Why the Coffee Industry Wants the EUDR Deadline Moved

The European Coffee Federation sent a letter to the European Commission asking it to postpone the EU Deforestation Regulation, or EUDR, which is set to apply to large companies on December 31, 2024. The federation warns that geographic tracking and due diligence rules could place a heavy burden on millions of smallholder farmers who depend on the EU export market.

The federation's members include Lavazza, Illy, JDE Peet's, Nestlé, Starbucks, Ecom, Ofi and NKG, so the request carries weight across the coffee industry. The regulation, introduced in June last year, covers coffee and cocoa. Companies that cannot complete due diligence face financial and market penalties, and analysts expect compliance costs to be passed along the supply chain.

The European Union's deforestation-free regulation (EUDR), introduced in June last year, is facing strong backlash from the coffee industry. The European Coffee Federation (ECF) recently sent a letter to the European Commission requesting a postponement of the implementation deadline originally set for the end of 2024 for large companies, warning that the regulation could impose an unbearable burden on millions of smallholder farmers. ECF members include giants such as Lavazza, Illy, Nestlé, and Starbucks, and their joint letter directly points to inadequate regulatory preparation. Meanwhile, companies like JDE Peet's have already begun taking action, but analysts worry that the pass-through of compliance costs will disrupt the coffee market. This article will sort out the sequence of events and include relevant observations from Front Street Coffee.

In June last year, the European Union introduced a regulation called the EU Deforestation Regulation (EUDR), stipulating that no individual or company may sell products linked to deforestation on the EU market, with coffee and cocoa among those included. However, this measure has sparked considerable controversy during its rollout.

According to a recent Bloomberg report, the European Coffee Federation (ECF), an influential trade organization in the European coffee industry, has sent a letter to the European Commission requesting a delay in implementing the new EU Deforestation Regulation (EUDR). The letter was addressed to the President of the European Commission. In the letter, ECF warned that the law currently scheduled to take effect on December 31, 2024 for large European companies will face enormous difficulties in practical operation, especially for millions of small-scale growers for whom the EU is a crucial export market.

ECF's member companies cover the vast majority of coffee companies entering the European market, including coffee industry giants such as Lavazza, Illy, JDE Peet's, Nestlé, and Starbucks, as well as well-known coffee traders such as Ecom, Ofi, and NKG.

ECF pointed out that once EUDR is fully implemented, European coffee companies that fail to meet legal requirements and cannot complete due diligence and reporting obligations related to forest coffee in their coffee supply chains will face financial and other market-level penalties. This pioneering law requires geographic tracking of coffee, aiming to prevent traders from sourcing coffee produced on land that underwent deforestation after December 30, 2020.

Many coffee industry analysts and producer rights organizations warn that although the EU regulation has good intentions, it may bring unexpected negative effects, especially affecting smallholder farmers who lack compliance capacity. This view echoes the content of ECF's letter to the European Commission, which also questioned the preparedness of the EU authorities.

Recently, affected by the EUDR regulation, multiple countries and traders have successively taken countermeasures, including some ECF member companies. For example, JDE Peet's previously jointly announced a comprehensive deforestation-free supply chain plan with Enveritas. In addition, to meet the needs of the coffee industry, third-party verification bodies have also launched new initiatives related to EUDR, such as the Intercontinental Exchange (ICE) compliance solution and Fairtrade International's updated coffee sustainability standards.

According to a warning issued last September by a coffee sustainability analyst at the latest edition of the Coffee Barometer, the European coffee industry is not yet fully prepared to comply with the EU development strategy, and many companies are insufficiently equipped to meet the scale of mandatory requirements. Although traders and retailers within the EU bear clear legal compliance responsibilities, industry participants, in order to continue accessing the European coffee market, tend to pass costs, obligations, and administrative burdens downward to smallholder farmers, which will adversely affect the most vulnerable workers in the coffee chain. In the long run, it may also trigger a series of chain problems such as disorder in the coffee market and rising coffee prices.

The above content is compiled by CoffeeHunters, a coffee news website.