The SME EUDR Paradox: Why Extended Deadlines May Not Help SMEs

The EU's recent decision to extend EUDR compliance deadlines for small and medium-sized enterprises (SMEs) until 2026 and 2027 sounds like welcome relief. But here's the uncomfortable truth that many smaller suppliers are already discovering: the extended deadline may be largely illusory for companies further down the supply chain.

The Real Pressure: Upstream Compliance Drives Downstream Obligations

While the regulation technically gives SMEs more time, the commercial reality is far different. Large retailers and multinational corporations that must comply by December 2025 won't wait around. They'll immediately demand due diligence declarations (DDSs) from all their suppliers—regardless of those suppliers' official compliance deadline.

This creates a de facto two-tier system where SMEs nominally have until 2026 or 2027, but practically face immediate compliance pressure from their largest customers. The regulation provides one timeline, but market power provides another—and market power usually wins.

Drawing from Real Voices in the Field

This isn't theoretical. Over the past months, we've spoken with numerous SMEs across the agricultural and commodity supply chains who report being contacted by their purchasing managers with urgent requests for EUDR documentation. A cocoa processor in Ghana, a cattle trader in Brazil, a rubber exporter in Indonesia—all have received messages like: "We need your DDS by end of Q1 2026" or "Include EUDR compliance documentation with your next shipment."

These aren't optional requests. They come from companies that represent 30%, 50%, sometimes 80% of an SME's revenue. Refusing to comply on their timeline isn't really a choice.

A Real-World Example: The Soya Trader and the Multinational Retailer

Consider this concrete scenario: a mid-sized soya trading company in Brazil sources beans from local farmers and exports to EU importers. Under EUDR, this trader would technically qualify as an SME with until December 2026 to start submitting DDSs.

But one of their key customers is a major European multinational retailer with hundreds of stores across the continent. That retailer, classified as a large operator, must comply by December 2025. In November 2025, the retailer's procurement team contacts the soya trader: "To meet our EUDR obligations, we need you to provide a DDS for every shipment starting January 2026, certified by your suppliers."

The soya trader now faces a choice: spend the next weeks rushing to gather EUDR documentation from dozens of smallholder farmers, or lose a major customer. The extended deadline, meant to provide breathing room, becomes irrelevant. The trader's compliance burden is immediately real, driven not by regulation but by commercial relationships.

The Information Asymmetry Problem

There's another layer to this challenge. Larger companies have resources to invest in EUDR compliance infrastructure—consultants, software systems, training programs. SMEs often lack these resources, yet they'll be the first ones asked to provide the data that large operators need.

This creates a perverse incentive structure: SMEs must scramble to gather EUDR information months before their official deadline, not for regulatory compliance, but to serve as information providers for their larger customers. Meanwhile, those larger customers can develop their systems more methodically, confident that their suppliers will feed them the data they need.

What This Means Going Forward

The extended EUDR deadlines for SMEs are well-intentioned policy. But they don't account for the realities of global supply chains, where market power is often more determinative than regulatory timelines. A small or medium-sized enterprise supplying a multinational retailer doesn't have the luxury of waiting until 2026 or 2027—their customers won't allow it.

As EUDR implementation unfolds, expect to see a bifurcation: some SMEs with smaller customers may indeed benefit from extended deadlines and work methodically toward 2026-2027 compliance. But SMEs integrated into supply chains serving large, EUDR-compliant corporations? They're already racing against the clock, regardless of what the regulation says.

Policymakers should recognize this reality: extended deadlines for SMEs sound generous on paper, but they don't reflect how supply chains actually work. True support for smaller suppliers would require either simultaneous compliance timelines across company sizes, or specific mechanisms to prevent large operators from pushing compliance burdens down the chain before official deadlines arrive.

Until then, the SME EUDR deadline extension remains more symbolic than practical for those who need it most.

This piece reflects discussions with numerous SMEs across agricultural commodity supply chains over recent months. Their collective experience suggests that commercial pressure from larger customers will drive EUDR compliance timelines regardless of official regulatory deadlines.

EUDR Services

We can help with all the above and more. Should you have any questions, concerns or would like to discuss EUDR in general, do not hesitate to get in touch with us. Email us at: questions@eudrservices.com