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How a little known EU rule could push the price of a cup of coffee higher and hurt already impoverished farmers

A new law aimed at tackling deforestation risks disrupting commodities exports to the European Union, raising prices for consumers and threatening the livelihoods of farmers from Indonesia to Honduras.

Coffee farmers are coming under pressure amid a new EU law aimed at preventing deforestation. Photograph: Patrick Meinhardt/Bloomberg

It’s a hot morning in the Lampung province on the southern edge of Sumatra and coffee grower Wiyono is leading two field agents to his farm, one holding a 2-metre black pole with a GPS unit on the end, the other with a tablet.

The team is there to map out Wiyono’s land in the lush Indonesian region. Documenting every plot is critical if farmers want to keep shipping produce to Europe as part of the continent’s new sustainability requirements.

The local coffee farming group mentioned that “Europe is doing this or that,” said Wiyono (48). “I didn’t ask for this mapping process, but our co-operatives arranged it,” he said. “They said when we supply to the companies, they want some papers.”

Most people haven’t heard of the European Union Deforestation Regulation (EUDR), the bloc’s new law aimed at tackling climate change and halting biodiversity loss, let alone in a remote corner of Indonesia. Yet, it’s threatening far-reaching consequences for more than $110 billion (€102 billion) of trade annually, economies across six continents and suppliers struggling to get to grips with the reality of Europe’s drive to be greener.


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Come the end of the year, large companies handling seven key commodities – coffee, cocoa, soy, palm oil, cattle, rubber and wood – and products derived from them will be required to prove that people in their supply chains didn’t work land that was deforested after 2020, legally or illegally.

That means that every coffee bean – along with such things as chocolate, tyres and books – will need to be traced to the exact locations they came from, or the EU will levy hefty penalties.

There are more than 55 countries that each export on average at least $100 million a year of goods to the EU that will be affected by EUDR. The impact will depend on the commodities they ship, who buys them and whether there are resources to handle farm mapping and all the necessary paperwork. But already there are warnings of higher prices for consumers in Europe, including Ireland.

The task is magnified in coffee. It’s reliant on millions of smallholder growers scattered across dozens of countries. Many lack the means to show they can comply with the law.

“We really are starting just to see the scale of this challenge around the globe,” said Elizabeth Teague, senior director of climate resilience at Root Capital, an impact investor supporting small-scale farmers in the transition. “Everyone is trying to scramble and respond to the EUDR reality.”

Small nations like Honduras risk losing customers in Europe, an economic lifeblood. “We’re working against the clock,” said Celso Alvarado, a regional coordinator for the Honduran Coffee Institute, which assists one of the nation’s critical export industries.

Then there are countries with opaque supply chains, such as Ethiopia, home to the greatest number of smallholder coffee farmers. They’re the backbone of the economy but are often poor, unprepared and unequipped to respond to the law.

“There’s the abject fear of countries over what this will mean for their exports and therefore their bottom line,” said Pamela Coke-Hamilton, executive director of the International Trade Centre, which works with vulnerable economies.

Nobody disputes the need to protect forests. In just three decades, the world lost an estimated 4.2 million square kilometres (1.6 million square miles) of woodlands, an area larger than the EU itself.

At the COP26 climate summit in 2021, more than 100 nations pledged to halt and reverse that trend. While some have watered down their promises, the EU is sticking with it, arguing it’s a matter of credibility after receiving overwhelming public support.

A spokesperson for the European Commission said the EU is committed to addressing concerns and to ensuring the successful roll-out of EUDR. The inclusion of smallholders in the ongoing dialogue is a priority, they said. The EU has a €70 million fund to help support them in partner countries.

But adapting to the new rules highlights the scale of the challenge to introduce green policies, some of which are already facing a backlash. Ever since it came into force last June, the piece of Brussels legislation has led to calls to delay it, numerous letters of concern over its implementation and heavy lobbying from governments.

Industry groups as diverse as coffee roasters, parquet-floor makers, printers and farmers have expressed concerns over the law. Countries as far as Australia have asked for a delay until the requirements are understood well enough. Traders have blamed the EUDR for adding to this year’s surge in cocoa prices. Coffee-trading nations warned of a potential shortage in Europe.

The law has also struck a nerve across the less-developed world, much of which still endures the legacy of Europe’s colonial past. Indonesia branded EUDR a form of “regulatory imperialism” while Paraguay’s industry minister recently spoke out in defence of his country’s “legal sovereignty.”

In recent weeks, even some EU member states have expressed concern their farmers and companies haven’t got enough time to prepare, and calling for a “swift revision” and an extension of the implementation period.

Meanwhile, the race is on to prove that farms haven’t been involved in deforestation and comply with local laws. Companies, governments and farmer co-operatives are busy geolocating land around the world.

In Amsterdam, Thomas Vaassen oversees a laborious process of field-data verification from more than 35 countries, and mapping of farms in Indonesia, Ivory Coast and Ghana.

The company he runs, Meridia Land, is in high demand from some of the biggest consumer brands and traders – Unilever, Mondelez and Cargill to name a few. Its clients have doubled since the EUDR was announced in late 2021 and it’s got a pipeline to verify millions more farms, said Vaassen.

He estimates that about half of the farms caught up in EUDR may not have been mapped. “Thousands and thousands of people are now geolocating farms around the world – there’s a huge ongoing effort,” said Vaassen. “There are millions of farms and they all have to be mapped in a few years.”

EU officials say that presenting the exact locations of farms can be easily done with a phone and for smallholders. But the reality is turning out to be more complex, with many farmers without connectivity, the right training, and – most importantly – little awareness of what’s coming.

What’s at stake is evident in Honduras, whose economy relies on exports of textiles, coffee and palm oil. With a GDP per capita of about $3,000, it is among the poorest countries in the western hemisphere.

About half of its coffee exports go to the EU, which together with palm oil, makes it one of the most dependent nations for trade with the bloc – some 3.5 per cent of the country’s GDP. Europe takes coffee shipped from family farms largely in remote, hilly areas. Climate change and an exodus of workers to the US have hurt the industry in recent years.

Most of the country isn’t ready for the EUDR regulations, according to the Honduran Coffee Institute, known as IHCAFE. The group has just 120 experts to assist some 120,000 growers in preparation for the law, according to Alvarado, the coordinator for the mountainous region of Yoro. “The risk is that a lot of Honduran farmers lose access to the European market,” he said.

Less than 20 per cent of Honduran farmers are ready for EUDR due to reasons like a lack of traceability or due diligence, according to Dimitra, which is currently covering the mapping costs at Comisuyl farms.

Tracing supplies all the way to their farms can be a daunting task. That challenge is writ large in Ethiopia, regarded as the birthplace of coffee, but with centuries-old production techniques and opaque supply chains. Coffee is Ethiopia’s number one source of export revenue and the EU is its top customer, accounting for about a third of shipments.

There are at least 2 million coffee farmers in the country, more than anywhere else in the world, according to Enveritas. It estimates some 40 per cent of them live under the poverty line.

Farms are remote, tiny, at times rendering a few bags of coffee in a year, which then get handled through a chain of brokers and mixed up, making traceability even harder. Before it leaves the ports of Djibouti or Kenya for overseas markets, one cargo could potentially come from thousands of farms.

The Oromia Coffee Farmers’ Cooperative Union has so far managed to map out about 5,000 farms out of its 557,000 members, at a cost of some $4 a farm.

“Ethiopia will suffer significant losses if it fails to meet the requirements,” said Dejene Dadi, Oromia co-op’s general manager. “And for the EU member states, it holds little significance.”

As the clock ticks, the EU is dispatching more officials on an information tour about the EUDR. Environment Commissioner Virginijus Sinkevicius himself recently toured Latin America and Africa where the legislation was a subject of discussions with local governments. Not finalising and implementing the legislation “would be a huge mistake for this planet, for our climate resilience,” Sinkevicius said in March.

But seven months before the legislation formally kicks in, the implementation details – from how the mapping data gets added to the EU’s computer systems to how the arriving cargoes are policed by authorities – are yet to be fully disclosed. The bloc has already deferred categorising supplier countries by their risk status until a later date.

Meanwhile, there are small signs of how the regulation is quietly starting to reshape trade. Palm oil exporters are already diverting hard-to-trace supplies to regions outside Europe, raising concerns it may undermine efforts to eradicate deforestation.

Ethiopia’s farmers are exploring alternative markets in Saudi Arabia, China and Russia. Uganda, another large coffee exporter dependent on the EU, is meanwhile trying to expand its trade with Russia and the Balkans, according to a local government agency.

One thing is clear. Farmers and companies want to get compensated for their efforts to comply. And that spells higher prices for European consumers.

In Honduras, farmers at the Comisuyl co-op – who for decades have ensured the land remains forested – expect to make at least $10 a bag more on top of the market price, according to farmer Wilson Cardenas.

“We aren’t asking for handouts and we don’t want to be given stuff for free, but we want buyers to understand that this requires more effort, more technical knowledge and more labour,” said Cardenas as farmers gathered in Comisuyl’s warehouse to sample recently harvested coffee. “Mapping is a cost. Maintenance is a cost. We are helping save the planet. We want the market to treat us fairly.” – Bloomberg