Recently the EU published anti-deforestation regulations in support of sustainability that basically call for the ban of all commodities produced from deforested land. This includes legally deforested land and deforestation that is strategically planned. The EU stated that the main driver of deforestation is the expanded agricultural production of commodities such as palm oil, soy, cocoa, and coffee as well as cattle farming. The EU plans to rate imports in terms of several factors including deforestation and will identify items as low, standard, or high risk. Based on this, it sounds like emerging economies in countries such as Indonesia, Malaysia, and Brazil may face challenges. Although the new regulations mention other commodities in addition to palm oil, many believe that palm oil and its producing countries are being targeted. It is widely expected that prices for several key commodities will rise significantly.

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Picture Credit Susanne Kuehne

Posted on 21 January 2022