On January 1, 2025, a law will come into force that will change the world. The EUDR - the European Union Deforestation Regulation. As a consumer, you won't notice anything, but anyone who produces meat, soy, coffee, or cocoa and wants to continue exporting their products to the EU will be affected. The same applies to all processors further down the supply chain.
What does this mean for coffee producers?
How deeply does the law penetrate the supply chain, and even private lives?
Is it a neo-colonialist law?
Janina Grabs, Professor at Esade Business School in Barcelona and from July 2024 Professor of Sustainability Research at the University of Basel, provides context.
Janina Grabs in conversation with Philipp Schallberger
When does the EUDR apply?
The law comes into force on December 30, 2024.
Which products are covered by the new EUDR law?
The law applies to wood, beef, cocoa, palm oil, coffee, soy, and rubber.
What does the new law state?
It is an EU-level regulation that will be treated equally across the entire EU. It affects importers, exporters, or companies trading within the EU. They must ensure that their respective supply chains are deforestation-free. They must prove this using GPS points or polygons (area representations) showing exactly where the coffee was produced. They must prove that coffee was not planted in areas where forest stood after the end of 2020. If forest was converted to agricultural land after the end of 2020, that constitutes deforestation. This is irrespective of whether it was permitted in the producing country or not. The EU relies on the FAO's definition of what constitutes a forest. If coffee were to be imported from such an area, it would now be illegal.
What do companies need to do?
Ensure that products do not come from a risk area, or rather, prove that their products were not produced on deforested land.
What is the idea behind it?
The EU wants to reduce imported deforestation. As consumer countries, we also have a responsibility. The law is good in principle, but it means a fundamental restructuring of the value chain in all sectors, because everything now has to be proven with GPS points. It is costly and leaves little time for implementation. The EUDR was adopted in June 23. Companies have until the end of 2024, and SMEs until mid-2025, to implement it. This is relatively little time, especially for industries that for decades have had little insight into their supply chains.
What does this mean for producers?
Larger producers (organizations) are sometimes well prepared, smaller ones perhaps less so; unorganized, dispersed producers may not be able to provide data at all. Andrew Hetzel rigorously demonstrates this in this article.
Larger buyers and traders might, for reasons of risk aversion, switch to larger, institutional producers (organizations) or intensify their work with them. More complex supply chains may be given less consideration due to risk. This could be a disadvantage in the first few years, as many companies cannot make their supply chains traceable so quickly.
So now what?
Theoretically, producing countries could lean back, says Janina Grabs. "Hey, what do you have to offer us?" That remains somewhat theoretical, because roasters can simply switch and buy other coffee.
Who bears the costs of the transition?
This is not defined, in practice most producers and exporters have to pay for it, but can hardly offset it against the green coffee price.
What do importers and companies need to do?
Collect data and provide a due diligence statement, the exact format of which is not yet clear (as of May 2024).
Who owns the GPS data?
Currently, they are kept secret. Very personal data: the outline of a producer's farm. "How would we react here in Europe if we had to disclose everything just to produce something?"
Is the EUDR a form of neo-colonialism?
The EU can do what it wants. But it is clumsy and has unintended consequences that producers are only brought in so late in the definition of the law.
Different Realities
Some producers are better prepared, others less so. In the coffee sector: many producers in Brazil and other coffee countries that are institutionally well-established are better prepared.
