The European Union Deforestation Regulation (EUDR) is more than just another set of environmental guidelines; it’s designed to address a harsh reality - the link between deforestation and the goods imported into the EU. It seeks to make European markets a sanctuary for deforestation-free products while tackling the adverse effects of deforestation, particularly due to agricultural expansion.
This article delves into the core objectives and challenges of the European Union Deforestation Regulation, highlighting its significance in the broader context of environmental conservation. We will explore the requirements placed on goods imported into the European market, the crucial role of traceability, and the implications for various stakeholders within the coffee industry, among others.
What is EUDR?
The European Union Deforestation Regulation (EUDR) is a framework to tackle forest degradation that occurs to produce goods that are imported into the EU. This initiative aims to ensure that products sold in European markets are deforestation-free and do not contribute to further ecological damage in producing countries.
The main objectives of EUDR are:
- To remove products that contribute to global deforestation from the EU market.
- Preserve forests that sequester carbon and reduce the EU’s carbon footprint generated from the production and consumption of certain commodities.
- Address deforestation due to agricultural expansion.
The commodities at the centre of EUDR include coffee, cacao, timber, soy, palm oil, and beef. These regulations affect traders, excluding Small and Medium-sized Enterprises (SMEs), and growers that import into the EU. EUDR is essentially a successor to the EU Timber Regulations and comes into effect at the start of 2025, giving the coffee industry about 18 months to meet the requirements.
To meet the requirements of EUDR, goods imported into the European market must be traceable at farm level. The primary objective is to reduce the risk of deforestation due to European consumption.
For a commodity to be accepted into the Union market, a due diligence framework has been created which requires the following:
- A description of the commodity, including the quantity and the country of production.
- The disclosure of the plot of land where the commodity was produced, with geo-location information.
- The date or time range of the production on the specific plot of land.
- Information and identification of suppliers, traders and businesses in the supply chain of that commodity.
The Significance of EUDR
Coffee production can be an environmentally exploitative process that diminishes biodiversity and contributes to deforestation in many producing countries. Between 1990 and 2020, 420 million hectares of forest were cleared for agriculture, an area larger than the EU itself. The goals of EUDR are to substantially reduce carbon emissions by halting deforestation around the globe.
As a major market for consumer goods and commodity imports, the EU has implemented these environmental regulations to reduce the carbon footprint generated by the demand for goods in Europe. These deforestation regulations will directly affect stakeholders in the supply chains of coffee and the other commodities included.
Supply chains will face many challenges in meeting the legislation requirements, particularly in terms of location data, traceability, monitoring systems, and deforestation-free supply chain management. These changes will be necessary to meet the requirements of the EU market for trading key commodities but are also an opportunity to accelerate agricultural development towards transparency, sustainability, and biodiversity.
To truly actualise the full potential of the EUDR, there will need to be stronger collaboration and cooperation between the public sector, private sector, international institutions, and local organisations to sustain the trade of agricultural commodities and ensure climate-neutral farming.
The Traceability Challenges of EUDR
Traceability is at the heart of EUDR. Traceability to the plot of land is necessary to demonstrate that there is no deforestation in a specific location.
The intention of the EU in collecting geographic coordinates and personal information is to ensure the traceability of commodities entering the EU market. By providing the geographic coordinates of the agricultural plots, the land use can be remotely verified using satellites, and forest loss determined. However, guidelines and procedures still need to be established, and the coffee sector must develop procedures on how the information will be managed.
EUDR will drive up the data requirements for coffee companies and increase the importance of digitalisation in the coffee value chain. This is no easy task as the coffee supply chain involves on average 11 players from farm to cup including farmers, co-operatives, importers, exporters, roasters, cafés and more. Pivoting towards this rapid digitisation and logging data at every step will require financial investment, skill building, and potential restructuring of how coffee is traded.
When done inefficiently, digitalisation can cause more problems than it solves and so it’s critical for coffee enterprises to invest their time carefully in choosing the right digital tools to help them meet the import/export requirements of EUDR. [link to EoW]
Change vs Chaos: How Can Growers Work with EUDR
While the EUDR is a step forward for sustainable agriculture, it does come with the risk of massive supply chain disruption. A key concern is that the regulations could potentially result in coffee traders buying less coffee from small farmers or moving to less risky areas. Large commercial farms are in a better position to comply with the due diligence requirements of EUDR while small growers face administrative and financial constraints that will hinder their compliance with EUDR.
While the legislation stipulates that small and medium enterprises (SMEs) don’t have to meet all the criteria in the legislation and they have a slightly extended deadline (1st July 2025), it remains unclear exactly how EUDR will apply to smaller enterprises. The uncertainty surrounding these rules along with the inherent vulnerability of coffee farmers to market changes has caused significant concern in coffee-producing nations. Those with a large concentration of smallholder coffee growers are particularly susceptible to supply chain disruptions due to EUDR.
Altogether, this points to a broader issue with the implementation of EUDR in the coffee supply chain. The supply chain for coffee involves numerous intermediaries and is more complex than other commodities included in the legislation. Moreover, traceability has long been an issue and the only way forward is to solve the issues with tracing and tracking coffee from plot to purchase.
The European Union Deforestation Regulation (EUDR) represents a significant step forward in the global effort to combat deforestation and its environmental repercussions. However, this endeavour is not without its challenges, particularly in terms of location data, traceability, monitoring systems, and deforestation-free supply chain management.
While EUDR represents progress toward sustainable agriculture, it also carries the potential for supply chain disruption, especially for small coffee farmers. Nevertheless, these challenges point to the need for a comprehensive solution to trace and track coffee in a complex supply chain.
EUDR is a call to action, challenging stakeholders across the coffee industry to adapt, innovate, and collaborate for the greater good of our planet and its vital forests. It is a reminder that responsible trade and environmental preservation go hand in hand, and the successful implementation of EUDR can be a blueprint for a more sustainable and transparent future in global commodity markets.