lowest globally—making it difficult to invest in the technology and systems needed for compliance. Weak infrastructure and scattered data systems only deepen the challenge.
Information Barriers: EUDR’s complexity—for example, around geolocation set up—makes compliance challenging without clear guidance on implementation.
This challenge is especially acute in Sub-Saharan Africa, where over 60% of the population are smallholder farmers working in highly fragmented supply chains.
Unlike regions dominated by large commercial farms—such as those in Latin America—disseminating information and ensuring compliance across thousands of smallholders is exponentially more difficult, requiring far greater coordination, time, and resources.
Limited Access to Partnerships: Many smallholders face challenges connecting with, and benefiting from, organizations that could support their compliance efforts.
Smallholders often operate in remote areas with poor digital access, making it hard to connect with support networks and coordinate collective action. Even when partnerships exist, smallholders may lack the financial, technical or organizational capacity to engage meaningfully.
Restricted participation in decision-making—often dominated by large agribusinesses or global actors—limits smallholders’ influence over how support is shaped and delivered. Their priorities are frequently overlooked, and fragmented farmer networks make it harder to organize, attract investment, or advocate for their needs. This cycle of exclusion leaves them without the partnerships needed to meet complex regulations like the EUDR.
Land Tenure Challenges: Legal land ownership is often required to verify deforestation-free status, yet many smallholders face insecure tenure or ambiguous boundaries, complicating compliance efforts. In Sub-Saharan Africa, only 14% of rural land is formally recorded.
Coffee cherries being harvested from a coffee plant. The red and green cherries are the fruit of the coffee plant, which are processed to produce coffee beans. Source: Stock Images.
Trade Disruptions and Market Shifts: Potential Unintended Consequences of EUDR
Without proactive solutions, the EUDR’s implementation risks unintentionally excluding smallholders from European markets. With smallholders producing 35% of the world’s food, this marginalization could have major repercussions on supply chains, sustainable land management, and rural livelihoods. The stakes are even higher in Sub-Saharan Africa, where smallholder agriculture employs over 60% of the population and contributes nearly a quarter of the region’s GDP. Forest-risk commodities covered by the EUDR—such as cocoa, coffee, and rubber—are especially vital to this region. For example, West Africa produces 70% of the world’s cocoa, contributing to ~10% of Ghana’s GDP and ~15% of Côte d’Ivoire’s GDP. Any disruption to export access—particularly to the EU, the biggest market—could stall economic growth, jeopardize the livelihoods of millions of smallholders, and reverse hard-won gains in land restoration and sustainable agriculture.
Challenges faced are likely be more acute with African smallholders, who typically face more barriers than other regions like Latin America, where greater access to internet and traceability systems, finance, certification programmes and regional initiatives, are helping farmers adapt and retain market access. A recent report suggests that Sub-Saharan Africa is at risk of losing up to $11 billion in annual export revenue as a result of compliance challenges—around ~2% of total export revenue. The risk is particularly significant for commodities like cocoa, where EU-Africa trade ties are historically deep: over half of West African cocoa is destined for European markets.
As well as causing trade disruptions and food shortages in the EU, this may inadvertently slow progress on sustainable agriculture and forest protection—outcomes the EUDR ultimately aims to accelerate. For example, as compliance challenges mount, smallholders unable to meet EUDR requirements may redirect exports to growing markets with less stringent deforestation regulations—such as China and India.
Meanwhile, the EU is likely to face increasing market consolidation, benefitting large, vertically integrated suppliers equipped with the resources and capabilities necessary to meet compliance requirements—a shift that could risk further entrenching existing inequalities in global trade and unintentionally favour large, commercial farming models.
Technical assistance providers like Rebuild and MRTA bring specialised expertise to the table —supporting smallholders with capacity building, digital literacy training, and access to traceability tools. These organizations serve as vital bridges, translating policy into practice and ensuring that farmers aren't left behind due to lack of information or resources.
The Vision: EUDR Preventing Deforestation and Empowering Smallholders
With the right support and interventions, EUDR has the potential transform forest protection, protect carbon sinks and biodiversity and empower smallholders. ABOCFA, a Ghanaian cocoa cooperative in MRTA’s portfolio, is a prime example of how cooperatives can support smallholder farmers to navigate compliance, maintain market access, and drive sustainable agriculture—proving that regulation and inclusivity can go hand in hand:
Conclusion: Balancing Compliance and Inclusion
The EUDR represents a pivotal step in global efforts to curb deforestation. But without intentional support, it risks sidelining the people most vital to sustainable land management: smallholders and community-based enterprises. In regions like Sub-Saharan Africa, where agriculture underpins livelihoods and economies, exclusion is not just unjust—it’s counterproductive.
The good news is that solutions already exist. From locally adapted traceability tools, to open source knowledge sharing platforms, to coordinated collective action, to targeted technical assistance, there are proven ways to integrate smallholders into compliance pathways.
European buyers, policymakers, and investors have an opportunity to shape a new model: one where forest protection doesn’t mean supplier consolidation or exclusion, but rather inclusion, regeneration, and resilience. By putting smallholders at the centre of implementation, the EUDR can drive a triple win- building deforestation-free supply chains, protecting high-risk restoration landscapes, and supporting the livelihoods of the farmers who feed the world.