This article is the second chapter in our five-part series exploring the future of first-mile traceability. In our first installment, we examined the state of first-mile traceability and why it has become a must-have for agri-commodity supply chains. Now, we turn to compliance and regulatory pressures, dissecting the major policies shaping global trade in cocoa, coffee, rubber, and palm oil.
Regulatory Pressures Are Reshaping Agri-Commodities
Compliance in the agricultural supply chain is no longer a box-ticking exercise—it has become a critical requirement that determines market access, corporate reputation, and long-term sustainability. As regulatory scrutiny intensifies, companies operating in cocoa, coffee, palm oil, and rubber supply chains face a major transformation in tracing and verifying their sourcing practices.
At the heart of this transformation lies the EU Green Deal, a set of policies to promote sustainable business practices and environmental responsibility. Among these policies, three key regulations are particularly relevant for agri-commodity stakeholders:
- The EU Deforestation-Free Regulation (EUDR) requires companies to prove that their products have not contributed to deforestation.
- The Corporate Sustainability Due Diligence Directive (CSDDD), which holds businesses accountable for environmental and human rights risks in their supply chains.
- The Corporate Sustainability Reporting Directive (CSRD), which mandates comprehensive sustainability disclosures, requiring companies to present auditable ESG data.
Each of these regulations carries significant implications, not only for companies sourcing agricultural commodities but also for the entire supply chain. Without the right data and traceability mechanisms in place, compliance becomes nearly impossible.
The EU Green Deal at a Crossroads
The EU Green Deal, initially launched to make Europe the first climate-neutral continent, is facing growing political and economic challenges. While the overall objectives remain unchanged, debates over implementation timelines and feasibility have led to delays and adjustments in regulatory enforcement.
The EUDR, initially set to take effect in December 2024, has been postponed by one year due to pressure from industry stakeholders. While this delay gives businesses more time to prepare, it has also sparked concerns that regulatory enforcement could weaken over time.
Yet, the postponement does not change the fundamental reality. The need for traceability remains as strong as ever, and businesses that fail to prepare now risk being locked out of the European market shortly. As the European Commission has noted, “The postponement of the EUDR doesn’t change the underlying reality: businesses that don’t invest in traceability today risk being shut out of the European market tomorrow.” (European Commission)
The CSDDD, another pillar of the EU Green Deal, has also faced resistance from some member states, prompting ongoing negotiations about its final scope. Meanwhile, the CSRD, which came into force in 2023, is already proving to be a major challenge for companies that now must provide detailed, audited sustainability reports—something many agri-commodity firms are struggling to compile.
Despite these political and logistical hurdles, the direction is clear: compliance with sustainability regulations is no longer optional.
Understanding the Requirements: What Do These Regulations Demand?
Each of the key EU regulations presents specific challenges for businesses.
EUDR: Proving Zero Deforestation
The EUDR mandates that agricultural commodities—including cocoa, coffee, palm oil, and rubber—can only be placed on the EU market if companies can prove they were not produced on land deforested after December 31, 2020. This requirement forces businesses to rethink how they collect and verify sourcing data.
To comply, companies must provide geolocation data for all farms supplying raw materials, maintain robust traceability systems, and conduct risk assessments to eliminate deforestation risks. The challenge is that many supply chains still rely on mass balance models, where traceable and non-traceable products are mixed together. For companies to meet EUDR standards, there is a growing need to shift towards bag-level or plot-based traceability.
CSDDD: Holding Businesses Accountable for Human Rights & Sustainability
While the EUDR focuses primarily on environmental compliance, the CSDDD expands accountability to human rights and labor conditions. This regulation requires companies to identify risks related to child labor, forced labor, and fair wages within their supply chains, take corrective action where necessary, and ensure ongoing monitoring and due diligence.
Due to fragmented, paper-based data collection methods, many businesses struggle to document these social risks. This is where digital solutions become essential. For instance, Farmforce’s CLMRS (Child Labor Monitoring and Remediation Survey), integrated into the Farmforce Orbit workflow module, enables companies to identify risks in real time and implement corrective measures before compliance violations occur.
“Regulatory compliance isn’t just about avoiding penalties—it’s about ensuring a sustainable future for both businesses and the communities they source from.”
OECD Due Diligence Guidance
CSRD: The Growing Demand for Sustainability Reporting
The CSRD has introduced a new level of scrutiny in sustainability reporting, requiring companies to provide audited reports on their ESG performance. Unlike previous voluntary reporting standards, the CSRD mandates that businesses disclose Scope 3 emissions, document human rights due diligence findings, and verify third-party sustainability data.
For many companies, the challenge is that their sustainability data is inconsistent and siloed, making it difficult to compile accurate reports. This is where solutions like Farmforce Insights add value—by aggregating first-mile sustainability data, providing businesses with a single source of truth for compliance reporting.
How Are Companies Responding?
While some companies are still scrambling to understand how these regulations affect them, others are already preparing for a new era of traceability and sustainability compliance.
- In cocoa and palm oil, industry leaders are moving beyond mass balance models and adopting bag-level or plot-based traceability to ensure compliance with EUDR. (SPOTT Traceability Report)
- In rubber and coffee, companies are using digital traceability platforms to centralize compliance efforts and streamline CSRD reporting. (IDH Sustainable Trade Initiative)
- Sustainability-driven brands are investing in consumer-facing traceability tools, allowing customers to scan QR codes and see the sourcing data behind their products.
Looking Ahead: Preparing for the Future of Compliance
The regulatory landscape for agri-commodities is shifting rapidly, and businesses must act now to stay ahead of compliance requirements.
- Waiting for deadlines is risky—companies that delay compliance efforts may struggle to catch up.
- Investing in digital tools is essential—first-mile traceability is key to ensuring sustainable, compliant supply chains.
- Thinking beyond compliance can be advantageous—companies that proactively adopt traceability solutions can strengthen brand trust and unlock new market opportunities.
At Farmforce, we help global brands, traders, and processors navigate these evolving regulations by providing the technology and expertise needed to build resilient, compliant, and transparent supply chains.
Chapter 3: The Impact of Traceability on Key Agri-Commodities: Cocoa, Coffee, Rubber & Palm Oil
