As the European Union prepares to enforce its Deforestation Regulation (EUDR), global supply chains are at a turning point. Designed to halt deforestation linked to key commodities—cattle, cocoa, coffee, palm oil, rubber, soy, and wood—the EUDR requires that all products entering the EU market be deforestation-free, legally sourced, and fully traceable. It’s a bold regulatory leap intended to reshape how companies do business.

But for smallholder farmers, particularly in Africa, this shift from voluntary to mandatory compliance could prove either transformative—or exclusionary.

“We first understood the true weight of the EUDR during an early-stage matchmaking effort between a major cocoa buyer and one of the agribusinesses in our portfolio,” says Sabina Gordon, Commercial Senior Associate at MRTA, a landscape restoration initiative working across tropical supply chains. “Expectations were high. But as the buyer began probing into traceability and compliance, it quickly became clear that our partner’s systems weren’t up to standard. The deal stalled—and eventually unravelled.”

That moment, Gordon recalls, was a turning point. “We didn’t just lose a commercial opportunity; we lost the potential for meaningful landscape restoration and measurable smallholder impact. From then on, we knew our strategy had to be about building the bridge to compliance first.”

Regeneration, a Palladium and Systemiq platform, works through the MRTA Facility to provide no-cost technical assistance to small and medium-sized agribusinesses in Africa producing sustainable commodities in regenerative agroforestry systems.

The Cost of Deforestation

The stakes are high. The World Bank warns that unchecked deforestation could cost the global economy US$2.7 trillion annually by 2030. Yet, according to Global Canopy, just 3% of companies have fully implemented deforestation policies. The EUDR seeks to change that by enforcing accountability across the value chain. But for smallholders—who produce more than 35% of the world’s food—access to the EU market increasingly hinges on their ability to meet strict documentation, mapping, and traceability requirements.

Take, for example, the case of Adom Cocoa in Ghana. Michael Sasu, the Business Associate for Ghana at MRTA, recalls how three cooperatives affiliated with Adom were on the verge of losing access to EU buyers and the premium payments that come with certification.

“With targeted support from MRTA, including updating governance documents, these cooperatives achieved Rainforest Alliance certification,” says Sasu. “That paved the way for sourcing contracts with ETG Commodities, directly benefiting around 1,093 smallholder farmers. Each received an additional US$250 per metric ton—a significant boost to their income.”

But success stories like this are hard-won. Gordon says the biggest initial hurdle wasn’t technology or land rights—it was simply understanding the regulation. “Even within our team, grasping the full scope of the EUDR was an uphill climb. For many smallholders, the implications weren’t even on their radar.”

To address this, MRTA developed a tailored EUDR concept note that translates regulatory language into actionable steps. Still, clarity alone isn’t enough. “Financing remains one of the most stubborn barriers,” Gordon explained. “A lack of early understanding can snowball—delaying investments and jeopardising market access.”

This domino effect is compounded by systemic constraints. In some regions, like the Rusizi Basin and Lake Kivu, the costs of GPS mapping and farm-level verification have proved prohibitive. “Without clear buyer commitments, suppliers are hesitant to invest,” says Gordon. “But buyers won’t commit without compliance—it’s a classic catch-22.”

In such cases, MRTA has looked beyond Europe, helping coffee producers target the U.S. specialty market, which still offers sustainability premiums but with fewer entry barriers. Yet this strategic pivot underscores a deeper concern: that EUDR may unintentionally tilt the playing field.

“In its current form, EUDR disproportionately benefits large, integrated players,” Gordon argues. “Those with the tech and infrastructure are already ahead, while smaller producers risk being sidelined. But it doesn’t have to be this way.”

The key, she says, lies in reforms that foreground equity: capacity-building, public-private partnerships, and knowledge-sharing. “With the right support systems, the EUDR can evolve from a regulatory hurdle into an incentive for farmer-led sustainability.”

The Next Step to Sustainability

That lesson came into focus through MRTA’s partnership with ABOCFA, Ghana’s only cocoa cooperative with double certification (Organic and Fairtrade). “ABOCFA’s cooperative model showed us the power of democratic governance structures,” adds Sasu. “Their traceability systems and market diversification strategies have been critical in helping us rethink our own approach.”

Through shared investment models, ABOCFA’s partners co-finance farm services, building long-term sustainability and farmer ownership. “They’ve helped us understand that smallholders aren’t just beneficiaries,” Sasu explains. “They’re co-creators of impact.”

Still, smallholder voices reflect a mix of hope and unease. While many recognise the potential of the EUDR to improve environmental outcomes and income, there’s widespread frustration over the lack of inclusion in decision-making and limited access to the tools required to comply. “Many feel the rules were imposed,” he says. “They describe them as cost-intensive and inaccessible.”

Among younger, more tech-savvy farmers, however, there is cautious optimism. “They hope the regulation will bring training, investment, and better prices—if it’s implemented fairly and with inclusion.”

Looking ahead, Gordon is clear-eyed about what success must look like. “Five years from now, we should see a thriving ecosystem of partnerships, every farm mapped, every supply chain traceable. Smallholders won’t just access European markets—they’ll participate in them equitably.”

But she warns of the risks if support systems fail to keep pace. “We could end up with a two-tiered market: those who can afford compliance and those who can’t. That’s why support for smallholders isn’t just a nice-to-have—it’s an urgent imperative.”

The EUDR could be a lever for environmental justice and rural prosperity—or a new frontier of exclusion. The difference will depend not just on regulation, but on the global will to make sustainability inclusive.

For more, visit Regeneration or contact info@thepalladiumgroup.com.