South Africa has a multi-billion Rand forestry industry which is responsible for 9.8% of the country’s agricultural Gross Domestic Product (GDP) and 4.9% of South Africa’s manufacturing GDP. The export value is over ZAR38.4 billion. It is a key contributor to South Africa’s economy and a major employer, indirectly supporting well over half a million South Africans.
Maintaining indigenous forests is vital to environmental health and mitigating climate change impacts. and the need to protect and rehabilitate South Africa’s indigenous forests, not least for their ability to sequester carbon, is gaining recognition.
Yet, increasing pressure for land use, and economic and social factors drive deforestation to make way for agriculture, urbanisation and infrastructure development. According to the UN Food and Agriculture Organization (“FAO”), nearly 4 million hectares of African forests are cut down each year, almost double the speed of the global deforestation average. While this is an alarming statistic, it also reflects the context of developing nations seeking economic growth and increased living conditions for growing populations.
Although the EU is Africa’s largest trade partner, accounting for some 33% of African exports in 2020, an estimated 10% of global deforestation between 1990 and 2008 was linked to European demand for goods and services. The EU has therefore taken a proactive approach to combating deforestation. EU Deforestation Regulation 2023/1115 of the European Parliament and of the Council of 31 May 2023 (“EUDR”) came into force on 29 June 2023, with an 18-month transitional period for large companies and a further 6 months for micro to small businesses. The EUDR builds on the Timber Regulation (EU) No 995/2010 (“EU Timber Regulation”). It is far-reaching in scope and consequence and we will feel its impact here in Africa.
With the implementation date of December 2024 fast approaching, on 14 November 2024, the EU Parliament voted to delay the implementation of the EUDR by an additional year. Amendments to the EUDR have also been proposed. However, it is important to understand how the EUDR will impact Africa.
In terms of Decision 11/CP.7 of the United Nations Framework Convention on Climate Change (“UNFCCC”), deforestation is “the direct human-induced conversion of forested land to non-forested land”. The EUDR provides a more relevant definition stating that deforestation is “the conversion of forest to agricultural use, whether human-induced or not”. Deforestation is the result of repurposing land for other uses or timber extraction. Balancing the interplay of economic, social, and environmental factors in deforestation for farming purposes is a complex challenge that requires careful consideration and a comprehensive approach. Deforestation-free is defined in the EUDR as “(a) that the relevant products contain, have been fed with or have been made using, relevant commodities that were produced on land that has not been subject to deforestation after 31 December 2020; and (b) in the case of relevant products that contain or have been made using wood, that the wood has been harvested from the forest without inducing forest degradation after 31 December 2020.”
Article of the EU Regulation provides that no products shall be placed in the European market unless they:
- are deforestation-free;
- have been produced in accordance with the relevant legislation of the country of production; and
- are covered by a due diligence statement.
This requirement aims to combat deforestation and prevent environmental damage by prohibiting deforestation associated with seven high-risk commodities, wood, soy, palm oil, coffee, cocoa, beef and rubber, and the products derived from them, such as chocolate, leather, and paper. Only high-risk commodities and products derived from them, which have been farmed in compliance with the EU Regulation may be sold in European markets.
The EU Commission has proposed amendments to the EUDR to include risk categories, such as no risk (countries with stable or increasing forest area development), low risk, standard risk and high-risk countries. A country benchmarking system must be in place by June 2025.
What does that mean for South Africa and other African countries supplying the European market?
African farmers who export high-risk commodities and related products to EU countries must have knowledge of the origin and legality of the commodities they deal in, and consider the risk of these products being linked to illegal harvesting (in the case of timber) or deforestation after 31 December 2020 in the case of farmed commodities. Traceability and data collection will increase internal costs associated with high-risk commodities.
In South Africa the prevention of deforestation exists within a fragmented regulatory framework:
- The Management of State Forests Act 128 of 1992 provides for the management of and control over state forests by the South African Forestry Company (SOC) Ltd.
South Africa has also ratified some international conventions and regional regulations, like the International Tropical Timber Agreement and the SADC Forest Law Enforcement Plan. When dealing with timber and timber products, the Forest Stewardship Council (“FSC”) certification confirms that the forest is being managed in a way that preserves biological diversity and benefits the lives of local people and workers, while ensuring it sustains economic viability.
Several environmental law requirements are in place for the legal clearance of Indigenous vegetation, including:
- The National Environmental Management Act 107 of 1998 (“NEMA”) which requires an environmental authorisation for the clearance of indigenous vegetation in an area of 1 hectare or more. This clearance requires a basic assessment, while clearance over 20 hectares requires a full environmental impact assessment including public participation and specialist studies.
- The following legislation may also find application National Environmental Management: Biodiversity Act 10 of 2004, National Environmental Management: Waste Act 59 of 2008, National Environmental Management: Protected Areas Act 57 of 2003 and the National Water Act 36 of 1998.
- Additionally, each province in South Africa has its own environmental legislation which governs deforestation and typically contains permitting requirements for timber harvesting and affords special protection to indigenous trees and trees located in protected areas and nature reserves.
- Finally, local authority zoning approval may be required for converting forested land into agricultural land in terms of the relevant municipal zoning law made in terms of the Spatial Planning and Land Use Management Act 16 of 2013.
Unlike the EU, in South Africa, there is no explicit requirement for companies to conduct due diligence to minimise the risk of illegal timber entering their supply chain or to check whether the high-risk commodities in their supply chain were farmed on deforested land. However, the environmental principle of duty of care under section 28 of NEMA is broad in nature and includes an obligation to take reasonable measures to prevent environmental damage and impliedly the duty to ensure, for example, that the timber was harvested in compliance with the laws of the country. Accordingly, commodity traders must determine whether high-risk commodities have been grown on land that was legally cleared.
South African farmers who are not compliant with local environmental laws would not be able to do business with EU-based companies. Conversely, compliance with the South African regulatory system and additional certification through the FSC, is likely to provide a good basis to meet due diligence requests from EU counterparts initiated as a result of the EU Regulation.
What should you do if you are a part of an EU supply chain?
If your business exports, or supplies to exporters, any of the seven high-risk commodities, wood, soy, palm oil, coffee, cocoa, beef, rubber or their derivatives like chocolate, leather, and paper, to the European market, it’s crucial to conduct legal due diligence on your operations and supply chain.
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Read the original publication at ENS
