The European Union’s new law, the EU Deforestation Regulation (EUDR), set to be enforced by late 2024, is causing ripples in the coffee industry. Importers in the EU are pulling back orders from small farmers in places like Ethiopia due to the law banning goods tied to deforestation, a major cause of climate change. This shift in buying patterns might harm small-scale farmers and raise prices for consumers in the EU. Moreover, it risks undermining the intended impact of the law on forest conservation.

Companies like Dallmayr, a German roaster, foresee difficulties in buying Ethiopian coffee in significant quantities because the beans they purchase now must comply with the future law, even before its finalization. The law requires importers to prove that their commodities, like coffee, cocoa, soy, and others, did not originate from deforested areas or face fines. This digital tracing of supply chains down to small farms is challenging, particularly in remote regions with poor internet access and complex land ownership issues. While the EU aims to assist producing countries and small farmers in complying with the law, there are concerns about its feasibility. Some major producers, like Ivory Coast and Ghana, might face difficulties due to their reliance on local intermediaries and the law’s impact on protected forests. Redirecting goods to non-EU markets and the segmentation of supply chains might reduce the law’s effect on forest conservation and lead to increased food prices within the EU. Overall, the EUDR’s implications are complex, involving economic, environmental, and social considerations. It is presenting challenges for small farmers and importers while aiming to curb deforestation linked to global trade in various commodities.