Smallholder Inclusion and Equity Concerns
Why this matters
Smallholder farmers produce significant shares of virtually every EUDR-covered commodity. In cocoa and coffee, smallholders are the majority of producers globally. The EUDR's traceability and geolocation requirements, while necessary for environmental integrity, impose data collection burdens that can be disproportionately difficult for small-scale, resource-constrained producers. How the regulation handles smallholder inclusion is therefore both an equity question and a practical compliance question: fail to include smallholders, and entire supply chains become non-compliant.
The Smallholder Reality
The global agricultural economy for forest-risk commodities is characterized by a dual structure. Large industrial plantations and highly capitalized farms coexist with tens of millions of smallholder producers, typically defined as farmers with fewer than two hectares under cultivation, though definitions vary by commodity and country. Both supply the same global commodity markets.
The scale of smallholder production across EUDR-relevant commodities is substantial:
- Cocoa: Approximately 90% of global cocoa is produced by smallholders, with most farms in West Africa averaging 2-3 hectares. In Cote d'Ivoire and Ghana alone, over 2 million smallholder families depend on cocoa.
- Coffee: An estimated 125 million people depend on coffee production globally, predominantly smallholders. Ethiopia's coffee sector is almost entirely smallholder-based.
- Palm oil: In Indonesia, approximately 40% of palm oil comes from independent smallholders. In Malaysia, the share is significant though somewhat lower.
- Rubber: In Southeast Asia, particularly Thailand and Indonesia, smallholder rubber tappers are the majority of producers.
- Soya and cattle: While these sectors are more consolidated in South America, significant smallholder and family farm involvement exists, particularly in Brazil's south and the Cerrado region.
Analogy: Requiring a Smartphone App in a Community with No Smartphones
Imagine a food safety regulation requiring all restaurants to submit detailed digital reports through a smartphone app, with fines for non-compliance. For a large restaurant chain with dedicated IT staff, compliance is a manageable software integration project. For a street food vendor in a rural market with no smartphone and intermittent mobile coverage, the requirement is practically impossible without external support. The EUDR's geolocation data requirements work similarly: for an agricultural cooperative with GIS expertise and GPS devices, plot mapping is manageable. For an individual smallholder farmer in a remote region who has never used GPS, the same requirement represents a fundamental capability gap that cannot be bridged through goodwill alone.
The Regulation's Smallholder Provisions
Recitals 53 through 58 of the EUDR's preamble acknowledge the smallholder challenge explicitly and commit the Commission and Member States to take measures to support smallholder inclusion. The regulation's approach involves several provisions:
- No direct obligations on smallholders: The EUDR places obligations on operators and traders, not on farmers. Smallholder producers are not directly regulated; they are asked to provide data to the operators who purchase their produce. This design choice means that the compliance burden formally rests with the buyer, not the farmer.
- Support for capacity building: The regulation commits the EU to support producer countries in building the technical and institutional capacity that smallholder farmers need to participate in EUDR-compliant supply chains, particularly through development finance programs.
- Flexibility in data collection approaches: The guidance acknowledges that geolocation data for smallholders may be collected by intermediaries (cooperatives, collectors, processors) on behalf of farmers, rather than requiring farmers to GPS-map their own plots independently.
- Country partnerships for systemic solutions: Rather than leaving each operator to solve the smallholder data problem independently, the Commission encourages national systems (farmer registration databases, government land mapping programs) that can provide the underlying data infrastructure for entire sectors.
Example: Ghana Cocoa Board's Farm Mapping Initiative
Ghana Cocoa Board (COCOBOD), the government body that manages Ghana's cocoa sector, has invested in a national farmer registration and farm GPS mapping program. Field officers visit each registered farmer, record their identity, and GPS-map the boundaries of their cocoa plots. This data is stored in a central database. When EU importers need geolocation data for their EUDR due diligence, they can obtain verified polygon coordinates from the COCOBOD database rather than collecting it afresh from each farmer. This systemic approach reduces the per-farmer cost and complexity of data collection enormously, making inclusion of Ghana's 800,000+ cocoa farmers operationally feasible for EUDR compliance.
Equity Concerns: Who Bears the Compliance Burden?
Despite the formal design placing obligations on operators rather than smallholders, the economic reality of supply chains means that smallholder producers can feel the effects of EUDR compliance requirements in several ways:
| Concern | Mechanism | Potential Impact |
|---|---|---|
| Supply chain exclusion | Operators unable to obtain plot data may stop buying from unregistered smallholders | Market access loss for farmers who cannot provide required documentation |
| Price pressure | Operators pass compliance costs back to producers through lower prices or higher quality demands | Reduced farm income for smallholder families already in poverty |
| Data collection costs | Even when cooperatives or traders collect data on behalf of farmers, costs may be passed back | Additional cost burden on smallholder supply chain intermediaries |
| Market consolidation | Large plantation operators with existing compliance systems win market share from smallholder-dependent supply chains | Structural shift away from smallholder production, reducing income for millions |
| Gender dimensions | Women farmers may have lower formal land tenure documentation or less access to mobile technology | Disproportionate exclusion of women from EUDR-compliant supply chains |
Solutions: Collective Approaches and Technology
Several approaches have emerged to address the smallholder inclusion challenge, drawing on both technical innovation and institutional design:
- Cooperative and aggregator-level mapping: Rather than requiring individual farmers to collect their own GPS data, cooperatives and buyers can organize systematic farm mapping programs, spreading the cost across thousands of farmers per field officer.
- Remote sensing-based plot delineation: High-resolution satellite imagery and AI-based field boundary detection can delineate individual farm plots from space without requiring physical GPS collection on every farm. Companies like Farmonaut, Satellogic, and others offer this service.
- National land cadastre digitization: Governments that digitize their land records and link them to GPS coordinates create a public data infrastructure that can support EUDR compliance across entire sectors.
- Interoperable data standards: Sector-wide platforms that aggregate smallholder data in a standardized format allow multiple operators to share the cost of data collection while maintaining competitive privacy of commercial relationships.
- Simple mobile tools: Low-cost smartphones with offline GPS capability are increasingly available in tropical agricultural regions, enabling field officers to map farms even in areas with poor mobile connectivity.
Free, Prior and Informed Consent
The regulation's legality requirement, which operators must verify for all commodities, includes a provision that production must respect the principle of free, prior and informed consent (FPIC) of indigenous and local communities. This requirement intersects with smallholder concerns in important ways: many smallholder farmers operate on customary or community land, where formal land tenure documentation is limited but traditional rights are clear.
FPIC verification adds an additional layer of complexity for smallholder supply chains, requiring operators to assess not just whether deforestation has occurred, but whether the production process has respected the rights of communities whose traditional territories may be affected. This is a significant due diligence challenge in regions with complex land tenure situations.
The EUDR acknowledges in its recitals that achieving genuine smallholder inclusion requires financial support beyond what individual operators can provide. The EU has committed development finance through multiple channels to support smallholder EUDR compliance capacity. The Global Gateway initiative, the EU's development investment framework, includes forest-related components supporting farmer registration and forest monitoring in key producer countries. Bilateral development programs under the European Development Fund and various Member State agencies (including GIZ in Germany, AFD in France, and DFID programs) have active projects building smallholder data infrastructure in West Africa, Southeast Asia, and Latin America. The Rainforest Alliance, Fairtrade International, and other civil society organizations have also received funding to adapt their smallholder support programs to include EUDR traceability requirements.
Key Takeaways
- 1Smallholders produce the majority of global cocoa and coffee and significant shares of palm oil, rubber, and other EUDR-covered commodities, making their inclusion essential to the regulation's environmental effectiveness
- 2The EUDR places formal obligations on operators and traders, not on farmers directly, but supply chain economics can still result in compliance burdens or exclusion risks for smallholder producers
- 3Key risks include supply chain exclusion of unregistered farmers, price pressure, and market consolidation toward large plantation operators
- 4Systemic solutions including national farmer registration programs, cooperative-level GPS mapping, remote sensing-based plot delineation, and sector-wide data platforms can make smallholder inclusion operationally feasible
- 5FPIC verification adds complexity for smallholder supply chains in regions with customary land tenure, requiring assessment not just of deforestation but of indigenous and community rights