Between Traceability and Tradability: How Regulation is Reshaping Agri-Commodity Business Models
As stricter traceability and climate regulations reshape agri supply chains, commodity trading needs to adapt. Enco Insights’ Senior Sustainability & Carbon Markets Advisor, Isabel Deconinck, explores the key changes, challenges and opportunities for sector participants.
February 10, 2026
Questions explored in this briefing:
What are the shifts happening in agri‑commodity trading traceability?
What role can data and digital traceability play in making compliance ‘smart’ and how can they become a source of competitive advantage?
Looking ahead, what capabilities, partnerships, and KPIs should agri‑traders prioritise?
The Regulatory Landscape
Enco Insights: What are the key ways in which regulation is reshaping agri-commodity trading, especially as traceability moves from a voluntary goal to a mandatory requirement?
Isabel Deconinck: Traceability has long been one of the hardest challenges in the agri-commodity supply chain. A kernel of soy or a grain of maize is physically indistinguishable from another, and the way global supply chains are organised, with crops from multiple farmers aggregated in elevators or silos before moving downstream, makes segregation extremely difficult to achieve at scale.
The first real breakthrough came in the palm oil sector, where the Roundtable on Sustainable Palm Oil (RSPO) created market pressure and certification systems that gradually transformed sourcing practices. It took years, and the system is still evolving, but the progress has been significant.
In grains and oilseeds, however, traceability has remained largely a niche segment, pursued mainly by leading companies responding to specific brand requirements or internal sustainability goals. Today, this is changing:
Traceability is increasingly becoming a licence to operate.
Upcoming Regulations such as the EU Deforestation Regulation (EUDR), together with broader corporate sustainability commitments, increasingly require traders to demonstrate that their supply chains meet defined environmental criteria.
There are structural shifts: Traceability is moving from a communication exercise; to increasingly being a matter of risk management, market access, and regulatory compliance.
Isabel Deconinck is a Senior Enco Advisor specialising in strategy and sustainability for agri‑commodities and carbon markets. A former Cargill voluntary carbon markets lead with two decades of experience in the sector, Isabel supports a range of companies in executing innovative decarbonisation, traceability, and ESG initiatives.
“The industry needs to find a sweet spot between traceability and tradability. Agri-commodity trading remains fundamentally about managing risk and moving goods efficiently from regions of surplus to regions of deficit — and that role must be preserved even as sustainability expectations rise.”
Enco: Which regulations (such as EUDR) are driving this transformation, and what do they require in practical terms for traders and suppliers?
Isabel: EUDR requires that products placed on the EU market be deforestation-free, supported by plot-level geolocation data and formal due-diligence statements.
While the regulation’s core objectives remain unchanged, the EU has postponed its entry into application and adjusted certain technical requirements in response to concerns around operational readiness, data availability, and the burden on smaller operators. Based on current guidance, implementation is expected to start from late 2026 onwards, with larger operators coming into scope first and smaller actors following later, likely into 2027, although further adjustments cannot be ruled out. This has introduced a degree of policy uncertainty. It is not a reversal of direction, but a recalibration of pace.
In parallel, the regulatory landscape is tightening around logistics and trade flows: the EU Emissions Trading System (EU ETS) has now been extended to maritime transport, and the Carbon Border Adjustment Mechanism (CBAM), the EU’s system that puts a carbon price on certain imported goods to ensure they face the same climate costs as EU-produced products, is being phased in for carbon-intensive imports.
In practical terms, this means traders and suppliers must prepare for greater data granularity, often down to individual farm plots, verify compliance across fragmented and global supplier networks, and ensure their chain-of-custody systems can withstand regulatory and audit scrutiny. Even where timelines shift, investments in traceability, chain-of-custody integrity, and data systems are becoming unavoidable for continued access to EU-linked markets.
Enco: How is this shift pulling compliance out of the back office and into the front‑line trading desk?
Isabel: The sustainability function in trading companies was historically quite isolated from the core business, often operating in a silo and perceived by commercial teams as a peripheral or abstract concept. Today, this is changing:
Accountability: Traders are increasingly accountable for the sustainability attributes of the cargoes they buy and sell and must assess regulatory exposure with the same discipline they apply to freight, quality differentials, or forex risk.
Integration: This increased integration is especially true for supply chains into and from the EU.
Embedding: Sustainability considerations are more embedded into commercial decision-making: which origins can be sourced without exposure, which suppliers meet traceability or emissions thresholds, and which supply chains carry unacceptable compliance risks.
Dimensions: In many ways, sustainability compliance has become a new dimension of commercial strategy and arbitrage.
EUDR requires products placed on the EU market to be deforestation-free.
Impacts & Adaptation
Enco: Where are commercial and sustainability functions merging inside trading organisations, and what does that mean for governance and KPIs?
Isabel: Merging happens in areas where strategy, origination, trading, and logistics intersect. Many companies now have mixed teams where sustainability experts sit directly with traders to guide decisions, assess risk, and translate regulatory requirements into operational requirements.
Enco: What role do data and digital traceability tools play in making compliance ‘smart’ - and how can they become a source of competitive advantage?
Isabel: Digital tools have become increasingly essential in agri-commodity markets. These technologies help navigate supply chains that involve multiple intermediaries and countless handovers between farmers, cooperatives, aggregators, processors, traders, and logistics providers. Examples include:
Satellite-imagery platforms that detect land-use change and monitor potential deforestation.
Farm-level Precision-Agriculture systems that generate real data on fertiliser use, soil health, and carbon sequestration.
Geolocation systems tracking product movement across the supply chain.
Such tools enable companies to automate compliance, reduce manual work, and extend traceability across complex global networks. However, as digital solutions proliferate, a major challenge is interoperability: systems often fail to communicate with one another, leaving data fragmented and increasing the administrative and financial burden - particularly for smaller players who may struggle with the cost and complexity of multiple platforms.
“Agriculture accounts for roughly a quarter of global greenhouse gas emissions, so the sector has a clear responsibility to adapt. But decarbonisation is uniquely complex in agri-commodities, where products are fungible and pass through multiple intermediaries.”
Enco: How can stricter traceability demands affect market liquidity, optionality, and price discovery - especially across segregated, mass‑balance, and book‑and‑claim models?
Isabel: Stricter traceability requirements inevitably reduce market liquidity because compliant supply is smaller, more concentrated, and more costly to segregate. Segregated and identity-preserved supply chains restrict optionality, while mass-balance systems offer more flexibility but are coming under tighter scrutiny.
One crucial emerging factor is geographical fragmentation of regulation: the EU is moving significantly faster than other regions in mandating plot-level traceability and sustainability criteria, while large exporters such as Brazil, the US, or Argentina have different, less prescriptive frameworks. This asymmetry risks creating two parallel markets:
EU-compliant supply chains - Higher costs but premium access
Non-EU markets - Traditional aggregation and blending practices may continue.
This divergence influences trade flows, freight patterns, and price differentials. As a result, origin choices become more constrained, and traders must navigate not just physical markets but also regulatory geography as a new dimension of optionality.
Farm-level Precision-Agriculture systems now generate data on fertiliser use, soil health, and carbon sequestration.
Enco: How are corporate buyers’ science‑based targets impacting procurement, and what thresholds are becoming non‑negotiable for suppliers and traders?
Isabel: For most corporations, reducing Scope 1 and 2 emissions is relatively straightforward because these are under their direct control. In the food and agriculture sector, however, 80–90% of a company’s operations often sit upstream, with farmers, suppliers, logistics partners, and other actors they do not directly manage (Scope 3). This is why so much of the pressure to meet science-based targets ultimately flows back to producers and traders.
Many food and consumer goods companies have set ambitious science-based targets without fully controlling how those reductions will be achieved, making collaboration across the value chain essential. In practical terms, this has become a licence-to-operate requirement: suppliers must demonstrate credible progress on traceability, emissions reduction, regenerative practices, and land-use compliance to continue accessing key customers and markets.
As a result, the industry has seen an explosion of pilots, collaborative projects, and co-claiming models, as well as large-scale regenerative agriculture programmes launched to support farmers in adopting lower-impact practices. These efforts represent real and meaningful progress, yet the sector is still “building the plane while flying it.” Challenges around measurement, reporting, verification (MRV), and permanence remain significant, and methodologies continue to evolve.
Even so, momentum is strong. The combination of regulatory pressure, corporate commitments, and farmer-centric innovation is accelerating decarbonisation across the upstream supply chain in ways that would have been unthinkable just a few years ago.
Enco: What does credible measurement, reporting, and verification (MRV) of emissions reductions look like, and how can traders embed it contractually?
Isabel: Credible measurement, reporting, and verification (MRV) is built on three key pillars:
Methodologies: It all starts with science-based, transparent, and recognised methodologies. The methodology will define the boundaries, baselines, emission factors, and monitoring requirements and will enable the downstream buyers, auditors, or regulators to trust the results.
Verification: The second pillar is independent third-party verification, which ensures the data and claims can stand up to external scrutiny.
Tracking: Credible MRV requires registry-based tracking, so that reductions or attributes are issued, transferred, and retired in a traceable and non-duplicated way.
In Focus: Offsetting & ‘Insetting’
Enco: What is the difference between voluntary carbon market offsetting and supply-chain decarbonisation (‘insetting’) - and why does this distinction matter for agri-commodity companies?
Isabel: Voluntary carbon market (VCM) offsetting and supply-chain insetting share a common foundation: both generate a carbon asset representing a verified emissions reduction or removal. Conceptually, the asset is similar - it is the location of generation that differs.
Offsetting: Here, the carbon asset is created outside a company’s value chain by is developed or purchased from a third party to compensate for emissions occurring elsewhere. This does not change the footprint of the traded commodity or the practices in the supplier network.
Insetting: By contrast, this requires that the emissions reduction to occur within a company’s own supply chain, even if the activities are implemented by third parties. A company can work with external technical partners or project developers, but the reduction must be tied to the farms, processing assets, or logistical steps that form part of its upstream footprint.
These in-supply-chain reductions can be recognised under Scope 3 and directly improve the climate performance of the product being traded. The distinction matters for agri-commodity companies because regulators, corporate buyers, and science-based target frameworks require decarbonisation within the supply chain.
Enco Insights: What lessons can be leveraged from the VCM to insetting?
Isabel: The voluntary carbon market provides important lessons that can be leveraged for insetting: the need for science-based methodologies, conservative baselines, rigorous third-party verification, and registry-based tracking to avoid double counting. Applying these principles ensures that insetting generates credible, auditable emissions reductions that can be allocated to downstream customers.
Sector Outlook
Enco: Looking ahead 12–24 months, what capabilities, partnerships, and KPIs should agri‑traders prioritise to balance traceability and tradability?
Isabel: The industry needs to find a sweet spot between traceability and tradability. At its core, agri-commodity trading is about managing risk and moving goods efficiently from regions of surplus to regions of deficit. Traders must continue to do this in an economically viable way: arbitrage, optionality, and supply–demand dynamics remain fundamental to global food security.
At the same time, agriculture accounts for roughly a quarter of global greenhouse gas emissions, which means the sector has a clear responsibility to adapt. Expectations for lower-carbon, more transparent, and more sustainable supply chains are rising quickly. Responding to these expectations is essential, not optional. In agri-commodities, this challenge is particularly complex because the products are fungible and goods pass through multiple intermediaries, making full segregation difficult in practice.
The goal is not to constrain trade, but to evolve the tools and systems that allow trade to remain efficient while meeting legitimate sustainability demands. The industry is already making meaningful progress. By combining digital traceability solutions, stronger data flows, farmer engagement, and cross-industry collaboration, traders can preserve the flexibility the market depends on while providing the transparency that regulators, customers, and society increasingly expect.
“Traders are increasingly accountable for the sustainability attributes of the cargoes they buy and sell, and must assess regulatory exposure with the same discipline they apply to freight, quality differentials, or forex risk.”
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