We originally wrote this blog post when the EU Deforestation Regulation (EUDR) was still in early days. With additional knowledge gained over time, we’re revisiting the topic to share further insights.
Understanding Operators and Traders
Who is an Operator?
Operators are natural or legal persons who place EUDR-regulated products on the EU market or export them in the course of a commercial activity. This can include companies that transform raw materials into finished products (e.g., sawmills, pulp producers, furniture manufacturers). The EUDR applies to various commodities—including wood, cattle, cocoa, coffee, oil palm, rubber, and soy—and to many derived products like leather, chocolate, tires, or furniture.
Real-life examples of operators include:
- Someone who imports EUDR-related products into the EU.
- Someone who exports EUDR-related products out of the EU.
- A forest owner who places timber on the market for the first time.
- A company manufacturing wood products (e.g., wooden chairs).
It’s possible that certain derived products don’t fall under EUDR requirements. If that’s the case, you’re not required to perform Due Diligence for those specific items. However, any product or by-product covered by the EUDR still requires its own Due Diligence.
Note that even if you produce only non-EUDR goods, you must still keep records of all EUDR-related information from your suppliers.
Practical Tip: Check your accounting records for product nomenclature codes and compare them with Annex I of the EUDR. If your products appear there, they fall under EUDR requirements.
Example:
If you buy roundwood logs and saw them into boards, you generate by-products like slabs and edgings, which you might burn internally to produce electricity. In this scenario:
- You must gather all supplier data for the logs.
- You don’t need to do Due Diligence on the electricity you generate, as it isn’t covered by the EUDR.
- You do need to perform Due Diligence on the boards if they’re placed on the market, because they are part of the EUDR product list.
- Any other by-product sold externally also requires Due Diligence (e.g., wood chips, pellets, bark).
Just few examples (for full list one must check Annex I):
- 4401: This heading encompasses various forms of wood used as fuel or in other applications:
- 4401 21: Wood in chips or particles, coniferous.
- 4401 22: Wood in chips or particles, non-coniferous.
- 4401 31: Wood pellets.
- 4401 39: Sawdust and wood waste and scrap, not agglomerated, also bark.
- 4403: Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared.
Who is a Trader?
Traders differ from operators but can have similar obligations. They are entities (other than operators) that make EUDR-regulated products available on the EU market. Large traders (non-SMEs) have the same Due Diligence obligations as operators, while SME traders have simplified obligations (we believe that SMEs really face similar burden – check under Obligation of Operators and Traders below).
Small and medium-sized enterprises (SMEs) are defined by staff headcount and either turnover or balance sheet total. While each country has specific definitions, the EU recommendation is that SMEs should not exceed 250 employees, €50 million in turnover, or €43 million in balance sheet total.
Obligations of Operators and Traders
Large Operators and Traders (non-SMEs)
- Due Diligence System (DDS): Must establish and maintain a due diligence system before placing products on the EU market or exporting them.
- Due Diligence Statement (DDS): Must submit a DDS in the EU Information System, including geolocation coordinates and supply chain details.
- Risk Assessment and Mitigation: Must ensure negligible risk by evaluating country risk levels, supplier reliability, and other compliance factors.
- Liability: Remain legally responsible for compliance, even when using upstream DDS from suppliers.
SME Operators and Traders
- Simplified Due Diligence: SME operators do not need to conduct full due diligence if they receive products from upstream entities that have already done so.
- No Mandatory Submission of DDS: Unlike non-SMEs, SME operators do not need to submit due diligence statements in the EU Information System.
- Obligation to Maintain Traceability: Must collect and store supplier and product information for five years and pass on relevant DDS information to the next buyer.
Even though SMEs have “simplified” requirements, in practice they often face similar challenges:
- They still need to collect and store supplier/product data for five years.
- They must pass relevant DDS information to their buyers.
- Goods are frequently mixed in storage, necessitating organized tracking (which can be time-consuming if you have tens or hundreds of DDS references).
- SMEs that choose not to create new DDS data might unintentionally reveal their supplier network to buyers.
Each DDS number includes both a reference code and a verification code—together totaling 22 characters. To remain EUDR-compliant, the seller must provide these complete numbers to the buyer for every covered item. In large transactions, it’s not uncommon to deal with tens or even hundreds of DDS references. Accuracy is paramount—if any details are incorrect, the buyer risks placing goods on the market without proper documentation, leading to potential non-compliance issues.
Obligation of operators and traders
How do we see it in practice
European Forest Owners
Each European country may approach EUDR obligations differently. Despite the variations, a forest owner is considered an operator, so they need a DDS before selling timber.
We anticipate that national forestry agencies or relevant organizations will provide some combination of:
- Nothing (we don’t really expect this atm).
- Geographic coordinates of the forest plot.
- Scientific and common names of timber species.
- A ready-made DDS.
Pantiko’s Current and Upcoming Solutions:
- Requesting a DDS: Forest owners will be able to generate or request a DDS via Pantiko’s system and share it with buyers (traders, sawmills, or other operators).
- Third-Party Request: Traders, sawmills, or other operators can request a DDS on a forest owner’s behalf, with the owner’s authorization (e.g., a signed consent).
- Ongoing Automation: We’re actively developing features to automate data retrieval from national services (where available), so the forest owner won’t have to supply these details manually.
Traders
European wood handling commonly happens in two ways:
- Direct Purchase: Traders or Sawmills (or other operator) buy directly from forest owners.
- Indirect Purchase: Traders or Sawmills (or other operator) buy from traders, who might source from multiple other traders or directly from forest owners.
In both cases, traders need to:
- Acquire upstream DDS from forest owners or other traders.
- Attach the correct DDS reference to purchase documents and transport documents (e.g., CMR; or via other means).
- Maintain traceability, especially when mixing timber from various sources.
When for example a single piece of log will be added to truck from different forest land (ex: from storage/inventory) DDS of that log must be also included. During sorting (on storage), all upstream DDS must be included.
Pantiko’s Current and Upcoming Solutions:
- If your supplier uses Pantiko, the relevant data flows automatically to you.
- If your buyer also uses Pantiko, you can share data seamlessly.
- For those concerned about disclosing their own suppliers’ information, Pantiko can help generate a new DDS number for your outgoing goods, thus preventing direct visibility of your upstream chain to buyers.
Sawmill, pulp or other producers
As operators, sawmills must track all incoming DDS numbers and ensure their outbound products also carry valid DDS references. This applies to all EUDR-covered outputs (e.g., wood boards, wood waste, chips).
Key Points:
- If you’re mixing goods, you need to list all relevant input DDS numbers.
- Production often spans different time frames for different grades of timber or by-products (e.g., first-class vs. third-class vs. wood waste).
- Production can run weeks or months, so maintaining accurate records can be problematic.
Pantiko’s Current and Upcoming Solutions:
- Automatically pull supplier data for your production records if both parties use Pantiko.
- Offer an automated DDS submission system at the end of your production process.
- Integrate Pantiko with existing software for seamless DDS generation, helping you maintain compliance without manual data juggling. We can provide your existing systems with DDS data.
Importing to European Union
We consider import to be special part in EUDR. Imports fall under “operators” because you’re placing goods on the EU market. If a single shipment contains timber from multiple plots (e.g., 10 in the USA and 20 in Brazil), you need the data for all 30 plots to complete the DDS.
Similar challenges with mixing goods in storage apply to imports as well. In general, non-EU parties can’t submit a DDS unless they have an EORI number, and even then, only for the act of importing into the EU. Once the goods arrive, the first company in the EU must submit its own DDS—though it can make use of any upstream DDS from a supplier holding an EORI number.
While non-EU parties generally can’t submit a DDS unless they have an EORI number, there’s still a need to maintain consistent data flow throughout the supply chain. That’s why we’re developing a solution to transmit both EUDR-related and non-EUDR data seamlessly, ensuring every link in the chain has the information it needs without relying on manual processes. This approach helps avoid errors, reduces administrative burden, and keeps operations moving smoothly—even when formal DDS submissions aren’t possible.
Final thought
We’re steadily advancing our EUDR features, but despite the extended timeline, the year is flying by—and our biggest concern remains the widespread lack of awareness. We expect a rush in the second half as more people realize what’s required, potentially creating headaches for everyone in the supply chain.
Why Act Now?
- Getting your EUDR processes in order early will help you avoid the chaos later on.
- Pantiko isn’t just about EUDR compliance. Our solution helps you simplify everyday tasks like data entry, field-based printing, and automatic synchronization across multiple devices. These features existed long before the EUDR and continue to evolve to meet real-world forestry needs.
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Sources:
- Classifying wood https://trade.ec.europa.eu/access-to-markets/en/content/classifying-wood
- Small and medium-sized enterprises (SME): https://single-market-economy.ec.europa.eu/smes/sme-fundamentals/sme-definition_en