The European Union regulation on deforestation entered into force on June 29, 2023; most of its obligations apply from December 30, 2026. Certain sectors and small Latin American producers face significant obstacles in preparing for the EUDR, particularly regarding geolocation, traceability, and financing. A regulation designed to protect forests risks consolidating large farms at the expense of small peasants, due to the lack of inclusion mechanisms. The EUDR may complicate access to the European market for small Andean producers; the EU-MERCOSUR agreement legally concerns MERCOSUR countries, not Andean countries.
The Essentials
- The EUDR conditions access to the European market on geographic traceability of agricultural products, effective December 2026.
- Brazil exported $169.2 billion in agricultural products in 2025 and has traceability infrastructures and tools in development or already operational in certain sectors, but their coverage and capacity to fully satisfy the EUDR vary according to products, territories, and supply chain links; many small Andean producers may lack sufficient access to infrastructure, data, training, and financing necessary, despite the existence of public, cooperative, and pilot traceability systems (Brazilian Ministry of Agriculture).
- Identified Solidaridad programs target tens of thousands of producers in certain countries, not a documented program of 125,000 small Andean peasants.
- The EU-MERCOSUR agreement (January 2026) amplifies the selection effect: it favors already formalized supply chains and penalizes informal systems.
- The central question is whether blended financing mechanisms can close the gap before December 2026, or whether traceability becomes structurally a privilege of the large.
Large Brazilian Exporters Already Have a Head Start
Brazil is the world’s leading agricultural exporter for several product categories. Its soy cooperatives, its certified slaughterhouses, its coffee supply chains have long integrated international traceability standards, not out of virtue, but because European and American institutional buyers have required it since the 2010s. The high level of Brazilian exports suggests significant macroeconomic capacity, but does not allow us to infer the margins or compliance capacity of each actor.
The EUDR covers livestock, cocoa, coffee, palm oil, rubber, soy, timber, and certain derived products; they must be free of deforestation after December 31, 2020. The EUDR requires geolocation data, evidence of compliance, and a due diligence statement; satellite imagery is a possible means of verification, not a general textual obligation. Large Brazilian cooperatives already do this work, or have outsourced it to specialized service providers such as Agrotools or Agrosmart, which offer agricultural mapping platforms.
Argentina, the second agricultural power of MERCOSUR, is in a similar position for its soy and corn supply chains, although its chronic economic crisis has slowed investment in certification. Large exporting groups, Cargill, Bunge, Louis Dreyfus, all operating from Buenos Aires, have the resources and networks to navigate EUDR compliance. Their partner producers benefit through capillarity from their traceability systems.
The Particular Situation of Small Andean Peasants
A coffee grower in the Peruvian Selva Alta, at 1,800 meters altitude, cultivates an average of two hectares. He sells his harvest to a local intermediary, who resells it to an exporter, who resells it to a European roaster. The chain has four or five links. Each one dilutes traceability. And none of the intermediate links, the acopiador, the regional merchant, has a digital cadastre of the plots he buys.
For a coffee to be compliant, the operator must be able to have the required information, including on the origin of the plots. The regulation does not require the individual producer to own a mobile application.
Each step has a cost. The cost of compliance can constitute a significant burden for small producers integrated into a support program. Without support or integration into a traceability chain, many small producers risk being unable to demonstrate their compliance.
Concrete precedents shed light on this risk. When bio or Rainforest Alliance certifications were introduced, small producers unable to finance audits were gradually excluded from premium supply chains, while large plantations consolidated their market share. The EUDR could increase access difficulties to premium supply chains for certain small producers.
SOLIDARIDAD and the Race Against the Deadline
Solidaridad launched or continued several EUDR programs in 2025, with documented targets of a few thousand to approximately 28,000 producers depending on the projects. These programs notably include plot mapping, training in digital documentation tools, and support for certification.
The model is based on a blended finance architecture: development funds (including the European Union itself through its development cooperation instruments), private foundations, and anticipated purchase commitments from European roasters who wish to secure their supply in compliance with the EUDR. The idea is to internalize the cost of compliance within the supply chain rather than letting it rest solely on the producer.
Identified Solidaridad programs target tens of thousands of producers in certain countries, not a documented program of 125,000 small Andean peasants. The total number of small producers in Latin America affected by the EUDR is not established with precision by available sources. The FAO, in its work on family agriculture in Latin America (LARC39, 2026), emphasizes that family agriculture represents a significant share of agricultural holdings in the region and that many of them operate in informal or semi-formal commercialization systems.
The SOLIDARIDAD program is a real step forward. It shows that an inclusion architecture is possible. But at this scale, it cannot, alone, close the gap by December 2026. Other actors must enter the game.
The EU-MERCOSUR Agreement Changes the Balance, Not Access Inequalities
The agreement signed in January 2026 between the European Union and MERCOSUR (Brazil, Argentina, Uruguay, Paraguay) covers several hundred million people and provides for reduced customs duties on hundreds of agricultural and industrial products. The agreement provides for limited preferential access for certain sensitive products, notably through quota for beef; Brazilian sugar falls mainly under an existing quota, and soy access is subject to applicable European rules, including the EUDR.
But the agreement does not lift the EUDR. The agreement contains environmental commitments compatible with the objective of the EUDR, but it neither replaces nor reproduces its operational due diligence and traceability obligations applicable to operators. Brazilian exporters who want to take advantage of the new tariff conditions must also satisfy traceability requirements. For large agro-export firms, the cost of compliance may be easier to distribute than for smaller actors. The EU-MERCOSUR agreement and the EUDR are two distinct instruments.
The Commission anticipated that the EUDR could produce a selection or supply redirection effect, but this effect still needs to be measured empirically after the regulation enters into force.
The EU-MERCOSUR agreement can affect actors differently depending on their capacity to meet applicable requirements. It increases possible commercial flows, but large exporters may have more means to deploy compliance systems, and all concerned operators must meet EUDR requirements; small producers may need enhanced support. This mechanics is found in other sectors of the global economy, where the ability to “assemble without designing” is no longer enough when the rules of the game increase in requirements.
North-South Regulation and the Lack of Inclusion Architecture
The EUDR was born out of a legitimate intention: to stop the deforestation that European supply chains contribute to financing. The European Union is one of the main destination markets for tropical agricultural products, and studies linking European imports to Amazon deforestation are solid. Acting on the demand side is a coherent strategy.
The EUDR provides for cooperation and assistance, but does not establish an automatic and universal financing mechanism for including small producers. Importers and other operators need information from their suppliers to satisfy the EUDR; depending on contracts and supply chains, this demand can be transmitted to producers, without the regulation prescribing an automatic or uniform cost pass-through. This cascade stops abruptly where producers do not have the means to respond. The absence of an automatic financing mechanism for compliance with small producers leaves significant room for voluntary initiatives, which are added to public devices for cooperation and capacity building by the EU and producing countries.
The EUDR illustrates a mechanics set to be repeated in upcoming trade agreements combined with ESG standards, green taxonomies, and carbon border adjustment mechanisms. The EUDR is a European regulation with extraterritorial effects on supply chains; support mechanisms exist, but their coverage and adequacy remain debatable. These standards can favor actors already formalized.
The engineers from Latin America who fuel North American AI startups illustrate in their own way the same structural asymmetry: the region produces resources, human or agricultural, whose value standards are set elsewhere, and access to premium markets is conditioned on compliance defined by buyers.
Blended Finance and Access Rights: What Is at Stake Between 2026 and 2030
On the horizon 2026-2030, blended financing mechanisms could structurally modify the conditions of access for small producers, or traceability will remain an advantage reserved for already formalized supply chains.
Two trajectories are plausible.
In the first, support programs multiply and coordinate. The European Union, which bears direct responsibility for creating this regulatory barrier, mobilizes its development cooperation instruments, notably the European Fund for Sustainable Development (EFSD+) and its associated guarantees, to finance compliance for small producers on a large scale. European roasters and chocolatiers, under pressure from their own due diligence obligations, commit to multi-year contracts that secure financing for certification programs. Regional development banks, CAF, BNDES in Brazil, World Bank, deploy specific credit lines for cooperatives of small producers wishing to invest in traceability tools. In this scenario, the regulatory pressure of the EUDR paradoxically becomes a lever for formalization and structuring of Andean agricultural supply chains.
In the second trajectory, financing remains fragmented. European roasters and importers, unable to secure their supply from non-compliant producers, shift to origins where traceability is already guaranteed, certified Brazil, Ethiopia organized into formal cooperatives, Mexico with its advanced Fairtrade programs. Small Andean coffee growers gradually lose market share in the European premium segment, and retreat to regional markets or less demanding buyers, at lower prices. The effects of excluding producers from the European market on deforestation remain uncertain.
The FAO emphasizes in its work on Latin America (LARC39, 2026) the importance of family agriculture for regional food security and its vulnerability to external regulatory shocks. Exclusion of small Andean producers from the European market could affect the rural economies concerned.
The signals to watch in the coming months are legible. The pace of deployment of European development cooperation resources targeted at EUDR compliance will be the first indicator. The concrete commitment of major roasters, their long-term purchase contracts with Andean cooperatives undergoing certification, will be the second. And the adoption rate of digital mapping tools by intermediate cooperatives, those that bridge producers and exporters, will give a measure of the real speed of change.
The European Commission announced that it wants to support the implementation of the EUDR through capacity-building mechanisms in producing countries. The Commission has already published a cooperation framework and announced financing; detailed timelines and modalities may vary depending on programs and countries. This is precisely where, in large part, the outcome is being decided.
The EUDR can be a lever for transforming Latin American agricultural supply chains toward greater sustainability and formalization. It can also create difficulties for the most vulnerable producers, without its effects on deforestation being able to be established in general. The resources deployed to support implementation of the regulation can influence these trajectories. Regulation without an inclusion architecture is a regulation half done.
Sources
- South America’s agricultural sector enters a phase of structural transformation amid record exports and deeper integration with the EU – UkrAgroConsult / SOLIDARIDAD LAC
- Regulation (EU) 2023/1115 on products associated with deforestation (EUDR) – official text, Official Journal of the European Union
- FAO, Regional Conference for Latin America and the Caribbean, 39th Session (LARC39), 2026 – United Nations Food and Agriculture Organization
- EU-MERCOSUR Association Agreement, consolidated text, January 2026 – European Commission
- SOLIDARIDAD LAC, Strategy 2026-2030 – Programmatic Guidance Report
