For over a year, the coffee industry has been awaiting the rollout of the European Union Deforestation Regulation (or EUDR). Announced in June 2023 and set to begin in December 2024, the legislation has huge ramifications for the global production and trade of coffee.
Many key players have expressed concern that the EUDR will restrict producers’ access to one of the biggest coffee markets in the world. Despite repeated calls to delay its enforcement, in late September 2024, the EU confirmed to the World Trade Organisation that it would implement the law by its end-of-year deadline.
But less than a week later, in a shocking turn of events, the European Commission proposed a year-long delay to the EUDR. The Commission stated the proposal was to grant global stakeholders, member states, and third countries “a phasing-in period to ensure proper and effective implementation”.
Although some consider the motion a setback to action on climate change, others are undoubtedly relieved to have more time to prepare for the landmark legislation. An additional 12 months may seem ample, but roasters and traders need to take advantage of all the time they have.
I spoke to Andreas Idl, CEO and co-founder of Cropster, and Gilles Brunner, COO at Algrano, to learn more.
You may also likeour article on why UK roasters and importers still need to prepare for EUDR.
EU proposes a year-long delay to its deforestation regulations
When the EU announced the landmark ruling in June 2023, it sent the coffee sector into a frenzy. Ambassadors of many producing countries – including Brazil, Colombia, Guatemala, and Peru – compiled an open letter to the European Parliament in September 2023 calling for changes to the legislation.
Ministers from Indonesia – the world’s fourth-largest coffee producer – referred to the regulations as “inherently discriminatory and punitive in nature” and expressed their concerns about its impact on key exports.
Since its announcement, calls to delay the EUDR have been persistent and vocal. In August 2024, key stakeholders, including Fairtrade International, Global Coffee Platform, and the European Coffee Federation, warned that the legislation could unintentionally harm smallholder farmers. In countries like Ethiopia, where the majority of coffee farmers have limited access to data needed to prove due diligence, the ruling could significantly restrict their access to the EU market – which buys up to 30% of the country’s coffee every year.
Despite these repeated calls from the coffee industry, the European Commission did little to address concerns publicly. Although it postponed the compliance deadline for smaller-sized enterprises from December 2024 to June 2025, the EU later confirmed to the World Trade Organisation that it would not delay implementation.
Less than a week later, and much to the coffee industry’s surprise, the European Commission proposed a year-long delay.
Gilles Brunner is the COO at the online direct trade platform Algrano.
“Rumours about a delay had been circulating in the industry for a long time,” he says. “It became more apparent when the European Commission didn’t publish an updated FAQ in March this year. This would clarify certain aspects of the regulation and the requirements around due diligence, one of the biggest question marks for everyone.”
Is a proposed delay the right decision?
The overall aim of the EUDR is positive. According to a 2022 UN FAO study, between 1990 and 2020, approximately 420 million hectares of forest were converted into agricultural land, including for coffee production. Imports of these commodities to the European Union market accounted for up to 11% of global deforestation levels.
Andreas Idl is the CEO and co-founder of the coffee software company Cropster. “It’s good that supply chains have to adhere to social and environmental responsibilities so that companies work more sustainably,” he says. “We have to comply with the EU’s General Data Protection Regulation, which had a huge impact on how IT companies process and store personal data. But overall, the law had a positive effect.”
Criticism of the EUDR largely revolves around its implementation, especially since the tight deadline allows little time for smallholder producers to collect data and develop systems to prove compliance. Given that smallholders grow up to 70% of the world’s coffee supply, restricting their access to one of the biggest international coffee markets would have huge implications for EU traders and roasters, too.
Sourcing practices would inevitably shift and reshape the global coffee sector. To ensure their shipments are EUDR compliant, roasters and traders could buy more coffee from countries with better-developed sustainability practices and systems, such as Brazil and Costa Rica. Origins with fewer resources and support, meanwhile, could struggle – reducing overall diversity in the EU market.
“We believe the EUDR is absolutely necessary,” Gilles says. “Yes, implementation was poor, and a phased approach would have been less disruptive, but something like this is crucial if we’re serious about slowing down global warming and protecting biodiversity.”
A step forward for some, one back for others
An additional 12 months to prepare to comply is a welcome proposal for many in the industry.
“Even companies that are well-prepared need further clarification about due diligence requirements,” Gilles explains. “Many other companies that fit the operator category have more complex supply chains, which aren’t often fully traceable. Relief is the polite way of saying it.”
A recent ODI report states a year-long delay reduces the risk of a “green squeeze” in Least Developed Countries (LDCs), which contribute minimally to global emissions and often lack the resources and infrastructure to comply with complex traceability and compliance requirements.
“More time to prepare is a good thing, especially considering the scope of the EUDR,” Andreas says.
Others, meanwhile, have made it clear that they oppose the delay. Human rights organisation Global Witness estimates the year-long delay could drive at least 150,385 hectares of deforestation linked to EU trade. This equates to an area more than fourteen times the size of Paris, France.
A recent Reuters article also highlights how companies that have already heavily invested in developing EUDR-compliant systems – including large traders and roasters – could suffer financial losses if the delay is approved.
The coffee industry might have bought itself more time, but compliance is inevitable
As of now, the European Commission’s delay proposal still needs approval from the European Parliament and member states. In March 2024, the majority of members asked the council to scale back and possibly suspend the law, indicating that approval is likely.
A vote will take place in November or December at the latest. Until then, producers, traders, and roasters will not know whether they need to comply by the end of 2024 or 2025 (or June 2025 or June 2026 if they are a smaller business).
While some may consider an extra year to prepare a generous amount of time, others still believe the EUDR is set to disrupt the coffee industry no matter when it’s rolled out.
“An additional year isn’t a lot of time to implement a new process, especially if you need to coordinate with your suppliers,” Andrea says. “You need to know whether all your suppliers can provide the necessary information.”
Indonesia’s Coordinating Minister of the Economy recently stated that the proposed delay was a “good step”, but a more pressing issue is the implementation regulations rather than the timeframe and that the EU should retract its benchmarking infrastructure. This classifies nations as high, standard, or low risk in terms of compliance. If a producing country is categorised as high-risk, it could dissuade importers and roasters from sourcing its coffee.
Moreover, to avoid buying non-compliant shipments, roasters may switch to lower-risk countries, which would significantly affect the types of coffee they offer to consumers. If an EU importer or roaster can’t prove compliance, they face fines of up to 4% of annual turnover. For many smaller companies, this would be devastating.
The time to prepare is now
While the coffee industry awaits the verdict on the EUDR delay, roasters and traders should remain focused on preparing for the legislation. Continuous reports show that EU traders have accelerated shipments ahead of the original deadline, underscoring the urgency behind compliance.
“The scope of the EUDR is complex, and the way it impacts roasters and importers changes based on the company structure,” Andreas explains. “For example, do you buy from importers or via direct trade? Are you selling to other retailers? All this affects what you need to track in your operations to be compliant.”
Traders will have to bear the majority of compliance responsibilities, but larger roasters will also be significantly impacted.
“Most roasters in the SME category who don’t import coffee themselves don’t have to do much. By the time the coffee reaches them, it will already be cleared,” Gilles says. “The burden is on large roasteries and importers. From experience, if the importer is prepared, the roasters working with them will be ready, too.
“SME roasters will need to know the identity of their suppliers and have the reference number for the due diligence statement associated with the coffee. It’s more complicated for large roasters, who have to make sure due diligence and risk assessment is in place upstream,” he adds. “Roasters outside the EU selling roasted coffee to member countries will have the same requirements.”
Useful resources
“It’s important to help suppliers with data collection and testing. We developed an EUDR file checker that producers in our network can use to spot errors in their data quickly,” Gilles says. “We’re working closely with more than 100 companies at origin to ensure their data is correct.
“The best source of information in complex cases like this is the primary source, so we recommend the regulation guidance and the new FAQ published by the European Commission,” he adds. “The Centre for the Promotion of Imports (CBI) also provides a good summary with recommendations, listing service providers that can help with EUDR compliance.
“For roasters who are not responsible for due diligence, it’s best to familiarise themselves with the regulation and ask their importers and partners questions. Learn what solutions they’re adopting and when they expect to be ready.”
On 17 & 18 October 2024, the first-ever PRF: Farm Summit will seek to address pressing issues about the EUDR. In addition to its focus on regenerative and organic farming and soil health, the event will host a panel on how producers, traders and NGOs can collaborate on EUDR compliance.
Opinions remain divided about whether the proposed year-long delay to the EUDR is a positive or negative motion. As it stands, an approval is likely, but roasters and traders still need to prioritise compliance.
No matter when the legislation comes into force, EU roasters and importers can’t run the risk of sourcing non-compliant coffee.
Interested in PRF: Farm Summit? Then readour article on who is speaking at the event.
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