How EU deforestation laws are changing the world of coffee

Le Van Tam is well aware of how the vagaries of global trade determine the fate of small coffee farmers like him.

He planted his first coffee in 1995 on land on the outskirts of Buon Ma Thuot city in the central highlands of Vietnam. For many years, his focus was on quantity, not quality. Tam used large amounts of fertilizers and pesticides to increase yields, and world prices dictated his performance.

And in 2019, he teamed up with Le Dinh Thu of Aeroco Coffee, an organic exporter to Europe and the US, to adopt more sustainable methods and transform his coffee fields into sun-dappled forests. I changed. Coffee grows alongside tamarind trees, providing nitrogen to the soil and supporting black pepper vines. Grass helps keep the soil moist, and the mix of plants prevents pests. Thanks to the pepper, Tam’s income has also increased.

“The production volume has not increased, but the value of the product has increased,” he said.

In the 1990s, Tam was among thousands of Vietnamese farmers who took advantage of soaring global prices to plant more than 1 million hectares of coffee, mainly Robusta. By 2000, Vietnam became the second largest producer of coffee, accounting for one-tenth of its export earnings.

Vietnam hopes farmers like Tam will benefit from stricter European laws to stop deforestation that could recalibrate the way coffee is traded.

The European Deforestation Regulation (EUDR) will ban the sale of products such as coffee from December 30, 2024, unless companies can prove they are not linked to deforestation. The new rules are broad in scope and apply to cocoa, coffee, soybeans, palm oil, timber, rubber and cattle. To sell these products in Europe, large companies will need to prove that they come from land that has not been deforested since 2020. Small and medium-sized enterprises must certify by July 2025.

Deforestation is the second largest source of carbon emissions after fossil fuels. According to the World Wildlife Fund’s 2021 report, Europe ranked second after China in terms of the amount of deforestation caused by imports in 2017. Helen Belfield, policy director at Global Canopy, said in an interview with The Associated Press that if the EUDR is successfully implemented, especially if stricter standards for tracing the origin of products become the “new normal.” said it has the potential to alleviate this problem.

It’s not failsafe. Companies would simply sell products that do not meet the new requirements elsewhere, without reducing deforestation. Thousands of small farmers who cannot provide potentially expensive data could be left behind. Belfield said much will depend on how countries and businesses react to the new law. Countries should support smallholder farmers by creating national systems to ensure that their exports are traceable. Otherwise, companies may end up only buying from very large farms that can prove they are compliant.

Orders for Ethiopian coffee are already declining. And Peru does not have the capacity to provide the necessary information for coffee and cacao grown in the Peruvian Amazon.

This overlaps with other challenges in Vietnam, such as worsening drought and declining groundwater levels.

“There will be winners and losers,” she said.

Vietnam cannot afford to lose. Europe is the largest market for Vietnamese coffee, accounting for 40% of Vietnam’s coffee export volume. Six weeks after the EUDR was approved, Vietnam’s Ministry of Agriculture launched an initiative to prepare coffee-growing regions for the transition. It has since rolled out a national plan that includes a database of where crops are grown and a mechanism to make this information traceable.

According to an August 2023 USDA communiqué, the Southeast Asian country has long viewed laws like the EUDR as “inevitable change” to promote more sustainable farming practices. Agriculture Minister Le Minh Hoang said the EUDR could help accelerate such transformation.

Tam and his export partner Too quickly adapted.

Even if the cost is higher, you can still get high-quality coffee at a better price, Tu said.

“We have to choose the best quality, or we’ll be workers forever,” Tu said while drinking his favorite coffee at his coffee processing factory next to Tam’s farm. “It will be,” he said. This is where trucks loaded with red Robusta and Arabica coffee cherries arrive from other farms, where the pulp is removed and the coffee beans are laid out on tables to dry in the sun.

Tu has already obtained a certificate from an international organization on sustainability that allows him to deal with the EUDR. David Hadley, director of regulatory impact programs at the Costa Rican nonprofit Preferred by Nature, said such certificates typically address deforestation issues, but may require some adjustments. He said there is.

Enabling Vietnam’s roughly 500,000 smallholder farmers, who produce about 85% of coffee, to collect and provide data to show that their farms are not causing deforestation remains a challenge. Some people may have trouble collecting location information using their smartphones. Lorne Lee of International Economics Consulting said small exporters need to set up systems to prevent other uncertified products from being mixed with coffee that meets EUDR requirements.

Farmers will also need documentation proving compliance with national laws on land use, environmental protection and labor, Lee said. Additionally, coffee’s long value chain, from bean production to collection and processing, requires digital systems to ensure error-free records.

Global Canopy’s Belfield said Brazil, the world’s largest coffee producer, has a relatively well-organized supply chain, as coffee is grown on plantations further away from forests. , said it was in a favorable position. Additionally, a 2024 Brazilian study found that Brazilian coffee is most likely to meet EUDR requirements. The reason is that much of it is exported to the EU, and there are few small-scale farmers in Brazil, and about one-third of the coffee-growing area is already exported to the EU. It’s for a reason. Some kind of sustainability certification.

The EUDR acknowledged concerns by giving less prepared suppliers more time, and said European governments should work with affected countries to “pay particular attention to the needs of smallholders and indigenous communities.” “It will enable the transition.” The 2028 review will also examine the impact on smallholders.

“Nonetheless, it is still expected to be costly and difficult for smallholder communities,” she said.

According to a study on the impact of the EUDR by the Amazon Business Alliance, a joint initiative with Canada’s USAID, in Peru, given the weak national institutions and the fact that most farmers do not have land ownership rights, Gathering information on hundreds of thousands of smallholder farmers has proven difficult. and the nonprofit organization Conservation International.

Ethiopia, where coffee accounts for about a third of its total export earnings, has been slow to respond, according to a U.S. Department of Agriculture report. Gizat Worku, chairman of the Ethiopian Coffee Exporters Association, said the national plan launched in February 2024 will fundamentally address how to collect the necessary data from millions of smallholder farmers and provide that information to buyers. He said that the problem had not been resolved.

“That requires tremendous resources,” he said.

Gizat, who like many Ethiopians goes by his first name, said orders have declined due to doubts about the country’s ability to comply with the EUDR. He said some traders are considering switching to other markets, such as the Middle East and China, where Ethiopian coffee is “booming”. But switching markets is not easy.

“These regulations will have a huge impact,” Guizat said.