Imports of coffee and other products whose production contributes to deforestation will be restricted. This is due to the recent entry into force of the European Union (EU) deforestation regulation, which the European Parliament and member states reached a preliminary agreement on in late 2022. "A great step towards the reduction of global deforestation and biodiversity loss," according to Maria Naranjo, researcher at Wageningen Economic Research. However, she says action is needed to minimise potential implications for smallholder farmers in the coffee supply chain.
The regulation (EU Deforestation Regulation, EUDR) imposes due diligence requirements on market participants who bring certain commodities to the European market or export them from the EU. Besides coffee, these include palm oil, cattle, timber, cocoa, rubber and soy - and their derivatives. Of all these raw materials, the regulation requires traceability of the plot on which they were produced. According to the regulation, the expansion of agricultural land and loss of forest after 31 December 2020 is considered deforestation.
Additional costs for smallholder farmers
Maria Naranjo and other researchers at WUR wrote a policy brief on the potential implications of the EUDR on coffee supply chains, based on an earlier version of the regulation. The EUDR clearly states that the due diligence process targets private-sector traders and operators, not countries and farmers. However, uncertainties remain on the implications for smallholders, given the lack of a production-side impact assessment. "The enforcement of the due diligence process could transfer higher costs for farmers already struggling to achieve a living income". Timely information and capacity-building support compliance with the regulation are needed so that they can prepare properly. Not every country is equally prepared, Naranjo argues: "That is why it is important to determine at the national level the readiness of producers in the country and which bottlenecks still need to be resolved."
Challenges for the coffee sector
Coffee was incorporated into the regulation because of the association between deforestation in a specific area or country and coffee production. EUDR provides clear definitions of forest and deforestation that will be applied. However, there is an overlap in the definitions of both regarding the structural characteristics of forest and agroforestry systems that needs attention. Furthermore, countries have different legal definitions of deforestation and national sovereignty that must be aligned with the regulations' definitions.
Preventing unwanted effects
According to Naranjo, the regulation should not result in coffee traders buying less coffee from small farmers or moving to less risky areas: "Complying with the due diligence requirements might favour larger commercial farms over smallholders in supply chains due to administrative and financial burdens as a result of the new EUDR". Furthermore, the expansion of coffee production might not be the leading cause of deforestation, but rather a consequence of a rapidly growing population's quest for living income. "If so, there may be increased demand for crops for the domestic market on land that is currently forest and a shift of coffee production to non-EU markets. These kinds of unwanted effects must be avoided."
The main implications of the EUDR for small coffee farmers have been summarised in a policy letter. The full text of this letter can be found here.
