Vietnam's rubber producers face EU Deforestation Regulation challenges

Vietnamese rubber producers - a crucial link in the global rubber supply chain - are facing challenges as over 60% of raw rubber originates from smallholder farmers who fail to meet the EU Deforestation Regulation (EUDR).

Rubber is among the seven commodities regulated under the EUDR. According to this regulation, rubber products are prohibited from entering the EU market if their production contributes to deforestation, forest degradation, or involves supply chain activities that violate the laws of the producing country.

The EUDR will be officially applied from December 30, 2025 to large importers into the EU, and from June 30, 2026 to small and medium-sized importers.

According to statistics, Vietnam’s rubber cultivation area in 2024 totaled approximately 910,000 hectares, with 80% in latex-tapping age, providing around 1.3 million tons of dry rubber equivalent. Of this, 488,000 hectares are managed by 264,000 smallholder households, supplying 819,000 tons or 54% of total area and 63% of national output.

Vietnam currently exports rubber products to 180 countries and territories. While the country’s rubber export markets are diverse, the three largest markets in 2024 were China (30.3%), the U.S. (18.6%), the EU (7.4%), and other markets (43.7%).

Export turnover has been on the rise, from $5.5 billion in 2020 to nearly $8.5 billion in 2024, including both natural rubber and rubber products.

A joint report by Forest Trends and the Vietnam Rubber Association (VRA) indicates that Vietnam’s smallholder rubber supply chain faces major challenges, including a lack of traceability systems throughout the chain, absence of foundational data (land coordinates and boundaries), and disruption in transaction records and communication between supply chain stages, especially between households and collection agents or among agents themselves.

Other challenges are informal agents operating without business registration, inadequate transaction records maintained by agents, and small and medium enterprises (SMEs) lacking tools and resources to manage input materials.

“These issues are widespread in today’s smallholder supply chains. Given their prevalence, most current supply chains involving smallholders cannot meet the EUDR,” noted To Xuan Phuc, a Forest Trends expert.

Only four enterprises with compliant supply chains

Phan Tran Hong Van from VRA noted that within the rubber supply chain (rubber farmers, collection agents, enterprises), enterprises play a critical role. These include natural rubber processing enterprises (primary processing), rubber product manufacturers (refined products), and distributors/retailers.

To comply with due diligence reporting obligations under the EUDR, EU importers must ensure all actors in the supply chain (farmers, agents, processors) collect and share the necessary information.

“Lacking information from any stage, including from smallholders, renders the entire chain non-compliant with the EUDR, and the products from that chain will be rejected by the EU,” the VRA representative warned.

In response, the industry has begun developing pilot models to restructure smallholder supply chains for EUDR compliance. Specifically, several private companies are working with smallholders and collection agents to reorganize operations, establish traceability systems, collect land and transaction data, and meet EUDR criteria.

As of January 2025, only four private enterprises had successfully built smallholder-inclusive supply chains that comply with the EUDR. These models involve 17,500 hectares of land, 6,000 smallholder households, export of 4,600 tons of compliant natural rubber, sold at $150-300 per ton higher than non-compliant rubber of the same grade.

Buyers of these compliant products include not only EU importers, but also customers from China and India, who may process and export refined rubber products to the EU.

“This success demonstrates the scalability potential of such models if key conditions are met,” said the Forest Trends expert.

Phuc emphasized that EUDR compliance requires close coordination among enterprises, smallholders, agents, local governments, and other stakeholders.

“The focus should be on building strong links between all actors in the supply chain; establishing and applying traceability systems; supporting smallholders in data collection; and encouraging formation of household groups to reduce transaction costs and enhance smallholder bargaining power in enterprise partnerships,” he added.

Phuc also stressed the need to formalize the roles of collection agents, ensuring transparency and legal compliance in their operations. Local authorities should act as connectors between enterprises and smallholders, helping verify land legality and providing base data, such as 2020 forest maps and planting area databases.

“Smallholders, agents, and SMEs are especially vulnerable due to limited resources, information, and capacity. The EU and other international importers should consider financial and technical support, and collaborate with Vietnamese firms to develop traceability systems and restructure supply chains to meet legal and regulatory demands,” Phuc proposed.

“Enterprises - especially large ones - should assist smallholders and agents in changing current practices to comply with EUDR standards,” the expert concluded.