The implementation of the EU Deforestation Regulation (EUDR) is expected to cost the German wood industry €1.8 billion, with ongoing annual costs of around €1.2 billion, according to a survey conducted by the German Wood Industry Association (HDH). The regulation, effective from January 2026, requires all companies in the supply chain to ensure that wood products are not linked to deforestation.

The survey, conducted in August 2025, involved over 400 companies across the entire supply chain, from timber purchasers and processors to manufacturers of furniture, packaging, and paper products, as well as traders. Results reveal widespread unpreparedness: more than half of all companies, and nearly two-thirds of small and medium-sized enterprises (SMEs), expect not to meet the compliance deadline. Only 39% reported that they are likely or certain to implement the regulation by year-end.

HDH President Johannes Schwörer warns of significant disruptions: "The low level of preparedness could paralyze the entire supply chain and halt the use of wood products. Missing data from upstream suppliers is a major risk, potentially leading to supply shortages, production declines, and short-time work."

Implementation Challenges and Costs

EUDR compliance requires extensive, often manual data entry, making additional personnel the largest cost driver, followed by software and data exchange expenses. Over half of companies anticipate needing at least half a full-time staff position to handle compliance tasks.

Schwörer emphasizes that the regulation creates unnecessary bureaucracy for EU countries like Germany, where deforestation is negligible. Europe already has satellite monitoring and sustainability certifications to track forest health. He urges the government to implement the agreed "zero-risk category" for wood from countries with no deforestation risk, which would eliminate unnecessary reporting requirements.

The survey included companies of all sizes: 25% micro-enterprises (<50 employees), 37% SMEs (50–250 employees), and 39% large enterprises (>250 employees). Costs were calculated based on average per-company estimates, weighted by company size and supplier networks.

The HDH warns that without immediate action to simplify the EUDR and ensure proper information flow along supply chains, the regulation could disrupt operations across the German wood industry and beyond.

Source: holzindustrie.de