The cattle and leather industries in Brazil and Italy are facing a crucial challenge: application of the European Deforestation Regulation (EUDR). Aimed at combating global deforestation, this regulation risks having significant repercussions on both markets with historic links to the hide trade.
Brazil is a colossus in the cattle industry. In 2022, Brazil’s agribusiness sector of beef and veal generated an economic value of US$ 204 billion, with a sectoral gross domestic product (GDP) equal to 41.6% of the entire agrifood area. Brazil’s meat exports are crucial to the country’s economy. Dependent upon the cattle supply chain is the leather industry, composed of 214 companies that transform raw hides into finished leather. Highly appreciated internationally, Brazilian leather recorded exports amounting to US$ 1.45 billion in 2021. China, the United States, and Italy are the main destination markets.
For its part, Italy boasts a leather industry that leads the world in terms of production value, technology, creativity, and sustainability. With a yearly turnover of € 4.6 billion, the sector accounts for 65% of leather production in the EU, and 25% of global output. Production is concentrated in specialised districts, like Valle del Chiampo in Veneto and Solofra in Campania.
The EUDR requires operators that market raw materials like cattle, soy, and wood in the EU to guarantee, after 31 December 2020, that these materials were not obtained from deforested areas. This entails the collection of geolocation data for each batch of raw material, which must be entered into an IT system managed by the European Commission.
The main criticisms that were raised include the complexity involved in the traceability of the hides’ origin, due also to the animals’ transfers between breeding farms before and after butchering, and the limited resources of small-scale producers, who represent 90% of cattle raisers in Brazil. Additional concerns relate to the costs of individual traceability with estimates indicating a possible 80% increase in the price for raw hides, the timing imposed by the regulation, and the trade distortions liable to benefit non-EU countries with less stringent environmental rules.
To mitigate the EUDR’s impact, proposals have been made both by Brazilian institutions and by the private sector. The Brazilian Ministry of Agriculture, Livestock and Food Supply (MAPA) has developed a digital platform for the animals’ traceability, although the project is still in its initial stage. Unified certifications – like “Carbon Neutral Beef,” “Low Carbon Beef,” and “Free Deforestation” – have also been proposed to promote sustainable practices. The Brazilian Beef Exporters Association (ABIEC) suggests adopting the “Beef on Track” protocol for the due diligence required by the EUDR, with trial tests in the offing. In parallel, CICB (Centro das Indústrias de Curtumes do Brasil) has initiated a voluntary livestock traceability project, aiming to make it mandatory in eight years’ time.
This past 14 November, the European Parliament approved the postponement of the entry into force of the EUDR, delaying the date of application by one year. According to the adopted text, large-scale operators and merchants will be required to comply with the regulation’s obligations starting 30 December 2025, while micro-enterprises and small enterprises will have until 30 June 2026.
