Argentina, Chile, Paraguay and Uruguay race to secure EU market access under new deforestation rules

A new requirement is rapidly changing the relationship between European buyers and some of South America’s most important agricultural exporters: knowing precisely where a product came from is becoming as important as its price.

Argentina, Chile, Paraguay and Uruguay are building new traceability systems to preserve access to the European Union as implementation of the EU Deforestation Regulation (EUDR) approaches.

The regulation covers commodities including soy, cattle, coffee, cocoa, palm oil, rubber and wood, as well as certain derived products. For the four Southern Cone economies, however, the most important exposures are concentrated in soy, beef and forestry.

The transformation goes well beyond obtaining another environmental certificate.

Export supply chains increasingly need to connect farms and production plots with geolocation information, satellite monitoring, legality documentation, transport records and the physical product eventually arriving in Europe.

In effect, agricultural commodities are acquiring something resembling a digital passport from farm to port.

And the four countries are approaching that challenge from very different starting points.

EUDR turns traceability into a condition for doing business with Europe

The commercial implications are significant.

According to the Dutch Ministry of Agriculture’s overseas agricultural network, the EUDR requires covered commodities to be traceable to their production plots and supported by geolocation and evidence demonstrating that production did not cause prohibited deforestation after the regulation’s cut-off date.

Argentina, Paraguay and Uruguay are particularly exposed through their cattle and soybean industries. Chile has relatively little soybean exposure, but its substantial forestry sector makes the regulation relevant for timber and wood-based exports.

For European companies, this means supply-chain information previously associated primarily with voluntary sustainability commitments is increasingly becoming a market-access issue.

The Netherlands illustrates the commercial importance. It receives around 15% of Mercosur soybean shipments entering the EU, making it the bloc’s second-largest destination after Spain, according to the Dutch government analysis. Its share reaches approximately 16% for soybean meal.

That makes EUDR preparedness in South America a European supply-chain issue as much as a Latin American export challenge.

Argentina builds one of the region’s most advanced systems

Among the four countries, Argentina has made some of the greatest progress.

At the centre of its strategy is VISEC — Visión Sectorial del Gran Chaco, an industry-led platform established in 2019 and now used to support traceability and verification across soybean and beef supply chains.

The model connects multiple stages of the export process.

Farms register production plots. Satellite imagery can verify historical land use. Electronic transport documentation follows products from their origin towards export infrastructure, while independent auditing can support compliance certification for individual shipments.

The system is administered by the Rosario Board of Trade and is free for farmers, with exporters absorbing its operating costs.

This represents a significant change in Argentina’s approach.

Political and agricultural-sector opposition to the European regulation has not disappeared. But the emphasis has increasingly shifted from simply contesting EUDR toward challenging the rules while simultaneously preparing to comply with them.

That pragmatic shift could prove decisive for maintaining European market access.

Argentina and Paraguay remain ‘standard risk’

Not every Southern Cone exporter enters the new system under identical conditions.

The EU’s country benchmarking classifies jurisdictions into low, standard and high-risk categories, affecting due-diligence procedures and the proportion of operators subject to checks.

Argentina and Paraguay are classified as standard risk, while Uruguay and Chile are considered low risk.

The distinction reflects persistent concerns over forest loss in areas including the Gran Chaco.

Both Argentina and Paraguay objected to their classification. Nevertheless, exporters must operate within the European framework if they want to maintain access to the market.

The consequences extend directly to European importers because greater risk and more complex traceability can translate into higher compliance and logistical costs.

The €860 million question facing Argentina’s soybean industry

The biggest challenge may ultimately be economic rather than technological.

Soybeans historically move through infrastructure designed around bulk commodities. Grain from numerous producers can be combined in storage facilities, processing plants and port terminals.

EUDR complicates that model.

Compliant products need sufficient traceability throughout the supply chain, and physical segregation can become necessary to prevent eligible and non-eligible commodities from becoming indistinguishable.

The Dutch government analysis estimates that physically segregating EUDR-compliant and non-compliant soy across Argentina’s storage, processing and port infrastructure could cost the sector roughly €860 million annually, based on the approximately $1 billion estimate cited by the source and current exchange-rate levels.

That cost will not necessarily remain in Argentina.

Part of it could move downstream through prices paid by European importers, feed manufacturers and eventually other participants in the food supply chain.

This is one of the fundamental economic consequences of EUDR: environmental traceability is becoming a measurable component of the cost of international trade.

VISEC is already looking beyond EUDR

Argentina is simultaneously exploring whether the infrastructure built for European compliance can serve a broader commercial purpose.

A new VISEC Plus model is being developed to go beyond basic EUDR requirements, including protection against conversion of other ecosystems, an earlier deforestation cut-off and additional social criteria.

Santa Fe province, a major centre for soybean and cattle production, is also developing a beef traceability system incorporating broader sustainability indicators.

This could transform an initially defensive investment into a competitive asset.

If global buyers increasingly demand detailed information on land use, biodiversity, labour standards and carbon footprints, the infrastructure created to comply with European regulation could eventually support access to multiple premium or regulated markets.

Paraguay faces the most complicated transition

Paraguay presents a different picture.

The country has had zero-deforestation legislation in its eastern productive region since the 1990s, yet forest loss and land-use change in the Chaco continue to weigh heavily on its risk profile.

Two major systems are being developed.

RETSA, led by the Ministry of Industry and Commerce, is a government-controlled platform intended to integrate deforestation information with multiple sources of legality documentation. Its scope includes soy, cattle and timber.

The private sector is developing SISE, which uses satellite monitoring and QR-based chain-of-custody tools. The platform already covers more than 1,600 producers and nearly 8,000 production units.

But neither system alone completely solves the compliance challenge.

The public and private platforms may eventually need to cooperate or become interoperable to provide a sufficiently comprehensive architecture for European buyers.

The Argentina-Paraguay soy corridor makes compliance a cross-border issue

One of the most important features of the Southern Cone agricultural economy is that national borders do not neatly correspond with supply chains.

Much of Paraguay’s soybean output passes through Argentine crushing plants and export infrastructure.

That makes interoperability essential.

Paraguay’s RETSA system for soy is therefore following the Argentine VISEC model and uses its software architecture. The result could eventually become a cross-border EUDR compliance network along the Paraná export corridor.

For Paraguayan exporters, this interconnectedness also makes abandoning the European market more complicated than simply redirecting ships elsewhere.

If Paraguayan soy moves through Argentine facilities increasingly configured around EUDR-compliant flows, European requirements can indirectly reshape the entire regional logistics system.

Paraguay faces additional costs without a guaranteed premium

The financial equation remains challenging.

Physical segregation in Paraguay is estimated to add approximately €14 per tonne, converting the source estimate of $16 at current exchange-rate levels.

Yet European buyers have not necessarily offered producers a premium capable of offsetting those expenses.

This creates tension between sustainability objectives and commodity economics.

Soy is an internationally traded product where relatively small differences in cost can influence competitiveness.

Paraguayan exporters have suggested they could redirect volumes toward other destinations if European requirements become too burdensome.

But geography limits that option: the integration between Paraguayan production and Argentine processing and port infrastructure makes complete separation difficult at scale.

Uruguay enters from a much stronger position

Uruguay offers perhaps the clearest example of how previous investments in agricultural traceability can reduce the cost of adapting to new regulation.

Its national deforestation-free platform was launched in 2024 and draws on official records, historical cadastral information and satellite-verified land-use plans.

The system can issue farm-level compliance certificates.

Its cattle sector is even better prepared.

Uruguay has operated mandatory individual cattle traceability since 2006, with animals tagged and movements registered through the national SNIG database.

The existing infrastructure already provides geolocation and movement information closely aligned with what European deforestation rules require.

As a result, Uruguay is considered one of the international beef exporters structurally best positioned to adapt to EUDR with comparatively limited changes.

Uruguay’s problem is at the ports

Even Uruguay faces a logistical complication.

Most of its soy exports are concentrated through only two ports.

Bulk commodities traditionally benefit from combining large volumes. Maintaining separate flows for compliant cargo can require either widespread adoption among exporters or handling verified soy as a specialty product.

Both alternatives can increase costs.

The issue demonstrates a recurring theme across the region: digital traceability alone is not enough.

The physical supply chain must also preserve the integrity of the information attached to the commodity.

Chile faces a different EUDR challenge

Chile stands apart from its neighbours.

It is classified as low risk by the EU and is not a major soybean exporter. Its main EUDR exposure instead comes from forestry products and, to a lesser extent, cattle-related supply chains.

A national assessment carried out in 2025 by Chile’s Office of Agricultural Studies and Policies, with support from the EU-backed AL-INVEST Verde programme, identified gaps in traceability, geolocation and coordination between institutions.

A second phase launched in 2026 focuses on implementation, technical guidelines, training and practical support for exporters.

Chile also differs institutionally because it is outside Mercosur and conducts its relationship with the European Union through its own bilateral framework.

Its low-risk classification provides an advantage, but it does not eliminate the need for traceability.

EUDR arrives as EU-South America trade integration deepens

The regulatory transformation is taking place alongside another major development in transatlantic commerce.

The EU-Mercosur Interim Trade Agreement was signed in Asunción on 17 January 2026, and provisional application between the EU and Argentina, Brazil, Paraguay and Uruguay began on 1 May 2026.

That creates an important paradox.

Europe and Mercosur are simultaneously reducing traditional trade barriers while increasing the importance of environmental traceability and due diligence.

Market access in the new relationship will therefore depend on more than tariffs.

For agricultural exporters, competitiveness increasingly means demonstrating where a product was produced, what happened on that land and whether every stage of the supply chain can substantiate the claim.

Certification alone may no longer be enough

Existing sustainability certifications will continue to play a role, but EUDR introduces an important distinction between supporting sustainable production and proving the physical origin of a specific shipment.

The Round Table on Responsible Soy (RTRS), for example, already conducts field audits and covers sustainability criteria extending beyond deforestation.

However, traditional credit-based certification models do not by themselves establish the physical traceability required under EUDR.

The emerging approach could therefore combine certification data with systems such as VISEC and RETSA, linking sustainability credentials to verified physical supply chains.

This points toward a much broader transformation of commodity trading.

From commodity to data-rich product

Soybeans, beef and timber have historically been traded primarily according to physical characteristics, quality, quantity, origin and price.

EUDR adds another valuable commodity to the transaction: data.

A tonne of soy accompanied by verified geolocation, satellite evidence, legality records and auditable chain-of-custody information becomes commercially different from an otherwise identical tonne without that information.

That could ultimately create two parallel markets: products capable of entering highly regulated destinations and products restricted to less demanding markets.

For Latin American exporters, traceability is therefore moving from a sustainability exercise to an issue of competitiveness, pricing and market access.

Argentina and Uruguay lead, but the race is far from over

The four Southern Cone countries demonstrate that there is no single route toward EUDR compliance.

Argentina has built a largely industry-driven system increasingly supported by public institutions.

Uruguay benefits from decades of public investment in registries and cattle traceability.

Chile is adapting from the comparatively advantageous position of a low-risk country.

Paraguay is developing potentially powerful systems but continues to face greater institutional, political and environmental challenges.

All four are seeking greater technical cooperation with European institutions and member states, particularly the Netherlands, whose role as an entry point for South American agricultural commodities gives it a direct interest in ensuring that the new system functions efficiently.

The larger lesson extends far beyond these four countries.

Europe’s environmental regulation is beginning to redesign agricultural infrastructure thousands of kilometres from the EU’s borders.

For Argentina, Chile, Paraguay and Uruguay, EUDR compliance is no longer simply about sustainability reporting. It is becoming part of the infrastructure required to continue doing business with one of the world’s largest and most valuable consumer markets.