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Coffee firms turning away from Africa as EU deforestation law looms

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on Reuters or enjoy below:

🗞️ Driving the news: As the European Union prepares to enforce a new law banning the sale of goods linked to deforestation, coffee importers are reducing purchases from African smallholders
• The EU Deforestation Regulation (EUDR), effective from late 2024, requires proof that goods do not originate from deforested land, leading to a decline in orders for Ethiopian coffee

🔭 The context: The EUDR demands stringent tracking of supply chains, posing significant challenges for companies
• This involves mapping supply chains digitally to the plot level, often in regions with limited internet access and complex socio-political dynamics
• The law's complexity and the difficulty of compliance are reshaping sourcing strategies, with some companies considering excluding smaller producing countries

🌍 Why it matters for the planet: Deforestation is a major cause of climate change, second only to fossil fuel burning
• The EUDR aims to combat this by ensuring EU imports are not linked to deforestation
• However, the shift in sourcing strategies might undermine the law's intent by diverting non-compliant goods to non-EU markets, potentially continuing deforestation practices elsewhere

⏭️ What's next: Some major companies plan to create segregated supply chains to comply with the EUDR, while others may redirect non-compliant materials to markets outside the EU
• The law is expected to raise food prices within the EU, as compliance costs are integrated into the supply chain

💬 One quote: "Nowadays from Europe no one is interested in our coffee," (Representative from Ethiopia's Oromia Coffee Farmers' Cooperatives Union)

📈 One stat: Coffee accounts for 30-35% of Ethiopia's total export earnings, with almost a quarter sold to the EU

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