EUDR's Impact On Coffee, Cocoa Farmers In Africa And Global Trade – CoffeeTalk

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The European Union (EU) is implementing the EU Deforestation Regulation (EUDR) to combat deforestation and ensure the traceability of coffee beans, cocoa, rubber, soy, beef, palm oil, and timber. The EUDR requires companies importing these products to trace them back to their fields, which involves geolocating millions of farms across several continents. This process is an exercise in mapping the world, but it will also change the landscape it describes, altering the practices of multinational buyers, middlemen, and workflow at rural stations where crops are collected and processed.

The challenge of implementation is particularly significant in coffee and cocoa, especially in Africa, where these crops are grown by millions of small farmers rather than on commercial plantations. The new era of “traceability” could disrupt access to European markets for African growers, but they might be able to use it to their advantage. The EU is both a voracious consumer of tropical commodities and a hub for their trade, importating around a third of the world’s coffee and half of its cocoa. In effect, Brussels can rewrite the rules for farmers the world over simply by tweaking its own requirements.

The EUDR prohibits imports of seven forest-related commodities if they have been grown on land that was deforested since 2020. Between 2019 and 2021, EU imports of those products accounted for 736 square miles of worldwide deforestation annually, with 34% coming from cocoa, 19% from palm oil, and 13% from coffee. Importers must provide geolocation data on their origin to prove their goods are legitimate, and breaking the rules can result in fines up to 4 percent of their EU turnover.

The regulation was originally due to enter into force at the end of this year, but it was criticized as unrealistic by industry associations, the United States, several countries in the global south, and most EU states. In early October, the European Commission proposed an additional year of preparation time until the end of 2025, a suggestion that will now be considered by the European Parliament and Council. Some major chocolate companies, including Nestlé and Mars Wrigley, oppose a delay, fearing it would jeopardize investments they have already made in preparation.

Traceability is a crucial shift in the way African coffee and cocoa are traded, particularly in rural Africa. Many multinational buyers operating there still do not know exactly where their goods are farmed, which is due to the lack of profitability for companies to pursue traceability, except for specialty products like high-grade coffees. Many African governments do not have good land ownership records and struggle to prevent large-scale smuggling of cash crops across their borders. The deeper explanation lies in the waves of reform that reshaped the way cash crops in Africa are traded. During and after World War II, states created marketing boards, which were usually the only entities allowed to export crops such as cocoa and coffee. They were often badly run and paid farmers little but gave some structure to agricultural marketing. In the 1980s and 1990s, this system was dismantled, often at the behest of the International Monetary Fund and the World Bank. Some countries, such as Ghana, made cautious reforms, leaving many of the marketing boards’ functions intact. Others, such as Uganda, rushed headlong into the free market.

In Uganda, coffee is traded through several layers of middlemen who in turn sell to foreign-owned export companies. A recent study in Ivory Coast found that as of 2019, less than half of the country’s cocoa beans could be traced back to their area of origin using public data. The EU has announced an initial package of some $78 million to help countries develop deforestation-free value chains, but companies and cooperatives are taking on most of the cost of mapping farms, with only haphazard coordination by national governments. Several countries, including Ethiopia and Uganda, are trying to push the EU to adopt a “territorial approach” to implementation, which would declare large areas to be deforestation-free, without the need to geolocate individual farms.

Complying with the EUDR will also mean more work for farmers. For example, many farmers grow crops in several different fields and will have to keep separate the beans from each. He supports the EUDR, which he thinks is essential for the future of cocoa farming, but worries that farmers “get nothing” for all that extra work. Some in the East African coffee industry are more pessimistic, with one leader in the Ethiopian sector describing the EUDR as a “disaster” for farmers.

Despite widespread concerns, many farmers representatives in Africa are hopeful that the traceability requirements of the EUDR could make supply chains a little fairer. Platforms representing 120 civil society groups and farmers associations from Ivory Coast and Ghana wrote to the EU in support of the regulation. The EUDR will not change the global power imbalances between small farmers and multinational traders, but at the local level, it could usher in the most significant changes for decades in the way that African coffee and cocoa are traded.

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Source: Coffee Talk

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