EU’s New Deforestation Rules Hurt Brazil’s Soymeal Exports But Help Argentina
The European Union’s (EU) new anti-deforestation regulations (EUDR) could adversely affect Brazil’s soybean exports to the bloc, thus allowing outbound shipments from Argentina into the Eurozone, which is better positioned to comply with the new rules.
According to the European Feed Manufacturers' Federation (FEFAC), Brazil supplied 23.3 million metric tons of soymeal to the EU in 2025, comprising nearly half of the bloc’s import volume. This makes Brazil the EU’s largest supplier of soybean meal for animal feed.
The new EUDR, which will come into effect from December 30, 2026, requires importers to prove that their products are not linked to deforested land. Non-adherence to or breaching of these regulations will incur heavy penalties. Brazil’s central and northeastern farmlands are a result of cleared ecosystems in recent decades. On the other hand, Argentina’s advantage stems from its farmlands being spread across the vast Pampas plains, which have been an agricultural haven for several generations.
Brazilian farmers are ringing alarm bells, particularly after the FEFAC estimated that the EU could close its market to almost 4 million tons of soymeal, roughly 17% of total exports from the Latin American country. In its latest report, the Federation assessed Brazil with a ‘medium risk’ rating, pointing out that the west-central state of Mato Grosso and others have several structural and logistical barriers which hinder them from complying with the EUDR.
Researchers are also pointing out that tracing supply chains across LatAm’s biggest economy, particularly because farmers from central Brazil are over 2,000 kilometres away from seaports and usually rely on trucks, barges and trains to get their produce across the border. Contrarily, Argentina’s prime soy-producing lands are within a 350-kilometre radius from Rosario port hub, which makes its supply chain easier to track and much less expensive.
Industry observers believe that these new regulations are unfairly tilted against Brazil. However, efforts to restore deforested land are being made in Brazil, although newer agricultural belts are being developed. Brazil’s newly elected President, Lula da Silva, is set to reassume office just days before the EUDR comes into effect. Dealing with this issue could be one of his top agenda items, especially after his opponent, Flavio Bolsonaro, remarked that he was in favour of Brazilian farmers doing as they please, and that environmental hurdles were not a concern.
Argentina's CIARA-CEC grains exporters and crushers chamber believes that LatAm’s third-largest economy is not only well-equipped to adhere to the new regulations but can also fill the gap of 5 million to 6 million tons of potential losses from Brazil. Argentina’s VISEC traceability system, which tracks soybeans and beef from the production stage to export, is ready and fully operational, just in time for the new rules to be implemented.
While Brazil was categorised as being at a medium-level risk, the FEFAC categorised Argentina as a low-risk economy for EUDR-related supply disruptions. It has also estimated that the net soy meal crop for the first six months of 2027 will meet the EU’s requirements.
Argentina is the world's largest soymeal exporter, shipping about 27 million metric tons last year, 25% of which was shipped to Southeast Asia. While Argentine exporters are increasing their trade volume with the Eurozone, Brazil should begin diversifying its supply chains by entering new markets to substitute its shipments to the EU.
The intra-regional tensions which could emerge from this development remain to be seen, as both Brazil and Argentina are Mercosur members. This trade hiccup comes only five months after the EU and Mercosur signed a provisional free-trade agreement in May following decades of negotiations.
