The European Union's Deforestation-Free Regulation (EUDR) brings fundamental changes for businesses operating in the European market. The aim of this regulation is to ensure that relevant commodities and products derived from them placed on the EU market or exported from it, did not contribute to global deforestation and were produced in accordance with the applicable legislation of the country of origin. In December 2025, targeted amendments to this regulation were adopted (so-called 3rd edition) that simplify and streamline the obligations for various entities in the supply chain. This article will help you understand your position in the chain and the obligations that arise from it.

Which commodities are affected and why is strict traceability important?

The EUDR rules apply to seven key commodities and related products: cattle, cocoa, coffee, palm oil, rubber, soy and timber. All of these products have extremely strict traceability requirements. The commodities used in the products must be traceable back to the land on which they were produced or grown.

An important rule is that the regulation strictly prohibits the use of so-called mass balance. This system normally allows the mixing of certified commodities with commodities of unknown origin. However, the EUDR Regulation does not allow this, as it would not be possible to guarantee that the resulting product on the EU market is truly deforestation-free. Commodities destined for the EU market must therefore be physically separated from other commodities at all stages of the supply chain.

The role of "Upstream" economic operators (first to market)

The cornerstone of the system is „"upstream" economic operator (operator). This is the natural or legal person who, in the course of a commercial activity, first places the relevant products on the EU market or exports them from the Union. This includes, for example, importers who release the products for free circulation (customs) or domestic producers operating directly in the EU.

These entities bear the greatest burden of responsibility. Before placing products on the market or exporting them, they must to perform due diligence. They are fully responsible for compliance with Article 3 of the Regulation, i.e. that the products do not cause deforestation and are legal. They must then submit to the European Information System Due Diligence Statement (DDS). This declaration also includes the geolocation of the land. After submission, the upstream operator receives a DDS reference number, which it must keep for five years and pass on to other entities in the chain. For customs procedures, this DDS reference number must be included in the customs declaration.

Simplification for micro and small primary entities (MSPOs)

The new amendments to the regulation have brought great relief to micro or small primary entities (MSPOs). This is an operator that meets the criteria of a micro or small enterprise, is based in a country classified as "low-risk" and grows, harvests or raises the products in question on its own land.

These entities do not have to submit a full due diligence declaration (DDS). Instead, they only submit to the Information System one-time simplified declaration. If the necessary information on the parcels is already available in existing national databases, Member States may provide it to the Information System automatically, thus eliminating the need for the operator to submit a declaration at all. The operator will then obtain a declaration identifier that accompanies his products in the chain.

Obligations of Downstream Operators and Traders

Entities further down the supply chain have obligations primarily aimed at maintaining traceability.

• Downstream operator is a person who manufactures, places on the market or exports new relevant products created from other relevant products that have previously passed the inspection and are covered by a DDS declaration.
• Trader is an entity that merely makes a product available on the market without changing its substance or HS tariff code.

The advantage for downstream operators and traders is that they do not need to perform new due diligence or submit new DDS. Their main task is to collect and store DDS reference numbers from their suppliers. Larger businesses (non-SMEs) in these categories must also register in the Information System.

Real-life scenarios: What does it look like in real life?

For a better understanding, let's show practical applications of these rules.

• Example 1: Wood and furniture industry. A large logging company harvests timber in the EU and sells logs. This company acts as an upstream operator and submits a DDS. The logs are purchased by a small sawmill and processed into wooden boards. This places a new relevant product on the market, but since the input logs already had a DDS, the sawmill is only a downstream operator. These boards are later purchased by a large furniture company and made into wooden furniture. The furniture company is again a downstream operator, but must request the original DDS reference number from the sawmill. If the same wood were to be used to make paper, which would later be printed and sold as a newspaper, the newspaper publisher would no longer be subject to the obligation, as newspapers are not a relevant product under the EUDR.
• Example 2: Importing and roasting coffee. A micro-enterprise that imports coffee beans from a third country into the EU acts as an upstream operator in the import. Since it did not grow the coffee itself, it does not qualify for the MSPO and must carry out full due diligence and submit a DDS system. If it sells this coffee after roasting to a wholesaler and the latter subsequently sells it to a café, both of these other parties act as traders. This means that they are merely passing on the DDS information.
• Example 3: Processing domestic soybeans. A medium-sized farm in the EU grows soybeans and sells them to an oil mill. The farm is an upstream operator and submits a DDS. However, if the farm did not sell part of the soybeans at all, but only used them to feed its own chickens, it would not submit a DDS for this part, as there is no placing of the product on the market. The mill that buys the soybeans and produces soybean oil is a downstream operator. If the oil is subsequently bought by a food manufacturer and made into margarine, the food manufacturer has no obligations, as margarine is not included in the EUDR commodity list.

In conclusion, the EUDR reallocates responsibilities logically according to position in the supply chain. Understanding whether you are an upstream operator, downstream operator, MSPO or trader is absolutely crucial to meeting legislative standards and protecting your commercial activities from sanctions. JRi&CO2AI