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Green Business

Why and how must operators collect coordinates?

The Regulation requires operators and traders which are not SMEs to collect geographic coordinates of the plots of land where the commodities were produced.

Traceability to the plot of land (i.e. the requirement to collect the geographic coordinates of the plots of land where the commodities were produced) is necessary to demonstrate that there is no deforestation occurring on a specific location. Geographic information linking products to the plot of land is already used by part of the industry and a number of certification organisations. Remotely sensed information (air photos, satellite images) or other information (e.g. photograph in the field with linked geotags and time stamps) may be used for verifying if the geolocation of declared commodities and products is linked to deforestation.

The geolocation coordinates need to be provided in the due diligence statements that operators are required to submit to the Information System ahead of the placing on the market or export of the products. It is therefore a core part of the Regulation, which prohibits the placing on the market, or the export, of any product covered by the Regulation’s scope whose geolocation coordinates have not yet been collected and submitted as part of a due diligence statement.

Collecting the geolocation coordinates of a plot of land can be done via mobile phones, handheld Global Navigation Satellite System (GNSS) devices and widespread and free-to-use digital applications (e.g. Geographic Information Systems (GIS)). These do not require mobile network coverage, only a solid GNSS signal, like those provide by Galileo.

For plots of land of more than 4 hectares used for the production of commodities other than  cattle, the geolocation must be provided using polygons, meaning latitude and longitude points of six decimal digits to describe the perimeter of each plot of land. For plots of land under 4 hectares, operators (and traders which are not SMEs) can use a polygon or a single point of latitude and longitude of six decimal digits to provide geolocation. Establishments where cattle are kept can be described with a single point of geolocation coordinate.

Should all commodities (imported, exported, traded) be traceable?

The traceability requirements apply to each batch of imported/exported/traded relevant commodities.

The Regulation requires that operators (or traders which are not SMEs) trace every relevant commodity back to its plot of land before making a relevant product available or placing it on the market, or before exporting it. Consequently, the submission of the due diligence statement which includes geolocation information is a requirement for the relevant products to be imported (customs procedure ‘release for free circulation’) and to be exported (customs procedure ‘export’) and the consignment for transactions within the market.

How does it work for bulk-traded or composite products?

For products traded in bulk, such as soy or palm oil, this means that the operator (or traders that are not SMEs) needs to ensure that all plots of land involved in a shipment are identified and that the commodities are not mixed at any step of the process with commodities of unknown origin or from areas deforested or degraded after the cut-off date of 31 December 2020.

For relevant composite products, such as e.g. wooden furniture with different wood components, the operator needs to geolocate all the plots of land where relevant commodities (wood for example) used for the manufacturing process has been produced. The relevant commodities’ components may be neither of unknown origin nor from areas deforested or degraded after the cut-off date.

Are mass balance chains of custody allowed?

The Regulation requires that the commodities used for all products falling under the scope be traceable to the plot of land.

Mass balance chains of custody that allow for the mixing, at any step of the supply chain, of deforestation-free commodities with commodities of unknown origin or non-deforestation-free commodities are not allowed under the Regulation, because they do not guarantee that the commodities placed on the market or exported, are deforestation-free. Therefore, the commodities placed on the market, or exported, need to be segregated from commodities of unknown origin or from non-deforestation-free commodities at every step of the supply chain. As mass balance is therefore to be ruled out, full identity preservation is not needed.

What if part of a product is non-compliant?

If part of a relevant product is non-compliant, the non-compliant part needs to be identified and separated from the rest before the relevant product is placed on the market or exported, and that part may be neither placed on the market nor exported.

If identification and separation cannot be done, for instance because the non-compliant products have been mixed with the rest, then the whole relevant product is non-compliant as it cannot be guaranteed that the conditions of Article 3 of the Regulation are met and therefore it may be neither placed on the market nor exported.

For instance, when bulk commodities have all been mixed and are linked to several hundred plots of land, the fact that one of the plots of land has been deforested after 2020 would make the whole relevant product non-compliant.

This is with no prejudice to other situations, however defined, where 100% of relevant commodities or relevant products placed on the market 1) can be traced to the plot of land, 2) is legal and deforestation free by the meaning of the regulation, and 3) at no point in time has been mixed with commodities of unknown origin or non-deforestation-free.

What does ‘plot of land’ mean?

The "plot of land" – the subject of geolocation under the Regulation – is defined in Article 2 (27) as "land within a single real estate property, as recognised by the law of the country of production, which possesses sufficiently homogeneous conditions to allow an evaluation of the aggregate level of risk of deforestation and forest degradation associated with relevant commodities produced on that land."

What are the rules for land that is not real-estate?

What happens with public or communal land that does not fall within the concept of “real-estate property”?

The Regulation requires that commodities placed on the market or exported must have been produced or harvested on the land designated as a plot of land. The absence of a land registry or formal title should not prevent the designation of land that is de facto used as a plot of land (see below). 

What if property registers or titles are unavailable?

How can operators and traders that are not SMEs obtain geolocation data in countries where there are no property registers and where farmers for instance might lack IDs or titles over their land?

Farmers can collect the geolocation of their plots of land regardless of the absence of a land registry or the lack of IDs or titles over their land. Unless they are direct suppliers of the operators or operators themselves, no personal information is required from the farmers  and the geolocation of the land they cultivate is sufficient, for example via application on a mobile phone.

As regards the legality requirement, the Regulation requires compliance with national laws. If farmers are legally allowed to farm and sell their product under the national laws (which might lack a property register and where some farmers might lack IDs), then that would also mean that operators (or traders that are not SMEs) would generally be able to meet the legality requirement when sourcing from those farmers. Operators (or traders that are not SMEs), nonetheless, would need to verify that there is no risk of illegality in their supply chains.

There are many different means that operators (or traders that are not SMEs) already use today to collect the geolocation and legality information: some resort to mapping directly their suppliers, while others rely on intermediaries like cooperatives, certification bodies, national traceability systems or other companies. Operators (or traders that are not SMEs) are legally responsible for ensuring that the geolocation and legality information is correct, regardless of the means or intermediaries they use to collect that information

Can an operator use the producer’s geolocation data?

Yes, but it is the operator who is ultimately responsible for its accuracy and not the producer who provides it. The Regulation does not apply to producers (i.e smallholders) which do not place products on the Union market themselves (and thus do not fall under the definition of operators and traders).

In such a case, the operator will have to guarantee that the area where the relevant commodity was produced is correctly mapped and that the geolocation corresponds to the plot of land. Among the risk assessment procedures and measures which the operator can use are supporting measures for suppliers to meet requirements  of this Regulation, in particular for smallholders, through capacity building and other investments.

Should operators verify the geo-location?

Operators and traders which are not SMEs need to verify and prove that the geo-location is correct.

Ensuring the truthfulness and precision of geolocation information is a crucial aspect of the responsibilities that operators and traders must fulfil. Providing incorrect geolocation details would constitute a breach of the obligations of operators (and traders that are not SMEs) under the Regulation.

Should due diligence be repeated for products from the same land?

The geolocation information obligation to be provided in the due diligence statements, via the Information System, is connected to each relevant product. Operators (or traders that are not SMEs) will thus need to indicate this information each time they intend to place, make available on the market or export a relevant product. The due diligence must be repeated (i.e. updated) for each relevant product, including providing the geolocation coordinates accordingly.

Can a polygon cover several plots of land?

Polygons are to be used to describe the perimeter of the plots of land where the commodity has been produced. Each polygon should indicate one single plot of land, whether contiguous or not. Several polygons must be provided in one due diligence statement where a relevant product is made of commodities from several plots of land. A polygon cannot be used to trace the perimeter of a random land area that might include plots of land only in some of its parts.

Should polygons be provided by means of circumference?

There is neither an obligation nor a possibility to provide the plot of land information by means of circumference. For plots of land of more than four hectares (for the production of the relevant commodities other than cattle), geolocation has to be provided using polygons (not a unique central point with a circumference) with sufficient latitude and longitude points to describe the perimeter of each plot of land.

How should the origin of mixed goods be declared?

The operator needs to declare the origin of all goods effectively shipped to the EU.

For example, if compliant goods from multiple origins are mixed into the same silo, and then some of those goods are shipped to the EU:

  • The origin declared on arrival in the EU must include the origin of all goods that entered the silo since it was last empty (and could therefore potentially be included in the shipment to the EU)
  • Declaring the origin of x amount of goods that entered the silo, where x is the amount shipped to the EU is not allowed under the Regulation, as it would violate the prohibition under the Regulation of placing products of unknown origin on the Union market.

Can operators include land that did not produce the commodity?

The thrust of the regulation requires a correspondence between the commodities/products placed on the market and the plots of land where they are effectively produced. However, an operator can, in specific circumstances, provide geolocation coordinates for a number of plots of land higher than those where the commodities were produced.

If the operator declares ‘in excess’ in the due diligence statement, the operator assumes full responsibility for compliance of ALL plots of land for which geolocation is provided, regardless of whether such plots of land are concerned by the production of commodities/products eventually placed on the market. If one plot of land ‘geolocalised’ in the due diligence statement is not compliant, the entire set of plots of land ‘geolocalised’ is non-compliant. In these cases the operator declaring plots of land in excess has also to carry out full due diligence in compliance with articles 9, 10 and 11, for ALL plots of land declared (including those in excess) and has to provide evidence that 1) the risk of non-compliance has been assessed in accordance with article 10.2 for ALL plots of land, and 2) that, in such assessment, the operator has taken particular account of criteria (i) and (j), of article 10 and 3) that such risk is negligible for ALL plots of land

How will geolocation allow claims to be checked in practice?

How will geolocation allow for checking the validity of a no-deforestation claim in practice? Is it aligning satellite navigation positioning and deforestation maps? Will there be baseline maps that forest areas or areas that have undergone deforestation and forest degradation? How will it work if geolocation of farms, plantations or concessions are not available?

It is the responsibility of the operator (or traders that are not SMEs) to collect the geolocation coordinates of the plots of land where the commodities were produced. If the operator cannot collect the geolocation of all plots of land contributing to a relevant product, then s/he shall not place that product on the market or export them, in accordance with Article 3 of the Regulation.

Operators (and traders which are not SMEs) and enforcing authorities could cross-check the geolocation coordinates against satellite images or forest cover maps to assess if the products meet the deforestation-free requirement of the Regulation. However, the operators (and traders that are not SMEs) remain liable.

How will the EU check the validity of a no-deforestation claim?

The EU Member States’ competent authorities (EUMS CAs) should carry out checks to establish that the relevant commodities and products that have been or are intended to be placed on or made available on the market or exported, come from deforestation-free plots of land and were produced legally (as per their obligation under Art. 16). This includes conducting checks on the validity of the due diligence statements, and the overall compliance of the operators and traders with the provisions of the Regulation.

For more information on the scope of EUMS CAs obligations, please refer to Articles 18 and 19 of the Regulation.

Will Competent Authorities use the definitions from the Regulation?

In the context of the implementation of this Regulation, Competant Authorities of EU Member States will use the definitions set out in Article 2 of the Regulation.
A regulation is a binding legislative act in the EU. It must be applied in a harmonized manner in its entirety in the 27 EU Member States.

How should polygons in shapefile format be declared?

The detailed rules for the functioning of Information System will be established through an implementing act. Stakeholders will be informed and consulted on these developments via the Multi-Stakeholder Platform on Protecting and Restoring the World’s Forests. The Information System will, where possible, facilitate the work of operators by allowing some widely used geolocation formats to be uploaded directly into the system when declaring polygons in a due diligence statement. The Information System will evolve and become more sophisticated over time, based on feedback from users.

What is supply chain traceability?

The information, documents and data that operators and traders that are not SMEs need to collect and keep during 5 years to demonstrate compliance with the Regulation are listed in Article 9 and Annex II as well as in Article 2 (28) as regards data related to geolocation.

Operators (and traders which are not SMEs) shall exercise due diligence with regard to all relevant products supplied by each particular supplier. Therefore, they shall put in a place a due diligence system, which includes the collection of information, data and documents needed to fulfil the requirements set out in Art. 9; risk assessment measures as described in Art. 10; risk mitigation measures as referred to in Art. 11. The requirements for the establishment and maintenance of due diligence systems, reporting and record keeping are listed in Art. 12. The operators will have to communicate to operators and to traders further down the supply chain all information necessary to demonstrate that due diligence was exercised and that no or only a negligible risk was found.

Operators and traders further down the supply chain that receive such information may base their own due diligence on the information received, but the fact that another operator or trader further up in the value chain has carried out a due diligence does by no means disapply their own obligations.

Operators and traders which are not SMEs are required to ensure that the information on traceability that they supply to enforcing authorities in the Member States through the due diligence statement submitted to the Information System is correct.       
The development and functioning of the Information System will be in line with the relevant data protection provisions. In addition, the system will be equipped with security measures, that will ensure the integrity and confidentiality of the information shared.

How will traceability work for products from multiple countries?

Operators and traders that are not SMEs are required to ensure that the required information on traceability that they supply to competent authorities in the Member States is correct, regardless of the length or the complexity of their supply chains.

Traceability information can be added up along supply chains. For instance, a large, bulk shipment of soy that has been sourced in several hundred plots of land from several countries would need to be associated with a due diligence statement that includes all relevant countries of production and geolocation information for every single plot of land from all of these countries that has contributed to the shipment.

What is the ‘date or time range of production’?

Operators (and traders that are not SMEs) are required to collect information on the date or time range of production under the obligations set out in Article 9 of the Regulation. This information is needed to establish whether the relevant product is deforestation-free. That is why it applies to the commodities covered by the Regulation that are placed on the market or to the commodities that are used for the production of relevant products covered by the Regulation.

For commodities other than cattle, the date of production refers to the date of harvesting of the commodities, and the time range of production refers to the period/duration of the production process (for instance, in the case of timber, “time range of production” would refer to the duration of the relevant harvesting operations).

For relevant products other than live animals in the cattle commodity, the time range of production refers to the lifetime of the animal including the date of slaughtering.

N.B: information on date or time range of production of a product operators wish to place on the market or export does not need to be included in the due diligence statement, but operators are required to collect, organise and keep it for five years (Art.9).

How does traceability work for cattle?

Would it be enough to provide the geolocation of the land where the calf was born? Some cattle may be moved to one or more locations before slaughter.

Operators (or traders that are not SMEs) who place on the market cattle products must geolocate all establishments associated with raising the cattle, encompassing the birthplace, farms where they were fed, grazing lands, and slaughterhouses.

What if upstream suppliers do not provide required information?

If an operator (or trader that is not an SME) placing a commodity on the market is unable to obtain the information required by the Regulation from upstream suppliers, they must refrain from placing the relevant products on the market or exporting them as that would result in a violation of the Regulation, which could lead to potential sanctions.

Should coordinates be provided for land in low-risk countries?

There is no exception for the traceability requirement via geolocation. The operators also have to assess the complexity of the relevant supply chain and the risk of circumvention of the Regulation and the risk of mixing with products of unknown origin or origin in high-risk or standard-risk countries or parts thereof (Art. 13).  If the operator obtains or is made aware of any relevant information that would point to a risk that the relevant products do not comply with the Regulation or that the Regulation is circumvented, the operator shall fulfil all of the obligations under Articles 10 and 11 and shall immediately communicate any relevant information to the competent authority.

Does the legality requirement apply for deforestation-free land?

Relevant commodities and relevant products cannot be placed on the market or exported unless they have been produced in accordance with the relevant legislation of the country of production as per the requirement set out in Art. 3(b).

The obligations under Art. 3 are cumulative: the legality requirement (Art 3(b)) has to be fulfilled in addition to the ‘deforestation-free’ requirement (Aricle3(a)) and the requirement for the commodities or products to be covered by a due diligence statement (Art.3(c)).

Are there obligations for non-EU countries?

There are no legal obligations applicable to non-EU countries. This Regulation sets out obligations for operators and traders (see chapter 2 of the Regulation) as well as for the EU member states and their competent authorities (see chapter 3 of the Regulation).

However, many countries around the world have taken action to enhance deforestation-free supply chains, strengthen public traceability systems on relevant commodities, etc., thereby facilitating the tasks of companies under this Regulation. This is welcome, as such developments can greatly help operators and traders to comply with their obligations.