EUDR – challenge or opportunity for the timber industry?

First the drop in demand, then the lack of access to FSC wood, now the EUDR…. what else?
The timber industry has barely had time to recover from the FSC turmoil, and already another challenge is looming – the EUDR, an EU regulation designed to restrict trade in timber from deforested areas. Timber business owners are worried about bureaucracy, costs, controls and losing customers. Is the EUDR the nail in the coffin for small and medium-sized businesses? Or is it, however, an opportunity to clean up the market and gain an advantage over cheap imports from the East? Let’s try to understand what we are really up against.

EUDR – what are timber entrepreneurs afraid of?

• That they will not acquire EUDR compliant timber,
  
• That their suppliers will not meet the standards,
  
• That they will not be able to sell timber already stored,
  
• That they will not meet the requirements of ‘due diligence’ (whatever that is),
  
• That they will drown in documentation – instead of producing, they will write papers,
  
• That they will be forced to implement costly systems that will sink them,
  
• that they will spend a fortune on an implementation that later proves to be redundant when the administrative decision is changed,
  
• that they will have to disclose the source of the goods to customers,
  
• That they will lose customers because they will not meet the EUDR requirements.
  

EUDR – an opportunity for entrepreneurs?

• Alibaba, AliExpress, Temu, Amazon, Allegro – access to foreign manufacturers is easy. The EUDR can become our trump card – the certification that cheap sources from the East will not provide can be our ace.
• Most customers in Europe require ‘timber certification’. The most recognised certification is FSC, less commonly PEFC – both are costly, requiring implementation and compliance: labour rights, prohibition of child labour, anti-bullying, etc. Until now, lack of FSC meant exclusion for a company not being able to bid for many contracts. Now some clients will accept the absence of FSC – because EUDR is enough for them.
• The State Forests have withdrawn from FSC. With EUDR they can no longer. Supply chains should remain secure.
  
  In 2024, the State Forests withdrew from the renewal of their FSC certificates by a top-down (probably political) decision. Access to the raw material required by many customers has been reduced. The supply of FSC wood fell dramatically and the price on the market skyrocketed. Supply chains were broken. Many companies went out of business. Now individual Regional State Forest Directorates are returning to FSC, but broken business relationships often cannot be repaired. For many companies, the game is over.

EUDR – what is known? Theory vs. practice

Does the EUDR apply to me at all?
The EUDR (Regulation 2023/1115) covers, among other things, timber and timber products.

By when should the EUDR be implemented?
Deadline postponed:

• until 30 December 2025 – for large and medium-sized companies,
  
• until 30 June 2026. – for small.
  

Responsibilities – THEORY

Before a product can reach the EU market, a Due Diligence Statement (DDS) must be submitted to the EUDR-IS system, which is already in place.

It will be the entrepreneur’s responsibility to collect and store the information:

• Where the timber comes from (accurate to the forest plot),
  
• name of supplier, country of origin, species and quantity of wood.
  

Responsibilities – PRACTICE

The State Forests are working on a digital system to enable plot location. Information from the Gromnik Forest District suggests that this functionality will be part of the new version of the Forestry and Woodland Portal. However, the details are unknown.

What about cases where, for example, we produce 5 pallets of chopping boards from material sourced from 40 different plots of land acquired throughout the year? How do you specify the location for briquette production?

Controls and penalties

The control is to be handled by the GIOŚ (Chief Inspectorate of Environmental Protection), with powers to impose fines and financial sanctions.

Risk assessment – theory

Does the wood come from a legal source?

PRACTICE – Will timber ‘from the peasant’ have the required documents? Maybe the idea is to limit logging from private forests?

Does the timber come from land deforested after 2020?

PRACTICE – How to check? The supplier should indicate the plot. There are tools available on the web, e.g:

• Global Forest Watch,
  
• FAO SEPAL,
  
• Google Earth Engine – but analysis requires knowledge.
  

The land must not be converted (e.g. from forest to plantation or arable field).

The question is who should carry out this analysis and who will manage it at all.

Has the product contributed to forest degradation?

PRACTICE – The EUDR defines degradation as the conversion of a natural forest into a monoculture. Presumably all you need to do is get a statement from the supplier and take their word for it.

Additional risk factors

• Corruption in the country of origin – presumably the CPI (Transparency International) will be taken into account. But how many CPI points means low risk?
  
• Level of forest law enforcement – there are sources like the NEPCon Sourcing Hub, FAO, World Bank – but no clear guidelines on where exactly to take data from.
  
• Transparency of the supply chain – who is to assess it? Will the entire supply chain have to be disclosed to customers? Will companies have to disclose their sources and subcontractors?
  

The EUDR-IS system, after going through all the steps, is supposed to assess the non-compliance itself. If the risk of non-compliance > 0, countermeasures will have to be implemented:

• change of supplier,
  
• additional documents,
  
• source audit.
  

PRACTICE
It can be assumed that suppliers will care about compliance with the EUDR. But for a small entrepreneur who needs to complete an order quickly and cheaply, the vision of auditing and inspecting suppliers sounds unrealistic.

SUMMARY

Implementing new procedures is never easy. Technological and formal changes are particularly painful. For many entrepreneurs, the spectre of additional responsibilities, costs and loss of customers is frightening – and makes them think whether it is time to change industry.

But to the question “is it necessary to be afraid of the EUDR?”, it is worth posing another: is not the progressive destruction of our planet more worrying?

In his book Life on Our Planet. My History, Your Future [2021, Poznan Publishing House] David Attenborough, shows what devastation we have wrought on our planet based on observations made over his 79 years of work. The main indicator of devastation that he uses is forest cover change. However, he gives hope that we still have a chance to save the world as we know it.

The EUDR could be a step in this direction.