On January 1, 2025, a law comes into force that will change the world. The EUDR - the European Union Deforestation Regulation. Consumers 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. As will all further processors along the supply chain.
What does this mean for coffee producers?
How deeply does the law intervene in the supply chain, and even in privacy?
Is it a neo-colonial law?
Janina Grabs, professor at Esade Business School in Barcelona and from July 2024 professor of sustainability research at the University of Basel, puts it into perspective.
Janina Grabs in conversation with Philipp Schallberger
When does the EUDR come into effect?
The law comes into force on December 30, 2024.
Which products does the new EUDR law apply to?
The law is applied to timber, beef, cocoa, palm oil, coffee, soy and rubber.
What does the new law state?
It is a regulation at EU level that is applied uniformly throughout the EU. It affects importers, exporters or companies trading in the EU area. They must ensure that the respective supply chains are deforestation-free. They must prove this through 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 existed after the end of 2020. If forest was converted to agricultural land after the end of 2020, that is deforestation. Regardless of whether that was permitted in the producing country or not. The EU relies on the FAO definition of what constitutes forest. If coffee were imported from there, it would now be illegal.
What must companies do?
Ensure that products do not come from a risk area, or alternatively prove that their products were not produced on deforested land.
What is the idea behind it?
The EU wants to reduce imported deforestation. As a consumer country, 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 must now be proven with GPS points. It is cost-intensive and leaves little time for implementation. The EUDR was adopted in June 2023. Companies have until the end of 2024, and SMEs until mid-2025 to implement it. That is relatively little time, especially for sectors that in most cases have had little insight into their supply chains for decades.
What does this mean for producers?
Larger producer(organizations) are sometimes well prepared, smaller ones perhaps somewhat less so, unorganized, scattered producers may not be able to provide data at all. Andrew Hetzel demonstrates this clearly in this article.
Larger buyers and traders might switch to larger, institutional producer(organizations) for risk aversion reasons, or intensify their work with them. More complex supply chains may receive less attention for risk reasons. This could be a disadvantage in the first few years because many companies will not be able to make their supply chains traceable as quickly.
And now?
In theory, producing countries could sit back and say, "What are you offering us then?" says Janina Grabs. That remains somewhat theoretical, because roasters can simply switch and buy different coffee.
Who bears the costs of the transition?
This is not defined. In practice, most producers and exporters have to pay for this, but can hardly pass it on to the raw coffee price.
What must importers and companies do?
Collect data and provide a due diligence declaration, which is still unclear in its exact form (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 be able 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 were involved so late in defining 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 well institutionally set up are better prepared.
