The world is running out of forests. Although humans have always cut down trees, using them for fuel or building materials, the scale of deforestation across the globe accelerated dramatically during the 20th century. Between 1960 and 2019, we cut down over a billion acres of forest cover.
We’ve recovered some of that loss, but that still leaves 200 million acres of forest gone within 60 years. Deforestation contributes to climate change: it drives up temperatures, leading to fires that burn more forests.
The main commercial causes of deforestation include logging and cattle ranching. But coffee also contributes: According to the 2023 Coffee Barometer, over the past two decades, 130,000 hectares of forest have been cleared every year for coffee cultivation.
While that is a drop in the bucket of the overall 10 million hectares of forests the world loses annually, it is still enough that coffee cultivation is included in the European Union’s impending deforestation legislation, known as the EUDR.
The EUDR, which officially comes into effect on December 30, 2024, will impact the coffee industry. In fact, it already has: traders are speeding up imports to beat the deadline, while coffee buyers are abandoning countries where traceability is difficult and switching their attention to better-equipped locations like Brazil and Vietnam.
Along with the immediate fallout before the law is even set to fully be implemented, there’s still confusion and mystery over how it will shape the coffee industry long term. The EU buys nearly a third of all the world’s coffee, and much like how California’s huge economy means its laws tend to impact how the other 49 states do business, the EUDR will have a lasting effect on the coffee industry globally.
We’ve reported extensively about the EUDR in our weekly news roundup—so here’s everything you need to know about how the new legislation will impact coffee.
What is the EUDR?
The EU, a bloc of 27 countries, imports many commodities from all over the world and is the single biggest coffee market globally. The EU is also vitally concerned with sustainability, and the EUDR is part of an overarching strategy to address and implement sustainable practices throughout the union, some of which include reaching net zero greenhouse emissions and creating a circular economy by 2050.
EUDR legislation was first outlined in 2019 as part of a broader forest protection and restoration plan and passed in 2022. It comes into full force at the end of 2024 for larger companies and six months later for small ones.
The EUDR will impact the coffee industry. In fact, it already has: traders are speeding up imports to beat the deadline, while coffee buyers are abandoning countries where traceability is difficult and switching their attention to better-equipped locations like Brazil and Vietnam.
In a nutshell, the EUDR requires companies importing certain commodities into the EU to provide evidence that those commodities have not contributed to deforestation or forest degradation. Forest degradation, according to the EU, means “structural changes to forest cover” or converting primary or naturally regenerating forests into managed forests like plantations.
Specifically, cocoa, soy, palm oil, cattle, rubber, wood, and coffee (or products derived from them) cannot come from land that was deforested after December 31, 2020. To comply, companies have to be able to trace their products back to their exact source or face steep penalties. Lack of compliance could see companies fined up to 4% of their EU-based revenue, have the offending products confiscated, lose access to public funding, and potentially be banned from doing business in the bloc altogether.
Companies must gather precise data to prove that products did not contribute to deforestation. Depending on the farm size, this could be satellite imagery or geolocation coordinates collected using mobile phones. The larger the plot of land, the more accurate the data will need to be.
When the legislation was first proposed, the EUDR had broad public support. Environmental organizations like Greenpeace championed the legislation, calling it “a major breakthrough for forests and for the people who stood up to protect them.”
But problems quickly became apparent. The onus is on the purchasing company to gather and handle the traceability and compliance data, but as soon as it was launched many feared the laws would end up hurting smallholder producers. The worry is that the cost of compliance—geomapping a farm, verifying that data, storing it and then providing it to the correct parties—will be passed down the supply chain until it eventually falls on the farmer who will either have to pay or miss out on the European market altogether.
For example, a company importing a container from Peru into Germany will need to have evidence that the land the coffee was grown on was not deforested. And geomapping all those individual farms is expensive. “Who’s going to pay for the producer groups to collect the data?” asks Mat North, Head of Operations for Europe at Raw Material Coffee, a not-for-profit specialty coffee importer and exporter.
“We buy off the producer groups, so I guess we are responsible for providing that data outwards—but we’ve been asked for it by our importer. So like any piece of data, you pass it down the line to the person you’re buying it from.”
The worry is that the cost of compliance—geomapping a farm, verifying that data, storing it and then providing it to the correct parties—will be passed down the supply chain until it eventually falls on the farmer who will either have to pay or miss out on the European market altogether.
North says that while the regulation itself is a good thing, the lack of clarity from the EU as to how this is all supposed to work is causing much of the confusion. “It has been poorly communicated by the regulators, when we are six months out and no one knows what’s happening, and a multi billion dollar industry relies on it.”
As the December 2024 deadline looms ever closer, the industry is scrambling to prepare—and some are still pushing back against the legislation.
How is the coffee industry preparing?
Since the EUDR announcement, European-connected coffee stakeholders have been trying to get their heads around what the laws mean for their businesses. From the producers and cooperatives who export to the bloc, to the importers and roasters who will be ultimately liable, the EUDR will change how coffee is grown, bought, and sold in the EU.
Some have worked to get ahead. In 2023, JDE Peet’s partnered with the sustainability verification and auditing company Enveritas for supply chain traceability in several countries it buys from, including Ethiopia, Papua New Guinea, and Uganda. The coffee trading marketplace Intercontinental Exchange launched its own compliance service for coffee buyers. Agricultural technology and satellite mapping companies like Meridia Land BV have been inundated with new business from giants like Louis Dreyfus Co. and Mondelez International to map their suppliers.
Others have gone another route: lobbying the EU for a postponement. Both the European Coffee Federation trade organization and International Coffee Partners, a consortium of large European coffee companies, have called to delay implementation. Both groups cite the negative impact the EUDR will have on coffee farmers. “The disruptions will be shattering, not least for the millions of smallholder producers for whom the EU is a significant marketplace,” the ECF wrote in a statement.
Countries outside of the EU have also been critical of the legislation. Indonesia accused the EU of conducting “regulatory imperialism,” while ambassadors from 17 nations signed a letter calling the EUDR an “inherently discriminatory and punitive unilateral benchmarking system.”
What impact will the EUDR have on coffee farmers?
Much of the impact of the EUDR will depend on where farmers are located and the resources they have at their disposal. In countries like Brazil and Vietnam, which are dominated by large farms or have more institutional resources to support data mapping, compliance should be pretty straightforward.
It is small farmers in Africa and parts of Latin America and Asia that are most at risk from the new laws. European buyers have already voiced their reservations, with some shifting coffee buying away from places like Ethiopia. “I see no way of buying significant quantities of Ethiopian coffee going forward,” Johannes Dengler, an executive at the German-based roastery Dallmayr, told Reuters.
Countries outside of the EU have also been critical of the legislation. Indonesia accused the EU of conducting “regulatory imperialism,” while ambassadors from 17 nations signed a letter calling the EUDR an “inherently discriminatory and punitive unilateral benchmarking system.”
Ethiopia, which exports much of its coffee harvest to Europe and whose farmers often lack formal land titles, is one of the countries most at risk from the EUDR.
“I don’t think Ethiopia is well prepared,” says Beamlak Melesse, project coordinator at Women in Coffee Ethiopia. “We’re racing against time, and the details and the procedures and the guidance, I believe, is still lacking.”
Five million smallholder producers across Ethiopia rely on coffee for their livelihoods; mapping each farm is a tall order, especially when most coffee comes from community lots from hundreds if not thousands of producers. “It’s going to be largely difficult to make sure that each and every farmer within Ethiopia has their GPS location reported,” Beamlak Melesse says.
“There are thousands and thousands of growers that each exporter has a relationship with, which means that the exporter has to go ahead and collect information for all the smallholder coffee farmers.”
There are plenty of projects already underway in Ethiopia to comply with the EUDR, from ag-tech firms with blockchain technologies to coffee cooperatives running satellite mapping programs. But as the deadline inches ever closer, many are exploring alternatives: Ethiopia and Indonesia are seeking to export more of their coffee to China, and Bloomberg reports that Uganda is looking to increase trade with Russia and the Balkans.
What will the EUDR mean in the long term for coffee?
We still don’t know exactly what will happen in January 2025. Some believe that the EUDR will cause consumer coffee prices to increase and exporters might look to more new markets. Judging by the number of multinational companies lobbying against implementation there’s still a chance the whole thing is delayed. The lack of clarity from EU regulators means that almost everyone is still in the dark.
One of the markets to benefit most could be the industry’s other big coffee buyer: North notes that, much like with Ethiopian coffee heading to China, the EUDR might end up benefiting the US market. “A whole lot of lots could end up going to America, because even with [the US] regulations for importing it’s probably easier than dealing with the EUDR.”
For producers, the burden of compliance may prove to be too difficult and they may abandon coffee altogether—which ironically might lead to more deforestation. Switching crops to something like maize, or just moving to subsistence farming, often involves clearing more forests to make space. “The most likely alternative to coffee farming in Timor-Leste is subsistence farming, a proven direct driver of deforestation,” writes Andrew Hetzel in Daily Coffee News.
With just over six months to go, there is still much we don’t know—and that confusion hurts the people the legislation will impact the most.
Photo by Nguyen Tong Hai Van
