Leave no-one behind: smallholder farmers must be put at the centre of tackling deforestation in supply chains

Deforestation poses an existential threat to the climate, accounting for up to one fifth of all greenhouse gas emissions.

Agriculture is responsible for 90% of deforestation globally, with a significant proportion of crops grown in deforested areas bound for export. Consumption of goods like coffee and cocoa in high-income countries make a huge contribution to demand. The UK market is responsible for clearing a forest area the size of Liverpool every year.

It is therefore welcome to see the EU and the UK take steps to address this. However, the voices of smallholder farmers in low- and middle-income countries are missing from the conversation, with potentially devastating consequences.

Understanding new EU and UK deforestation regulations

The EU has introduced its Deforestation Regulation (EUDR), which sets strict due diligence requirements for commodities linked to deforestation (coffee, cocoa, cattle, palm oil, soy, timber and rubber). From the end of 2025, companies will need to verify that any of the listed products entering the EU market are deforestation-free and comply with local production laws in the country of origin.

The UK is introducing its own Forest Risk Commodities (UKFRC) scheme, which covers the same commodities as the EU except timber and coffee. Implementing legislation is anticipated in the coming months, but since so many supply chains come through the EU, UK companies are already getting ready for compliance.

The need to consult smallholder farmers in forested areas

The EUDR and UKFRC are a step in the right direction for climate action (although recent delay  to enforcement has weakened the EUDR). However, the regulations will pose significant challenges for smallholder farmers in low- and middle-income countries who are responsible for producing the majority of some deforestation-risk commodities. For example, 90% of the world’s cocoa and 75% of coffee is produced by smallholders in forested areas across Africa, Latin America and Asia.

The EUDR and UKFRC have so far failed to meaningfully engage with the very communities that the regulations will most affect. Governments in low- and middle-income countries have repeatedly raised the issue. They are particularly aggrieved by rich countries’ failure to meet their climate commitments as they simultaneously demand more from low- and middle-income countries through environmental regulation.

If these governments feel shut out, it is no surprise that many smallholders find themselves as no more than ‘rule-takers’; unable to meet the new standards, let alone shape them to their own benefit.

Smallholder challenges to complying with new deforestation regulations

One of the biggest criticisms of the deforestation regulations is the one-size-fits-all approach to implementation. For instance, Ghana’s traceability system for cocoa is already established, while Sri Lanka does not yet have a system for rubber. Both supply chains will need to be compliant by the end of this year, but there is  no provision for different levels of preparedness. There are similarly vast differences between supply chains and countries as to whether and how land is registered and what support is available to smallholder farmers.

The cost of complying with new deforestation rules could be devastating for smallholder farmers. Data on compliance costs vary, with one study showing that the EUDR will cost around 0.1% of the importer’s operating costs, and others citing a US$1.5 billion cost to consumers.

Even if these costs only amount to a small proportion of the importer’s total revenue, there is nothing to stop them being pushed up the supply chain to smallholder farmers who are unlikely to be able to afford them. Estimates from an Indonesian palm oil farmers’ organisation suggest that the initial outlay for EUDR compliance could be €70–€200 per farmer alone. Farmers may have to bear relatively huge compliance costs without receiving a higher price for their products. This could drive many out of UK and EU supply chains, or out of business completely.

A significant amount of data will be required to monitor compliance, which brings its own set of issues. Under the EUDR, farmers’ land plots are being mapped in polygons to show precise climate, biodiversity and yield information about each farm. If treated ethically, data can be a tool for empowerment. Farmer-led data cooperatives and transparent national traceability systems are emerging as promising models. These ensure farmers retain control over their digital information and can leverage it for better pricing, technical support or market access. However, data is being extracted in some instances without farmers’ meaningful consent or benefit.

Land tenure remains another major hurdle. Many smallholders work on land without formal titles. Proving legal ownership, as required under the EUDR, is therefore a significant challenge. The need to comply with the new regulation presents an opportunity: gaining more secure land rights can offer farmers long-term stability. However, achieving this is a huge task which will require significant resource, including to ensure that smallholders are part of the process, working with their respective governments.

How the UK government can ensure deforestation regulation includes smallholders

Here are four steps the UK must take to ensure that no-one is ‘left behind’ under new deforestation rules:

1. Put farmers at the heart of decision making

To ensure equitable outcomes, farmers must be involved from the outset in policy development and implementation. Strengthening farmer cooperatives, and fostering transparent, participatory governance of the way traceability systems, compliance frameworks and support programmes are designed, is key. As the UK develops and rolls out the UKFRC, it has an opportunity to do this more thoroughly than many EU governments and businesses have done to date.

2. Provide financing, technical training and a living income

Governments and businesses across the UK and the EU must offer accessible finance, technical training and long-term infrastructure investment to help smallholders make the transition.

3. Ensure data empowerment

The UKFRC must follow data governance principles that prioritise farmer rights, protect privacy and promote informed consent. Empowered farmers, rather than merely compliant ones, will be better equipped to drive lasting sustainability.

4. Support secure land tenure

The UKFRC should actively support initiatives that address land rights in an inclusive way – particularly for women and other communities that are marginalised.

Smallholder farmers are already struggling with climate impacts, volatile markets and high operating costs. The UKFRC must be designed in a way that puts smallholders at the heart of new measures if it is to avoid unintendedly harming a group that is critical to so many UK supply chains.