EU deforestation law means uncertainty for African coffee

Ethiopia and Uganda already developing strategies to meet the  EU’s new  requirements

ANALYSIS | AGENCIES | Many African smallholder coffee farmers, who primarily sell their harvest to European markets, now find their main source of income in jeopardy.

In 2023, the European Union (EU) established mandatory rules for companies dealing in commodities such as coffee, palm oil, and cocoa. The rules are designed to ensure that products imported to Europe do not originate from deforested land, land acquired forcibly from local and/or indigenous communities, or whose cultivation involves labor and/or human rights abuses. To avoid heavy fines, companies must prove compliance by the end of 2024.

“We’re not seeing many buyers this year,” Tsegaye Anebo, general manager of Ethiopia’s Sidama Coffee Farmers Cooperative Union, told DW. Typically, farmers receive orders for beans that will be sold in supermarkets and shops months later, but Anebo said the unclear consequences of the new EU regulations have created a “sense of ambiguity in the market.” His observation is shared by several other African traders, such as the Oromia Coffee Farmers Cooperatives Union, which has raised concerns over EU companies shunning their products.

The EU’s anti-deforestation law, known as EUDR, has garnered praise from environmental organizations, including Greenpeace, for assuring Europeans that the items in their shopping carts are not sourced from deforested areas. However, critics argue the new laws may penalize smallholder coffee farmers around the world, particularly in Africa, possibly resulting in a coffee shortage in Europe.

How to know if coffee comes from deforested land

Coffee production significantly contributes to deforestation, with approximately 130,000 hectares of forest lost annually due to land clearing for cultivation, according to the 2023 Coffee Barometer — a biannual report produced by the NGOs Solidaridad Network and Conservation International that assesses the sector’s state of sustainability. The trend has persisted for the past two decades as demand for the popular drink has grown and farmers continued to strive to make ends meet. Many coffee regions are also situated in areas grappling with issues such as slavery-like labor abuse, corruption, and smuggling, as well as land grabbing.

To ensure commodities traded in Europe are not tainted by these issues, anti-deforestation regulations aim to make products ‘traceable’ back to their production origins.

“Traceability makes the entire supply chain transparent,” said Jennifer Mbuvi, a Kenya-based sustainability expert who works for the farm assurance program GLOBALG.A.P. “It allows us to check if the lands claimed by the company as the source can truly produce the amount of coffee they sell or if additional supply is sourced from undisclosed and potentially deforested areas,” she told DW.

The EUDR requires companies to collect the geographic coordinates of land where commodities are produced, using mobile apps and computer-based tools.

However, the law overlooks the production side, making it difficult to determine the impact or opportunities for farmers, according to Maria A. Naranjo, a researcher on green economy and land use at Wageningen University in the Netherlands. Naranjo told DW the law treats all sectors, regions, and products in the same way, even though they differ in how they contribute to deforestation. “There is a strong need to conduct country-level assessments on the readiness to fulfill the new EU legislation, and especially on how smallholder coffee farming families would be affected,” she said.

Can smallholder farmers comply with the EU’s anti-deforestation law?

Approximately 25 million smallholder farmers produce about 80% of the coffee consumed worldwide. Many of them live in remote places with patchy internet.

In Ethiopia alone, around 2.2 million farming families produce most of the country’s coffee, earning a significant portion of their income from exports, according to World Bank data. However, a lack of infrastructure and support hinders their ability to prove compliance and adapt to the new regulations.

“We have already begun to submit the geolocation data of our member farmers, but we probably need longer than December to finish it,” Anebo said, adding that many other farmers do not have the opportunity or means to submit their data. “Many of those who sell their harvest to middlemen might not even know where to start,” he said.

Similarly, in Uganda, the government has developed a comprehensive action plan to meet the compliance requirements, according to Dr. Gerald Kyalo, the Director Development Services at the state-run Uganda Coffee Development Authority (UCDA).

He said UCDA has partnered with JDE Peet’s and Enveritas to ensure that all Ugandan coffee is deforestation-free and compliant with the EUDR by the end of 2024.

“This is crucial since enforcement of the EUDR at European ports of entry will begin on 30th December 2024 for large companies and on 30th June 2025 for small companies,” he told coffee stakeholders in Kampala on Feb.22, adding that in the short term, Uganda, with support from JDE Peet’s and Enveritas, has initiated a Territorial Approach to identify and remediate non-compliant coffee plots within the next few months, ensuring compliance by mid-2024.

In the long term, Kyalo said, the Uganda coffee sub-sector aims to establish a robust National Coffee Traceability System to support EUDR compliance reporting, streamline extension services to small-scale producers, and improve the coffee supply chain in light of the upcoming EU Corporate Sustainability Due Diligence (CS3D) reporting requirements.

He noted that UCDA is also engaging the EU to demonstrate the country’s commitment to meet its regulations as it also raises awareness on EUDR among the value chain actors.

Could EU anti-deforestation measures actually contribute to deforestation?

Members of the Sidama Union have been implementing environmental standards for years, with their products bearing several international sustainability certificates. For millions of other coffee farmers across Africa, that’s not the case.

For sustainability expert Jennifer Mbuvi, the situation highlights a major loophole in the EUDR. “Regions and producers who have already been following sustainability rules will find it easier to prove their compliance with the new regulations,” she said, adding, “the other producers will most likely lag behind and might start looking for more lax markets.”

If that happens, the EUDR might have “zero or negative impact on deforestation,” Mbuvi said.

Naranjo and Mbuvi both emphasize that coffee expansion is not the root cause of deforestation; rather, it is driven by population growth and the associated need for food and income. “The growing population might continue transforming forests into agricultural land to produce other crops,” Mbuvi noted.

Will EU anti-deforestation rules lead to coffee shortages and higher prices in Europe?

“The current coffee prices aren’t good for farmers,” Tsegaye Anebo told DW, emphasizing that “many of them are already having a tough time making enough money.” He pointed out that “some coffee farmers are looking for buyers outside Europe” because of the extra costs EUDR rules compliance means for them.

For Europe, it might mean coffee becomes harder to procure. Vanúsia Nogueira, executive director of the International Coffee Organization (ICO), expressed concerns in a December 2023 Bloomberg interview, stating that Europe might face a coffee shortage due to the lack of clarity surrounding the implementation of deforestation regulations.

In coffee regions outside of Africa, farmers not only grapple with the hurdles of EUDR but also contend with El Nino, a weather pattern capable of causing extreme conditions. Forecasts, including a 2023 ICO market report, suggest the phenomenon will persist until summer – posing threats of drought and high temperatures for coffee plants in parts of South America and Asia and potentially resulting in lower yields. This, too, could contribute to the rising cost of Europe’s favorite drink.

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Source: DW and additional reporting by The Independent.