COLOMBO, Oct. 31 (Xinhua) -- Sri Lanka is bracing for the implementation of the European Union's Deforestation Regulation (EUDR), which will take effect on Dec. 30, requiring all commodities entering the EU market to be deforestation-free and legally sourced, according to a recent study by the Institute of Policy Studies (IPS), a Sri Lanka-based research institute.
The regulation targets seven key commodities, including natural rubber, palm oil, soy, cattle, cocoa, coffee, and wood, along with products derived from them, such as tires and wooden furniture. Sri Lanka's rubber exports to the EU, valued at approximately 338 million U.S. dollars in 2024, form a significant part of this trade, IPS researchers said.
To comply with the EUDR, exporters must provide detailed geolocation data and demonstrate legal ownership of the land where commodities were sourced. While large plantations may manage these requirements without major difficulty, the study highlighted challenges faced by smallholder farmers who cultivate over 68 percent of Sri Lanka's nearly 98,400 hectares of rubber.
Lack of digital infrastructure, unreliable internet access in rural areas, and the complexity of digitizing land titles hamper smallholders' ability to meet the stringent traceability and documentation standards, the IPS team noted. The potential exclusion of small farmers from lucrative EU markets raises concerns about the socio-economic impact on rural communities.
IPS modeling projects that compliance could increase export costs by 5 percent, leading to a 7.6 percent decline in rubber exports to the EU, equating to an annual loss of 24.4 million dollars. Failure to comply might result in a complete loss of EU market access for these products, potentially shrinking the country's gross domestic product by 0.07 percent.
Employment in the rubber manufacturing sector, which currently supports over 34,000 workers, could also be affected. The study estimates that a non-compliance scenario would reduce labor demand by 15.6 percent, resulting in thousands of job losses. ■
