The EU Reaches Agreement to Ban Imports of Coffee from Countries Contributing to Deforestation

On the 6th of December, 2022, the EU reached an agreement to ban the import of products in cases where supplying countries are deemed to contribute to deforestation. According to the European Commission, products such as coffee, soy, and cocoa are the main drivers of deforestation owing to agricultural expansion. The EU aims to reduce a considerable share of global deforestation and forest degradation, lowering greenhouse gas emissions and biodiversity loss. EU importers will have to prove traceability via crop geolocation data, proving that their supply chains do not contribute to deforestation before selling their products in the EU. Since the EU is a leading consumer of coffee products, this move is expected to cause a major shift in global coffee trade.

The country that could be most affected by the ban is Brazil, the leading coffee supplier to the EU. According to Les Echos – Le Parisien Group, a leading French media company, the country deforested 4,000 square kilometres during the first six months of 2022, 10.6% more than in 2021, and the highest on record since 2016. The South American nation has the largest market share in Germany, Belgium, Italy, and Spain, exporting over USD 2.17 billion to the four destinations last year, accounting for 37% of Brazil’s total coffee shipments. Brazilian coffee exporters may need to divert their shipments to alternative markets such as Thailand, taking advantage of the Robusta coffee boom in the Southeast Asian country.

Major coffee producers, such as Vietnam, Indonesia, and India, have all been accused of deforesting land to facilitate the expansion of their coffee crops. However, in recent years, these countries have made strides in tackling the issue, which could allow them to take advantage of Brazil’s possible reduced market share in the EU in 2023. In Indonesia, leading coffee growers agreed not to plant coffee in Bukit Barisan Selatan National Park and other sites to preserve the nature and wildlife in these areas. In India, producers have developed a complex shade system, allowing coffee plants to be intercropped with tall timber-generating trees, thereby preserving the forest. Similar strides have also been made in Vietnam, where the government halted the cutting of upland hill country forests, and implemented laws to ensure the conservation of resources, decrease erosion, and the protection of the habitat.

According to François Rotteleur, an Engagement Manager for Tridge in France, the agreement set by the EU could have major ramifications in the coffee trade in 2023. Rotteleur also stated that review clauses are planned in the coming years to extend the agreement to cover wooded systems other than forests and to products such as corn.