What is EUDR and How Does It Impact Thailand's Rubber Industry?
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What is EUDR and How Does It Impact Thailand's Rubber Industry?
The European Union Deforestation Regulation (EUDR) has become one of the most discussed topics among agricultural and industrial exporters in Southeast Asia, especially in Thailand’s rubber sector.
Currently, as the world’s largest exporter of natural rubber, Thailand faces both opportunities and challenges from this new regulation. The EUDR aims to combat global deforestation by ensuring that products sold in the EU are deforestation-free.
However, for Thailand’s rubber industry, it is deeply linked to smallholder farmers, supply chains, and global manufacturing. Therefore, the regulation brings complex implications that could redefine how rubber is produced, tracked, and exported.
Therefore, in this article, well break down what the EUDR is, why it matters, and how it will reshape Thailand’s rubber industry, from plantation to export.
What is EUDR, and why does it matter for the rubber industry
The EUDR or the European Union Deforestation Regulation is a law introduced by the European Union in 2023, which requires companies selling certain commodities, such as rubber, coffee, or bean products, to prove that their products do not come from land that has been deforested or degraded after December 31, 2020.
In simpler terms, the EUDR means that if you want to sell a stated product to the EU, your product must be deforestation-free and traceable back to its origin.
The objective of the law
The EUDR law is intended to reduce global deforestation and forest degradation, ensure that EU consumption does not contribute to deforestation in developing countries, and promote sustainable supply chains and transparency in product sourcing.
For the rubber sector, this means any natural rubber or rubber-derived product, such as tires, gloves, hoses, and industrial parts, exported to the EU must meet EUDR standards.
Why EUDR Matters for Thailand’s Rubber Industry
Thailand produces over 4.8 million tons of natural rubber annually, accounting for about 35% of global production. The EU, along with China and Japan, is one of Thailand’s top export markets for rubber and rubber products.
As the released the new regulation from EU, it means that Thailand must prove the origin of its rubber, ensure no deforestation occurs after 2020, and provide geolocation data for every plantation involved in the supply chain. This is considered a significant shift from the traditional system, where smallholder farmers sell latex to local traders without clear traceability.
Therefore, this caused a challenge in terms of management and regulatory compliance. According to the statistics, over 1.6 million smallholder farmers manage most of Thailand’s rubber plantations, and Many of these plantations do not have official land titles or GPS coordinates. Therefore, the process of tracking deforestation-free compliance is difficult without digital tools and satellite mapping for local Thais, so it adds compliance pressure on local producers and exporters.
How EUDR Impacts Thailand’s Rubber Supply Chain
The EUDR rubber regulation affects every stakeholder inside the production supply chain, from smallholder farmers to large exporters and even tire manufacturers.
The below are the key impacts;
1. Technological and certification challenges for smallholder farmers
As stated above in the key challenge, for Thailand’s 1.6 million smallholder farmers, compliance is the biggest challenge in selling due to a lack of knowledge in using trackable technology; therefore, they will not have a proven record of the product, whether their product comes from a deforestation zone or not.
Moreover, approval certification, such as the certificate of origins, is not easy to register for local farmers, since the law requires the land ownership title approval to ensure the safe origins, but some of them sell the product, but do not own the land title deed
2. Limitation in data collecting and traceability for traders and processors
Rubber traders and processors will need to collect, verify, and manage traceability data from farmers. Furthermore, they must implement digital traceability systems and maintain transaction records, and the failure to comply could lead to export rejection or fines.
3. The shifting in supply chain management for exporters and manufacturers
From the perspective of exporters and tire manufacturers, EUDR means rethinking the entire supply chain. Means that they need transparent supply chains with verified suppliers. And working with certification bodies and data platforms to ensure compliance with the law, which potentially increases operational costs, but improves brand reputation and market access.
What Happens If Thailand Fails to Comply?
If Thailand fails to comply with the EUDR rubber regulation could have significant consequences for Thailand’s economy, global reputation, and local livelihoods, especially since the country’s rubber sector contributes billions of baht annually and supports more than 6 million people across the value chain.
Thailand Could Result in Export Restrictions and Market Loss
If Thailand cannot meet the EUDR requirements, rubber exports to the EU may be restricted or even banned.
European buyers, including major tire manufacturers, are already aligning their procurement systems with EUDR standards. This means that non-compliant suppliers could be blacklisted or excluded from future trade contracts.
Loss of Competitive Disadvantage
While Thailand struggles with compliance, competitors such as Vietnam, Indonesia, and Malaysia are rapidly developing national traceability systems and pilot projects to meet EUDR standards. If these countries achieve compliance earlier, buyers may shift their sourcing to those markets. This could weaken Thailand’s long-held dominance as the world’s leading natural rubber producer.
Reputational Damage
Non-compliance could also harm Thailand’s reputation in global sustainability rankings. In the age of ESG (Environmental, Social, and Governance) investment, global brands and institutional investors prefer working with suppliers who follow sustainable sourcing standards. Therefore, Thailand’s failure to comply could lead to lower ESG ratings for Thai exporters, Declining investor confidence in the sector and negative perceptions of Thailand’s commitment to environmental protection. The EUDR rubber regulation is not merely a compliance challenge, it’s a transformative opportunity for Thailand. By aligning with EUDR requirements, Thailand can strengthen its position as a responsible, sustainable rubber exporter.
The European Union Deforestation Regulation (EUDR) has become one of the most discussed topics among agricultural and industrial exporters in Southeast Asia, especially in Thailand’s rubber sector.
Currently, as the world’s largest exporter of natural rubber, Thailand faces both opportunities and challenges from this new regulation. The EUDR aims to combat global deforestation by ensuring that products sold in the EU are deforestation-free.
However, for Thailand’s rubber industry, it is deeply linked to smallholder farmers, supply chains, and global manufacturing. Therefore, the regulation brings complex implications that could redefine how rubber is produced, tracked, and exported.
Therefore, in this article, well break down what the EUDR is, why it matters, and how it will reshape Thailand’s rubber industry, from plantation to export.
What is EUDR, and why does it matter for the rubber industry
The EUDR or the European Union Deforestation Regulation is a law introduced by the European Union in 2023, which requires companies selling certain commodities, such as rubber, coffee, or bean products, to prove that their products do not come from land that has been deforested or degraded after December 31, 2020.
In simpler terms, the EUDR means that if you want to sell a stated product to the EU, your product must be deforestation-free and traceable back to its origin.
The objective of the law
The EUDR law is intended to reduce global deforestation and forest degradation, ensure that EU consumption does not contribute to deforestation in developing countries, and promote sustainable supply chains and transparency in product sourcing.
For the rubber sector, this means any natural rubber or rubber-derived product, such as tires, gloves, hoses, and industrial parts, exported to the EU must meet EUDR standards.
Why EUDR Matters for Thailand’s Rubber Industry
Thailand produces over 4.8 million tons of natural rubber annually, accounting for about 35% of global production. The EU, along with China and Japan, is one of Thailand’s top export markets for rubber and rubber products.
As the released the new regulation from EU, it means that Thailand must prove the origin of its rubber, ensure no deforestation occurs after 2020, and provide geolocation data for every plantation involved in the supply chain. This is considered a significant shift from the traditional system, where smallholder farmers sell latex to local traders without clear traceability.
Therefore, this caused a challenge in terms of management and regulatory compliance. According to the statistics, over 1.6 million smallholder farmers manage most of Thailand’s rubber plantations, and Many of these plantations do not have official land titles or GPS coordinates. Therefore, the process of tracking deforestation-free compliance is difficult without digital tools and satellite mapping for local Thais, so it adds compliance pressure on local producers and exporters.
How EUDR Impacts Thailand’s Rubber Supply Chain
The EUDR rubber regulation affects every stakeholder inside the production supply chain, from smallholder farmers to large exporters and even tire manufacturers.
The below are the key impacts;
1. Technological and certification challenges for smallholder farmers
As stated above in the key challenge, for Thailand’s 1.6 million smallholder farmers, compliance is the biggest challenge in selling due to a lack of knowledge in using trackable technology; therefore, they will not have a proven record of the product, whether their product comes from a deforestation zone or not.
Moreover, approval certification, such as the certificate of origins, is not easy to register for local farmers, since the law requires the land ownership title approval to ensure the safe origins, but some of them sell the product, but do not own the land title deed
2. Limitation in data collecting and traceability for traders and processors
Rubber traders and processors will need to collect, verify, and manage traceability data from farmers. Furthermore, they must implement digital traceability systems and maintain transaction records, and the failure to comply could lead to export rejection or fines.
3. The shifting in supply chain management for exporters and manufacturers
From the perspective of exporters and tire manufacturers, EUDR means rethinking the entire supply chain. Means that they need transparent supply chains with verified suppliers. And working with certification bodies and data platforms to ensure compliance with the law, which potentially increases operational costs, but improves brand reputation and market access.
What Happens If Thailand Fails to Comply?
If Thailand fails to comply with the EUDR rubber regulation could have significant consequences for Thailand’s economy, global reputation, and local livelihoods, especially since the country’s rubber sector contributes billions of baht annually and supports more than 6 million people across the value chain.
Thailand Could Result in Export Restrictions and Market Loss
If Thailand cannot meet the EUDR requirements, rubber exports to the EU may be restricted or even banned.
European buyers, including major tire manufacturers, are already aligning their procurement systems with EUDR standards. This means that non-compliant suppliers could be blacklisted or excluded from future trade contracts.
Loss of Competitive Disadvantage
While Thailand struggles with compliance, competitors such as Vietnam, Indonesia, and Malaysia are rapidly developing national traceability systems and pilot projects to meet EUDR standards. If these countries achieve compliance earlier, buyers may shift their sourcing to those markets. This could weaken Thailand’s long-held dominance as the world’s leading natural rubber producer.
Reputational Damage
Non-compliance could also harm Thailand’s reputation in global sustainability rankings. In the age of ESG (Environmental, Social, and Governance) investment, global brands and institutional investors prefer working with suppliers who follow sustainable sourcing standards. Therefore, Thailand’s failure to comply could lead to lower ESG ratings for Thai exporters, Declining investor confidence in the sector and negative perceptions of Thailand’s commitment to environmental protection. The EUDR rubber regulation is not merely a compliance challenge, it’s a transformative opportunity for Thailand. By aligning with EUDR requirements, Thailand can strengthen its position as a responsible, sustainable rubber exporter.
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