Coffee Prices Likely to Keep Heating Up Due to ‘Terrible’ EU Rules

The EU’s deforestation rules could potentially lead to thousands of farmers’ coffee bean exports being rejected due to their production on recently deforested land. Despite the rules’ intentions to preserve forest quality and reduce deforestation’s impact on local communities, industry leaders fear they may have been poorly drafted and nearly impossible to implement in some cases.

The new rules require coffee manufacturers worldwide to use satellite coordinates to digitally map their farms and clearly highlight their boundaries to check if any land has recently been deforested. However, for farmers in key coffee-producing and developing nations, such as Brazil, Vietnam, Indonesia, and Colombia, this would be close to impossible due to the funds and technical expertise required for satellite mapping.

European roasters, such as Lavazza, believe that the upshot for business would be “terrible” and that many farmers in Central America are not ready to comply with the regulation. Farm borders in many countries are blurred, resulting in farmers not knowing the full extent of their farms exactly, making it difficult to provide the necessary information for satellite mapping.

The EU’s new regulations also create additional regulatory burdens on coffee importers, who will now have to conduct extensive checks on their export partners, such as independent audits and risk assessments. This could lead to many EU coffee roasters contemplating leaving the bloc and setting up facilities elsewhere, such as China or the US, constraining coffee supplies even more.

Coffee prices have been rising recently due to natural factors like droughts and geopolitical factors like the Red Sea crisis, adding to shipping times and supply chain backlogs. The EU deforestation rule requires operators or traders to prove that products do not originate from recently deforested land or have contributed to forest degradation. The rules aim to decrease the EU’s carbon emissions triggered by the bloc’s production and consumption of these commodities.

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