First announced in 2022, EU Deforestation-free Regulation (EUDR) has proved highly controversial in the coffee industry. Advocates say the landmark legislation is vital to protect the world’s forests from commodity-linked deforestation, while critics argue the rules could have unintended negative consequences for some of the world’s poorest farmers. Deniz Karaman spoke with leading coffee businesses from across the debate to find out if EUDR can work for supply chain stakeholders and the planet
An aerial view of a coffee plantation in Brazil | Photo credit: Pedro Henrique Dini/Shutterstock
According to the UN, an estimated 420 million hectares of forests have been lost to deforestation globally since 1990. To put this into perspective, on average of 13 million hectares – an area equivalent to the size of England – is cut down every year.
Most deforestation is driven by rising demand for key commodities, including palm oil, cattle, soy, cocoa, timber, rubber – and coffee. As Europe’s demand for caffeine grows, so does pressure on farmers to clear forests. A 2024 report published by the French government highlighted that as the world’s largest importer of coffee, the EU is responsible for 44% of coffee-related deforestation.
In response to this profound challenge, in November 2020 the European Union proposed a groundbreaking solution: EU Deforestation-free Regulation (EUDR). The legislation makes it illegal for businesses to import deforestation-linked commodities into the European Union and means coffee traders and roasters will need to prove their products have not contributed to deforestation anywhere in the world after 31 December 2020.
For coffee businesses and farmers that rely on access to the EU market, the ramifications of EUDR are substantial. According to the European Commission, the EU accounts for nearly a third of global coffee consumption, importing 2.7 million tons of coffee in 2023 from non-EU countries with a value of €10.6bn ($2.7bn). Businesses that do not comply with EUDR face fines of up to 4% of their coffee turnover, while some producers could face being cut off from the EU market.
EUDR was originally set to take effect in December 2024. However, after compliance concerns were raised by prominent groups, including the European Coffee Federation (ECF) (which represents major brands, such as
Lavazza,
illy,
JDE Peet’s,
Nestlé and
Starbucks) and the
International Coffee Organization (ICO), EUDR will
now apply from 30 December 2025 for large and medium companies, and from 30 June 2026 for micro and small enterprises.
“Poverty is a root cause of deforestation”
Peter Dupont, Head of Sourcing & Sustainability, Coffee Collective
The importance of EUDR
Advocates of EUDR say the legislation is an important step towards limiting deforestation and making businesses accountable for their supply chains.
David Browning, CEO of sustainability auditor Enveritas, is highly supportive of the regulation as forests play vital roles in supporting biodiversity, carbon sequestration, water quality and have a direct climate impact.
“Finding ways to protect the world’s forests benefits both our planet and our children’s future,” Browning says, adding that EUDR and the geo-mapping technology developed by Enveritas has “given rise to a genuine and unique opportunity to eliminate deforestation in the coffee sector. This can be done in a way which fulfils the aspirations of the EU and its citizens, while also protecting the livelihoods of millions of coffee growers at origin.”
According to Peter Dupont, Head of Sourcing & Sustainability at influential Danish specialty coffee roaster and café group,
Coffee Collective, “EUDR is a fundamentally good and important regulation seeking to improve sustainability in relevant sectors, including coffee.”
Dupont also notes the legislation goes beyond climate change to address economic and social concerns that coffee farmers face. “Article 50 in the EUDR introduction chapter states that higher prices should be paid to coffee producers, in particular smallholders, since poverty is a root cause of deforestation. This point is too often neglected but is crucial,” he says.
“Stakeholders have not been able to prepare for the regulation with certainty”
Neumann Kaffee Gruppe
Smallholder coffee farmers produce 70-80% of the world’s coffee supply, yet an estimated 75% live in poverty. For these farmers, clearing forests to increase coffee cultivation is often a sure way to boost income. However, EUDR could compel governments to enhance supply chain transparency and ensure farmers receive a fairer price, meaning they would be more inclined to focus on quality rather than expanding production.
Dupont also emphasises that EUDR makes EU companies purchasing coffee responsible for traceability and compliance with national legislation in countries of origin, where enforcing environmental and labour laws is often difficult.
“This marks an important shift from the last decade’s attempts to bring sustainability by creating long supplier codes of conduct based on each company’s interpretation of what is sustainable. Instead, we now need to support local legislation in producing countries. In many coffee-producing countries, good legislation on land entitlement, working conditions and environmental protection already exists, but implementation and enforcement is often challenging,” he says.
A palm oil plantation encroaching on pristine forest at an undisclosed location in 2023 | Photo credit: Jonas Gruhlke/Shutterstock
Challenges and concerns
While EUDR has the potential to address the thorny issues of deforestation and poverty in coffee-growing communities, concerns persist among both producers and their EU trading partners.
Neumann Kaffee Gruppe (NKG) is one of the world’s largest green coffee groups and works with exporters, importers, farmers and mills across 27 countries. According to the Hamburg-based business, many questions on EUDR implementation remain unanswered.
“We would have appreciated greater clarity from the legislator,” an NKG spokesperson said, referring to guidelines placing countries at ‘low’, ‘medium’ and ‘high’ risk of deforestation.
“Inspection samples, custom issues, SME definitions, multi-stage processing, and many more parts of the legislation are still not defined in detail. This means stakeholders have not been able to prepare for the regulation with certainty,” NKG added.
Alejandro Cadeno is Co-founder and CEO of Latin American specialty coffee exporter,
Caravela Coffee. He also highlights confusion among many farmers they work with.
“The level of understanding and communication around EUDR varies significantly across coffee growing regions. The effectiveness of information dissemination depends on collaboration among national coffee associations, co-operatives, exporters, and other stakeholders. In some areas, there’s limited understanding of EUDR, while conflicting messages have caused confusion in others. In this respect, some producers could be receiving different interpretations of the regulations from various sources, leading to uncertainty.”
EUDR could also lead to many of the world’s 12.4 million smallholder producers facing exclusion from the European market.
“We don’t anticipate a significant negative impact from EUDR”
Alejandro Cadeno, co-founder and CEO, Caravela Coffee
“For these smaller producers in the global south, EUDR and the associated increase in regulatory requirements poses a threat to market access. We fear for the variety and quality of available coffee, but also for the economic situation of the affected countries and producers. Producers risk being excluded from the EU market because of missing geo-data or administrative requirements rather than deforestation itself,” NKG said.
As EUDR mandates that companies digitally map their supply chains down to the individual plots where raw materials are cultivated, effective tracking and tracing geo-data will require tracing millions of small farms in remote areas.
Cadeno’s conversations with coffee farmers have also revealed concerns about a lack of data or verification. “Common concerns raised by producers include potential cost increases, loss of trading relationships and being flagged as ‘non-compliant’, which could negatively impact both individual farms and entire communities… In more complex supply chains with multiple intermediaries, meeting these standards becomes much harder, with the risk of miscommunication and non-compliance rising. The risks of non-compliance don’t just impact individual farms but can extend to entire communities, potentially stigmatising regions and making it more difficult for them to participate in international markets.”
With smallholder coffee farms often located in remote areas with limited transport and communications infrastructure, there is the risk that large European coffee companies will be incentivised to work with more established farms to reduce risk.
Ethiopia’s Oromia Coffee Farmers’ Cooperatives Union has already reported a reduction in European trade due to EUDR. “Roasters are moving to big, rich Brazilian farmers. It’s really shocking”, said another Ethiopian coffee trader at a World Coffee Alliance webinar in late 2023.
Meanwhile, German roaster
Dallmayr, which purchases approximately 1% of the world’s coffee supply every year, indicated in 2023 that it could significantly scale back coffee purchases from the East African nation due to EUDR.
“While well-intended and promising in theory, we fear that the practical implementation of EUDR may be detrimental to less integrated coffee sectors. It’s much cheaper and less risky under EUDR to source from large farms than to engage with the underlying deforestation drivers. The additional costs of EUDR (paperwork, geo-data, compliance with national laws) can also make working with smallholder farmers less attractive, putting them at a further disadvantage,” NKG said.
Both NKG and Coffee Collective agree that the bureaucratic challenges of EUDR will likely raise costs and cause shipping delays in the short term. “We have invested a lot of time to understand the regulation and we still have much to learn. During our annual visits with producers, we are spending longer figuring out how we can meet the obligations of EUDR. We already have full traceability on our coffee, so I guess we are a step ahead of some other companies in the sector,” Dupont says.
Coffee in hemp sacks ready for export at a warehouse in Armenia, Colombia | Photo credit: Alfredo Maiquez/Shutterstock
The path forward
While many EU businesses remain uncertain about some aspects of the legislation, it is essential to provide education and resources to help smallholder farmers better understand and effectively comply with the legislation without facing further obstacles.
As Dupont puts it: “I believe it is the responsibility of coffee businesses to help smallholders comply with the regulation. We need to reach out to them, explain what the regulation is about and how, together, we can comply with it. When EUDR is implemented, EU companies can no longer make money buying cheap coffee produced in slave-like conditions and hide behind the opaque supply chains.”
Nevertheless, Carvela’s Cadeno believes that those businesses prioritising transparency and direct trade will thrive under EUDR.
“We don’t anticipate a significant negative impact from the EUDR on our business. On the contrary, we see it as an opportunity. Businesses like ours, which have long prioritised transparency, traceability and direct relationships with coffee producers are well-positioned to thrive under these regulations,” he says.
“Our shorter, more direct supply chains make compliance easier today and ensure continued compliance in the future. Most importantly, this framework strengthens our ability to empower coffee-producing partners, enabling them to serve as role models in sustainability and responsible sourcing. It also creates deeper connections with coffee roasters and consumers who value ethical, highquality coffee,” Cadeno adds.
With the climate crisis threatening the viability of coffee production globally, tackling deforestation is vital to build a sustainable and climateresilient future. As the world’s first comprehensive strategy to tackle commodity-linked deforestation, EUDR is an ambitious roadmap for the coffee industry that ensures greater accountability across the supply chain – especially for coffee traders and roasters.
“A genuine and unique opportunity to emiminate deforestation in the coffee sector”
David Browning, CEO, Enveritas
However, with coffee supply chains often mired in complexity, there is the real risk of unintended negative consequences for the world’s most vulnerable smallholder coffee farmers who rely on EU market access.
Notably, the exemption of soluble coffee from the rules remains an important oversight that is difficult to justify and many businesses continue to raise legitimate concerns about compliance and business continuity.
Ultimately, the EU has listened to the concerns of the coffee industry and other commodity traders by
implementing a 12-month postponement of EUDR. Legislators in Brussels can learn much from the sourcing expertise of coffee companies, particularly those pioneers of direct trade and transparency who have worked tirelessly to embed sustainable and ethical principles into their operations.
Their continued cooperation presents an unprecedented opportunity to preserve the world’s forests for future generations.
This article was first published in Issue 22 of 5THWAVE magazine.
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