According to a 2022 United Nations Food and Agriculture Organisation study, between 1990 and 2020, approximately 420 million hectares of forest was converted into agricultural land – including for coffee production. Moreover, the FAO’s research also found that imports of these commodities to the European Union market accounted for up to 11% of global deforestation levels.
To directly address these issues, in June 2023, the European Parliament and the European Council announced the Regulation on Deforestation-Free Products (or EUDR). This new law prohibits European companies – including coffee traders and roasters – from importing commodities from supply chains that include deforestation.
As of December 2024, medium and large-sized companies which import goods into the EU must comply with new standards to prove their supply chains are deforestation free.
To understand the scope of the EUDR and how roasters and traders can successfully comply with its regulations, I spoke to Bruno Dominguez, co-founder of Coolx, and Jean Zuloaga, marketing director of Opce Coffee.
You may also likeour article on what the EUDR delays mean for the wider coffee industry.
What are the implications of EUDR for coffee traders and roasters?
In very simple terms, the EUDR seeks to minimise the European Union’s contribution to global deforestation and biodiversity loss, as well as to reduce its share of global greenhouse gas emissions. Once the new regulations are in force, the EU expects to eradicate at least 32 million tonnes of carbon dioxide emissions per year.
Bruno Dominguez is a co-founder of Coolx – a Spanish start-up that supports coffee importers to meet EUDR standards.
“[For the coffee industry], complying with the EUDR creates several logistical, technological, and economic challenges – both for importers and for their supply chain partners in producing countries,” he tells me.
As a result, the enforcement of these regulations – which will be mandatory for medium and large companies from December 2024 and smaller companies from June 2025 – has received some backlash.
“Information has been more readily available in Europe than in producing countries, which has created concern among many companies that export to the EU,” Bruno adds.
To address these issues, ambassadors of countries including Brazil, Colombia, Dominican Republic, Ecuador, the Ivory Coast, Ghana, Guatemala, Honduras, Indonesia, Mexico, and Peru compiled an open letter to the European Parliament in September 2023. In addition to calling for changes to the legislation, ambassadors encouraged more open dialogue about how to better assist small and medium-sized businesses.
Why compliance is so important
Despite these concerns, Bruno emphasises that regulations are a stark reality, so non-compliance will lead to serious legal consequences for companies that operate within the EU market. Traders and roasters will have to demonstrate that their supply chains have no links to deforestation as of December 2020. If they fail to prove this, companies face fines of up to 4% of their annual turnover, as well as the confiscation of their products.
Bruno adds, however, that there are benefits to this strict legislation.
“Companies need to work closely with their suppliers in coffee-producing countries to comply with regulations, which creates opportunities to strengthen long-term relationships,” he says.
How coffee traders and roasters can implement EUDR
Bruno explains some of the EUDR requirements for coffee importers, exporters, and roasters.
“The regulations require companies to geolocate their farms or land where they grow coffee,” he says. “They must also submit a Due Diligence Declaration, so they must have a traceability system in their supply chain. This involves collecting information from producers and other suppliers, as well as extensive data verification.”
Jean Zuloaga is the marketing director of Opce Coffee, which exports coffee from Colombia to Europe. He tells me Opce has already started to comply with EUDR, and adds that the process can be difficult without the right level of support.
“The challenge for European companies is to make sure they comply with all requirements, which takes time and is costly,” he says. “On the other hand, it’s difficult for producers, especially smallholders, to comply with regulations that don’t consider certain circumstances in Latin America.”
He explains that in Colombia, for example, land is often inherited without legal paperwork. Among several other issues, this can make it challenging for him to obtain the necessary documents for the farms he works with.
“We are also trying to resolve certain social security requirements for farm workers,” Jean adds. “Many of them are hired temporarily and work only during the harvest seasons, while others receive benefits such as housing and food.”
Jean says that to ensure compliance with the EUDR by December 2024, Opce Coffee worked with Coolx to seek advice and support.
“Coolx helped us to manage navigating how complex the new regulations are,” he says. “The team has been patient enough to understand the reality that Colombian farms face, as well as the different suppliers we work with. What’s more, access to technology has been key to strengthen and streamline our processes.”
What are the EUDR compliance requirements?
First and foremost, it’s important to understand how producers, traders, and roasters are impacted by the EUDR. Bruno explains that because Coolx works across the coffee value chain, he and his team can also acknowledge the challenges these supply chain actors are facing.
He adds that when starting to implement EUDR, coffee imported into the European Union must comply with three essential requirements:
- Provide verifiable information that the product does not come from deforested areas as of 31 December 2020
- Verifiably prove that coffee has been produced in accordance with the applicable legislation of the country of origin
- This includes land use rights, environmental protection, labour rights, human rights, indigenous peoples’ rights, tax, anti-corruption, and trade and customs regulations
- Produce a Due Diligence Statement
- This a document that proves information collection, risk assessment, and risk mitigation have all been properly carried out
Addressing the main challenges
Bruno tells me that for coffee exporters in particular, communicating with and advising producers about why it’s so important to provide data required for the EUDR can be one of the biggest obstacles.
Jean agrees, saying that obtaining certain sets of data can be a demanding task, largely because administrative processes are often not part of many farm workers’ job roles.
Another significant challenge for exporters is to monitor and trace the farms they work with, as it’s absolutely critical to know if there has been any deforestation at any point in the coffee supply chain.
Importers, on the other hand, also face some difficulties. These include forming close relationships with their suppliers, and part of this is understanding their capacity to meet EUDR requirements.
“If suppliers can’t fully comply with the regulations, importers will need to help and guide them in order to strengthen their relationship,” Jean says.
But perhaps the biggest and most important challenge is to develop a reliable and verifiable centralised data system that allows importers, exporters, and roasters to produce Due Diligence Statements. To tackle this, Coolx has developed several tools which use geolocation technology and artificial intelligence to collect and process information.
“We help to facilitate compliance with EUDR by making it quicker and easier, as well as fostering a closer relationship between importers, exporters, and producers,” Bruno says. “We want to make the process as simple as possible for our clients.”
Taking steps to successfully implement EUDR
Bruno says there is no one-size-fits-all solution to comply with EUDR requirements.
“Every company has their own specific issues they need to consider,” he says. “Coolx works on an individual basis with each of our clients to focus on their reality, whether in Europe or in a producing country.”
He explains some of the steps that Coolx’s software can assist exporters, importers, and roasters with to guide them through the EUDR compliance process:
- To fully understand how EUDR requirements apply to their specific company, such as an exporter at origin or an importer in Europe, as well as the size of their company
- To conduct an evaluation of the company and its entire supply chain, according to criteria required by the EUDR
- To collect and analyse all the required data, starting with information about deforestation at farm level and the relevant legal information in the countries of origin
- Based on this analysis, to reduce any existing risks of deforestation and design mitigation strategies
- Submit a Due Diligence Declaration to the European Commission
New opportunities for the coffee industry
EUDR requirements certainly present some problems for coffee companies, including the risk of losing non-compliant suppliers at origin or being sanctioned for failing to comply with the regulations. The new legislation, however, also unlocks many opportunities.
Both Bruno and Jean agree that the EUDR promotes better traceability throughout the supply chain, and mention that compliant companies have a competitive advantage. Jean points out that these companies can gain access to premium markets that value sustainability – and buyers may be willing to pay higher prices.
Additionally, the EUDR also helps traders, roasters, and producers to develop closer relationships and more effective communication, which will only serve to strengthen long-term partnerships.
Moreover, the new regulations will allow coffee companies to become more innovative. As traders, roasters, and producers all use technology to ensure traceability and prove no deforestation has taken place in their supply chains, they can develop marketing strategies in line with these efforts.
While the implementation of the EUDR has caused some resistance in its early stages, it is an opportunity to make necessary changes to the coffee industry.
Compliant companies will be able to adapt to other legislation that will surely be required in different markets in the future. In turn, it’s essential to receive the right level of support and advice to achieve success.
Enjoyed this? Then readour article on growing sustainability in the coffee supply chain.
Perfect Daily Grind
Please note:Coolx is a sponsor of Perfect Daily Grind.
Editor’s note: This article was translated from Spanish into English.
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