18 hours ago6 min read
Segregation Is Non-Negotiable: Inside the EU’s Deforestation-Free Supply Chain Mandate
- Gusi Ayu Putri Chandrika Sari
- May 7
- 6 min read
Updated: May 7
Executive Summary
EUDR mandates full traceability and segregation of high-risk commodities—mixing compliant with non-compliant goods makes entire shipments non-compliant and barred from the EU market.
Segregation is a critical compliance challenge due to complex, multi-tiered supply chains with limited documentation and manual processes.
At KOLTIVA, we enable end-to-end EUDR compliance through on-the-ground support, segregation training, field monitoring, and its KoltiTrace digital traceability system.
As the European Union Deforestation Regulation (EUDR) reaches full enforcement, agribusinesses sourcing cocoa, coffee, palm oil, rubber, and other high-risk commodities must urgently prioritize traceability and compliance. The regulation mandates that only legally produced and deforestation-free goods, verified with precise geolocation data, may be traded on or exported to the EU market. Commodities harvested from land deforested after 31 December 2020, or those lacking verifiable traceability, are deemed non-compliant and barred from entry. (European Commission).
One of the most critical, yet often underestimated, risks in achieving EUDR compliance lies in the mixing of compliant and non-compliant products—either intentionally or due to operational inefficiencies during transportation, aggregation, and trade. The regulation strictly prohibits the blending of commodities from compliant and non-compliant land plots, or from areas of unknown origin. Commodities must be kept separate—from harvest to export. If mixing occurs, the entire shipment becomes non-compliant and cannot be placed on the EU market.
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In increasingly complex supply chains—with layers of intermediaries and informal transactions—ensuring that compliant products are not mixed with non-compliant ones, or goods of unknown origin, has become one of the most pressing operational challenges for agribusinesses, not to mention complying with local regulations.
As emphasized by the European Commission, segregation is non-negotiable. Commodities from land plots backed by valid EUDR evidence must remain completely separate from those lacking such documentation. Any failure to enforce segregation results in regulatory violation, market inaccessibility, and potential reputational damage. (European Commission)
Even when companies source from deforestation-free areas, maintaining segregation throughout the supply chain is a logistical challenge—especially when a single producer may cultivate both compliant and non-compliant plots.
“Tracking these products back to their precise source is difficult due to the involvement of multiple intermediaries.Many of these transactions lack proper documentation or records.” said Indryani Bali, Project Lead at KOLTIVA “This is where segregation becomes not just a compliance requirement, but a foundational risk mitigation strategy.”
The stakes are clear: without robust segregation systems, even a deforestation-free product risks being shut out of the EU market.
So, how can businesses operating in complex, multi-layered supply chains
ensure effective segregation—especially when a single producer
may have both compliant and non-compliant products?
The following sections explore these challenges in depth, incorporating expert insights and case studies to highlight the importance of segregation in supply chains. Through real-world examples and industry perspectives, we examine practical solutions that can help businesses meet EUDR requirements while ensuring long-term sustainability.
How Supply Chain Segregation Happens in Practice
Take the example of Dealer A (Tier 3) in Thailand, who sources from 70 smallholders in Area X, covering 350 plots, and supplies 1 ton of natural rubber per month. On average, each plot produces 10 kg of rubber monthly, and each smallholder owns five plots. After conducting plot mapping and detailed producer surveys, it is found that 20%—or 70 plots—are non-compliant.
To remain in a position to supply Dealer B (Tier 2), who holds a contract with Dealer C (Tier 1) to deliver a minimum of 10 tons of EUDR-compliant rubber each month to Company AA in the EU, Dealer A must:
✅ Physically segregate rubber from compliant and non-compliant plots.
❌ If non-compliant rubber is mixed with compliant rubber, the entire batch becomes non-compliant—eliminating the opportunity for Dealer A to sell the rubber to Dealer B.
This example highlights the operational complexity of compliance—and the critical role that traceability and segregation play in protecting market access under EUDR.
Why Segregation Matters
Segregation— understood as the separation of EUDR compliant and non-compliant products, both physically and through a clear system of records—is not just a regulatory box to tick. It is the foundation of trust and traceability in global supply chains. Without clear segregation practices, businesses cannot verify which producers meet EUDR requirements, and non-compliant materials can easily slip into the system—putting entire shipments at risk of rejection and jeopardizing access to the EU market.
The stakes are high. When segregation is absent or poorly enforced:
Compliant producers cannot be accurately verified.
Commodities of unknown or non-compliant origin may infiltrate the system.
Entire shipments risk being flagged, rejected, or banned from entry to the EU market.
In short, poor segregation undermines not only regulatory compliance, but also the brand reputation and long-term competitiveness of agribusinesses. In contrast, rigorous segregation practices—supported by clear recordkeeping and data systems—enable companies to confidently certify that only legally produced, deforestation-free commodities reach the EU market.
Field-Level Challenges: Where Segregation Breaks Down
Our experience supporting segregation in the rubber supply chain—particularly through our collaboration with large companies—has exposed just how challenging compliance can be at the first-mile level.
Despite having structured supply chains, many businesses still rely on manual data entry, handwritten records, and outdated systems—making enforcement of segregation at the dealer level extremely weak. This often forces companies to re-evaluate their internal monitoring frameworks.
“Businesses lacking an up-to-date, verifiedlist of compliant farmers and still relying on conventional bookkeeping make segregation harder to track,” adds Indryani Bali, Project Lead.
Structured Support from the First Mile
Achieving compliance with the EU Deforestation Regulation (EUDR) requires more than deforestation monitoring and producer mapping—it requires tangible action across the entire supply chain.
At Koltiva, we provide hands-on, end-to-end support to help businesses implement robust segregation systems, starting at the farm gate and extending to export hubs. Segregation—the physical and documented separation of EUDR-compliant and non-compliant materials—is not just a regulatory requirement; it’s a cornerstone of credible traceability. We enable companies to operationalize segregation within complex sourcing ecosystems through a structured, field-tested methodology tailored to real-world conditions.
Our comprehensive approach supports segregation implementation from farm to export through:
1. Capacity Building Through Segregation Training
We provide training to ensure proper segregation practices are in place. We start with Tier 1 suppliers, who then cascade the knowledge to Tier 2 and Tier 3 suppliers. We also help implement reliable record-keeping and segregation protocols, starting at Tier 3—the level closest to producers.
2. Field Monitoring & Evaluation
To ensure long-term effectiveness, we revisit implementation sites six months after rollout. Our teams assess how segregation is being practiced in real-world conditions—reviewing dealer comprehension of EUDR requirements, and evaluating practices during weighing, processing, and delivery of compliant vs. non-compliant goods.
3. Traceability Through KoltiTrace FarmGate
Our mobile application is designed for processors, enabling them to record detailed producer data and ensure transparency in sourcing. It also logs transaction records to validate supply chain activities. Additionally, this can be complemented with Boots-on-the-Ground support (Field Agent assistance) to train and monitor intermediaries or dealers in recording transaction data from producers to factories. The KoltiTrace FarmGate further facilitates end-to-end traceability from producers to manufacturers, ensuring full compliance with EUDR standards.
This integrated system generates actionable insights, helping companies quickly identify compliance gaps, improve data accuracy, and maintain regulatory alignment.
Segregation in EUDR Compliance Is No Longer Optional
In a regulatory landscape defined by increasing scrutiny, segregation is no longer optional. It’s essential to meeting EUDR requirements, maintaining access to key markets, and building resilient, transparent supply chains. It demands more than policy—it requires on-the-ground action, digital tools, and collaborative effort across all supply chain actors.
Partner with Koltiva to Secure Compliance and Market Access
Compliance isn’t just about avoiding penalties—it’s a strategic advantage. With Koltiva’s expert guidance, digital tools, and boots-on-the-ground support, businesses can transition from reactive compliance to proactive risk management and supply chain resilience.
Let Koltiva support your journey to full EUDR alignment—starting from the first mile.
Writer: Gusi Ayu Putri Chandrika Sari, Social Media Officer at KOLTIVA
Content Resources: Indryani Bali, Project Lead at KOLTIVA
Editor: Tika Sylvia, Chief Marketing Officer at KOLTIVA
About Writer:
Gusi Ayu Putri Chandrika Sari, serving as Koltiva's dedicated social media Officer, brings an impressive more than 8-year track record in communications, bolstered by a profound enthusiasm for sustainability, technology, and agriculture. Her extensive experience in communications has honed her skills in crafting compelling narratives and engaging content across various digital platforms.
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