EU Regulation: Curbing Forest Conversion for Agriculture Comes at a Price

Some hillsides in Nan Province, Northern Thailand, have been cleared and converted for agriculture. Photo credit: David Gritten.

Share on:           


The EU’s regulation to reduce tropical deforestation caused by agriculture will be crucial, but it may impose severe short-term costs on smallholders.


Tropical deforestation undermines key Sustainable Development Goals (SDGs), especially Goal 13: Climate Action and Goal 15: Life on Land, driven significantly by global demand for agricultural commodities.

The European Union’s Deforestation Regulation (EUDR) aims to address this issue by placing requirements on the importation of certain commodities. It is a potential game-changer, especially with similar regulations planned in other markets and additional European Union (EU) efforts.

However, many smallholders will face challenges complying with these requirements, particularly in countries like Thailand where they play a vital role in commodity production. 


The urgency to stop deforestation is clear, given its impact from the landscape to global levels. This need is reflected in the considerable evidence of our failure to meet SDG target 15.2—to halt deforestation by 2020. Between 2015 and 2020, the world lost forests equivalent to the land area of Spain, totaling 50 million hectares (ha).

The scale of forest conversion to agricultural land is evident, with cattle, palm oil, and soy estimated to account for about 80% of tropical deforestation worldwide. The EUDR focuses on the seven most destructive agricultural commodities in terms of deforestation: cattle, coffee, cocoa, palm oil, rubber, soy, and wood. This conversion often incurs costs for Indigenous Peoples and local communities.

The Regulation, effective from June 2023, will mandate EU importers to verify starting 31 December 2024, that covered agricultural commodities are legally sourced and not from post-2020 deforested land. This entails due diligence for compliance proof and disclosing production geolocation.

Deforestation in Thailand is less severe than in the past, with the country’s forest area remaining stable at around 31.6% over the last decade. Nevertheless, many parts of the country still experience pressures, as seen in the loss of over 49,000 ha in 2021, compared to over 350,000 ha annually from 1973 to 1998. This progress reflects the important government efforts, supported by various partners, particularly civil society.

Thailand, a major producer of commodities like rubber (the world’s largest) and palm oil (third largest globally), exported approximately $1.83 billion worth of EUDR commodities to the EU in 2022. Rubber accounted for the largest share, totaling $1.7 billion, constituting 11.5% of Thailand’s total rubber exports. However, the country’s export of the other EUDR commodities to the EU are all a small share of the total exports of these commodities.

Smallholders, essential in agricultural production in Southeast Asia, face challenges in generating sustainable income due to factors such as climate change, fluctuating prices, costs, and demand. With approximately 1.7 million rubber and 364,000 palm oil smallholders in Thailand, covering roughly 4 million ha and 1 million ha of plantations, respectively, their role is vital.

Moreover, nearly 800,000 households cultivate agricultural commodities in state-designated forest land (National Reserved Forests), which is theoretically illegal. Consequently, these households may struggle to export to the EU if their products fall under the regulated commodities.

Thailand also faces a critical deforestation risk in imports of EUDR commodities, including $3.2 billion of soy imported from Brazil in 2022. Additionally, it imports a large amount of non-EUDR commodities linked to deforestation. For example, in 2022, Thailand imported nearly $415 million of maize from Myanmar and over $283 million of cassava from Cambodia—both commodities are major drivers of forest loss in these countries. According to the FAO, Cambodia lost 8.8% of its forests between 2015 and 2020, while Myanmar lost 4.8% in the same period.

Thailand’s deforestation footprint overseas is important not only due to the EUDR’s requirements for importers to ensure deforestation-free supply chains, but also because of the expected expansion of commodities covered by the EUDR beyond its current seven.


The EU's crucial effort to curb market-driven deforestation has unintended consequences, such as shifting costs to those already struggling financially. This challenge is particularly evident in Thailand, where many smallholders may struggle to maintain their place in EU supply chains for the seven commodities. These difficulties stem from a lack of understanding of the EUDR's requirements and the costs and challenges faced by smallholders to comply.

Companies prioritize partnering with smallholders with better access to services and clean supply chains. However, there's concern that smallholders in remote areas may be excluded, leading to reduced income and potential poverty. Consequently, the most vulnerable may resort to increased reliance on forests, potentially exacerbating forest loss through illicit activities.

Urgent EU support is needed for awareness-raising activities in producer countries like Thailand. Additionally, importers to the EU must prioritize assisting smallholders in countries like Thailand rather than shifting their supply chains to locations where there are farmers with large holdings. Otherwise, the Regulation risks penalizing those least able to afford the costs.

David Gritten
Consultant, Production and Trade of Agricultural Commodities

David Gritten’s work and education background focus on forest governance in the Asia-Pacific region. He has worked for various organizations including the FAO, RECOFTC, and Environmental Investigation Agency, where he addressed deforestation by improving timber and agricultural supply chains and supporting Indigenous Peoples and local communities in securing rights to their forests. He holds a PhD in Agriculture and Forestry from Joensuu University, Finland.

Follow David Gritten on

Landell Mills
Management Consulting

Landell Mills is an international development consulting firm, which provides a range of development-oriented services that aim to assist countries and their peoples in attaining the Sustainable Development Goals. Its mission is to assist clients to participate actively in the global economy while protecting fragile environments and vulnerable communities in the process.

Follow Landell Mills on
Leave your question or comment in the section below:

The views expressed on this website are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.