In the context of many difficulties and challenges to meet the traceability requirements according to EUDR regulations, reviewing supply chain information and solutions of State management agencies as well as businesses and industry associations is very urgent.
Studies show that currently, information about the supply chain of agricultural and forestry production households in general is still relatively limited, especially information serving the traceability of agricultural and forestry products.
According to Forest Trends, the provisions on supply chain verification (also known as due diligence) in the EUDR are basically not much different from the provisions that the EU has applied in the Timber Legality Regulation (EUTR 995) and the VPA/FLEGT Agreement to manage the supply chain of timber and timber products. However, the EUDR requires higher levels of evidence when requiring businesses to provide coordinates to the harvested land plot. With this information, the EUDR authority can verify by itself using the EU's remote sensing satellite system whether there is deforestation and/or degradation in the area where goods are produced. Therefore, the statistics and assessment of households participating in the supply chain are mandatory.
To collect information related to households such as the number of land plots, area of plots, location of plots, legal status, history of formation and risk of deforestation, etc., enterprises need to proactively coordinate with local authorities to conduct a comprehensive census of households participating in their supply chain. In particular, it is necessary to clarify the differences between two groups of households, including: Households participating in the chain with certificates (about 30% of coffee growing area and some forest growing households); Households not participating in certification programs.
Survey content must satisfy at least the following elements:
- Information on the farming and agricultural and forestry production areas of the household: number of plots of land, area, legal status, geographical location, quantity and type of plants on each plot, age of plants, yield....
- Farmer output channels: product types, who to sell to, where to sell, how much, whether products are mixed between different plots of land/between certified and non-certified sources during harvesting/processing/storing/transporting (traceability)...
- Household linkage mechanism: Does the household participate in any cooperative model, does the household participate in linkage with the company in the production process, what is the linkage mechanism, what are the linkage benefits...
Forest Trends
In addition to farmers, the group of purchasing traders also needs to be counted and surveyed to see what risks there are in the way they purchase and manage information about goods in this group before selling to companies and processing facilities. This group also needs to be informed about the new regulations of the EUDR so that they can advise and request households to collect necessary information into agricultural and forestry product records to help users in the next stages of the chain avoid costs that may arise later when buyers or competent authorities in the EU request to trace back the entire chain.
Implementing this survey on a large scale requires a lot of resources because the number of households participating in production is very large, the production plots are fragmented and scattered. Currently, only certified areas are more accessible because households have implemented traceability requirements when participating in certification programs. Therefore, it is difficult to deploy nationwide but need to approach key production areas of each industry. The pilot can be carried out at the commune or district level before expanding to the entire province or region.
In parallel with collecting information and identifying risks, businesses need to have a strategy to reduce risks in the chain and support their suppliers, including the network of traders and farmers, to take such actions. All these activities, when carried out synchronously and with full records and information, will help businesses avoid obstacles when exporting to the EU when the EUDR begins to be applied, while also reducing the risk of Vietnam being classified by the EU as having a high risk of deforestation and forest degradation.
In the context of the upcoming time whenthe EUDR regulationis officially implemented, according to Forest Trends, reviewing risk points in the supply chain related to farmers is urgent. This needs to be implemented systematically and with a clear strategy to promptly collect and process information of millions of farmers according to EUDR regulations.
However, due to the generally limited capacity and resources of farming households, the participation of many stakeholders, especially export enterprises and management agencies at all levels, is needed.
First, the role of regulatory agencies
It is necessary to urgently research, develop, update and share with relevant parties such as associations, businesses and the EU the following information: Maps of forest status, deforestation, forest degradation; Land status - digital maps, locations and status of plots of land that have not been granted red books, the accuracy of locations and boundaries of plots of land according to issued red books... focusing on provinces with large areas of coffee, rubber, and planted forests.
In addition, it is necessary to review the supply chains of the industries – starting with the wood, coffee and rubber industries – to assess the risks and the ability of producers, traders and businesses to meet the requirements of the EUDR as presented above.
On this basis, departments, especially local authorities, organize information and propaganda activities, build capacity for farmers, especially in areas with many ethnic minorities. In addition, it is necessary to consider issuing appropriate policies to quickly legalize production land plots of households that do not currently have land use right certificates but are not at risk of causing deforestation and forest degradation.
"EUDR stipulates that exported products must have geographical coordinates, but Vietnam currently has no legal regulations on this issue. This is one of the issues that the Forestry Department continues to research, perfect forestry laws, as well as organize training sessions to improve enforcement capacity for businesses and supply chains."
Mr. Tran Quang Bao - Director of the Department of Forestry, Ministry of Agriculture and Rural Development (Workshop: Reviewing the level of readiness to implement EUDR regulations for the coffee and wood industry in Vietnam)
Second, the role of businesses and associations
Businesses should quickly review their supply chains and work with local authorities and their suppliers to assess the ability of their current supply chains to comply with EUDR regulations. The assessment should also identify the shortcomings of the chain. Through this, businesses will develop plans to overcome these problems. Addressing these shortcomings may require human and financial resources and the active participation of stakeholders, especially local authorities - the agency responsible for building a database on the legal status and geographical location of households' cultivated land plots.
Responding to traceability requires businesses to reorganize their supply chains, especially formalizing transactions between households and the trader system. Formalizing these transactions requires simplifying requirements at these stages. Shortening the supply chain by establishing links between households and processing companies in projects to build sustainable certified raw material areas is one of the good ways to simplify the chain. Some wood, coffee, and rubber companies that have had experience participating in sustainable certification programs for many years said that traceability is a mandatory requirement in these programs. Therefore, businesses that have a need to export to the EU in the future but have not yet participated in certification can consider this option to overcome upcoming barriers.
On the other hand, the formation of sustainable raw material areas and the building of links between companies and farmers need to ensure that the economic benefits that farmers receive from certified products adequately compensate for their input costs, especially labor costs. As one of the key parties participating in the supply chain, businesses need to support farmers in participating in sustainable, certified product production activities.
(Photo source: Simexco)
To meet the EUDR regulations, Dak Lak 2-9 Import-Export One Member Limited Liability Company (Simexco) has promptly implemented a series of measures to collect data on growing areas and related legal procedures. To date, after many efforts, the Company has been awarded 2 certificates by the 4C Organization, for 2 growing areas meeting EUDR standards, with nearly 8,000 farmers, 9,500 hectares of coffee and an output of over 35,000 tons.
In particular, the development of sustainable coffee growing areas has been implemented by the enterprise early on, through programs such as landscape management, quality certification, and carbon-reducing coffee production. After 15 years, the enterprise has cooperated with 40,000 households, built a linked area of over 50,000 hectares, and produced over 100,000 tons of sustainable coffee each year. Implementing sustainable production helps the enterprise easily adapt to EUDR regulations.
In addition to the initiative of enterprises, local authorities should also have policies and mechanisms to encourage households and enterprises to participate in these activities. These incentives can be through the Government's active participation, resolving land-related problems, and identifying the link between deforestation risks and production activities of households and enterprises.
Farmers need to be trained to raise awareness of the legality of agricultural and forestry products in general and the new regulations in the EUDR in particular so that they are aware of the importance of traceability, thereby actively and proactively taking necessary actions to enhance transparency of product origin and minimize risks in the supply chain. The network of traders, as a bridge between millions of farming households and large processing and exporting enterprises, needs to participate in capacity building activities, propaganda, and dissemination of information on the EUDR to understand and grasp the new regulations in order to collect sufficient and correct information needed to trace the origin of agricultural products.
Regarding regulations on geographical coordinates of production plots, enterprises and local authorities need to coordinate to help households grasp information on the location coordinates of their land plots so that they can provide it to buyers upon request.
Due to the difficulties in dividing the product supply chain in practice, requiring households to provide this information when selling products to any buyer needs to be implemented synchronously to ensure traceability. Enterprises and local authorities need to create a database of households and land plot maps as well as software for households to self-declare information to serve continuous traceability in the future. These utilities must be provided free of charge and easily accessible to households and any interested parties. Households need support in purchasing equipment and training in using these utilities if needed. Parties should consider joining together to contribute funds to build a database and software for common use across the country and across sectors to save costs and make information management easier.
