There is something mysterious about how coffee beans become products. From remote farms and steep hillsides, weighed, graded and standardized products reach global markets. This journey, like much global trade, is often opaque. As the 19th-century Dutch novelist Eduard Dewes Dekker, better known as Multatulli, pointed out in his anti-colonial masterpiece Max Hubler, to find out what’s going on in the world, you have to be a coffee broker. Must be.
That is, unless you are in the European Union. With ambitious plans to combat deforestation, the company wants to know “what’s going on” in growing coffee, as well as cocoa, rubber, soybeans, beef, palm oil and timber. The EU Deforestation Regulation (EUDR), which will come into force sometime before the end of 2025, will require companies importing these products to trace back the origin of their products. This means locating millions of farms across multiple continents, making it an exercise in world mapping.
There is something mysterious about how coffee beans become products. From remote farms and steep hillsides, weighed, graded and standardized products reach global markets. This journey, like much global trade, is often opaque. As the 19th-century Dutch novelist Eduard Dewes Dekker, better known as Multatulli, pointed out in his anti-colonial masterpiece Max Hubler, to find out what’s going on in the world, you have to be a coffee broker. Must be.
That is, unless you are in the European Union. With ambitious plans to combat deforestation, the company wants to know “what’s going on” in growing coffee, as well as cocoa, rubber, soybeans, beef, palm oil and timber. The EU Deforestation Regulation (EUDR), which will come into force sometime before the end of 2025, will require companies importing these products to trace back the origin of their products. This means locating millions of farms across multiple continents, making it an exercise in world mapping.
But unlike maps, EUDRs also change the landscape they depict. It will change the practices of multinational buyers, the daily operations of intermediaries, and the workflow at rural stations where crops are collected and processed. Adoption challenges are perhaps greatest, particularly in Africa, where coffee and cocoa tend to be grown by millions of smallholder farmers rather than on commercial plantations. For African producers at one end of a highly unequal system, the new era of ‘traceability’ could hinder access to European markets, but they may also be able to use it to their advantage.
The EU is both a voracious consumer of tropical products and a trading center for them. The region imports about a third of the world’s coffee and half of its cocoa. In effect, Brussels can rewrite the rules for farmers around the world by simply tweaking its own requirements.
The EUDR is doing just that, banning the import of seven forest products grown on deforested land from 2020 onwards. Trase, a non-profit organization that tracks deforestation and commodity trade, estimates that imports of these goods from the EU will decline between 2019 and 2021. Every year, 736 square miles of forest are deforested around the world, an area more than 10 times the size of Brussels. (Other methods using high-resolution satellite imagery yield different estimates.) About 34 percent of that deforestation comes from cocoa, 19 percent from palm oil, and 13 percent from coffee. .
To prove that a product is genuine, importers must provide geolocation data about the country of origin (single coordinates for small farms, polygons for large farms). That information can be cross-referenced with satellite imagery to determine if trees have been cut down. The regulation also applies to land that has been legally deforested under national law, and importers who violate the rules could be fined up to 4% of their EU turnover. This is a key part of the EU’s plan to achieve carbon neutrality by 2050.
The regulation was originally scheduled to take effect at the end of this year. But that deadline was criticized as unrealistic by industry groups, the United States, several countries in the Global South and even most EU member states. In early October, the European Commission proposed an additional preparation period until the end of 2025. The proposal will now be considered by the European Parliament and the European Council.
Seatini, a Ugandan NGO working on trade issues, called the postponement “good news”, but the prospect of a postponement is worrying many activists. Human Rights Watch said this was “bad news” for the rights of forests and the people who live in them. Activists from the NGO Fern said the commission had “succumbed to constant pressure from companies and countries who had known for years that the regulations were coming but had not adequately prepared”. . Some major chocolate companies, including Nestlé and Mars Wrigley, have opposed the postponement, warning that it would jeopardize investments they have already made in preparation.
However, no matter how long it takes, traceability will be achieved. This is a significant change for rural Africa, which supplies around 85% of the EU’s cocoa imports and 13% of its coffee imports. Many multinational buyers operating there still do not know exactly where their products are grown.
One reason for this is that it is generally not profitable for companies to pursue traceability, except for specialty products such as high-end coffee, for which consumers pay a premium. Furthermore, many African governments do not have good records on land ownership and struggle to stop large-scale smuggling of cash crops across their borders.
But the deeper explanation lies in the wave of reforms that reshaped the way Africa’s cash crops were traded. During and after World War II, states typically established marketing boards that were the only organizations authorized to export crops such as cocoa and coffee. They were often poorly run and paid farmers little, but they did give some structure to the marketing of their produce. 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, have undertaken careful reforms to their marketing boards while retaining many of their functions. Other countries, such as Uganda, have also entered the free market head-on.
The result is a system in Uganda where coffee is traded through layers of intermediaries and then sold to foreign export companies. “Reforms in the early ’90s created a highly decentralized and completely deregulated value chain,” said Robert Byaruhanga, president of the Uganda Coffee Federation, an industry group. “When you get your coffee, you have no idea where it came from.”
Supply chains vary from country to country, but it is generally true that more intermediaries reduce transparency. Justin Archer, head of sustainability at Geneva-based multinational coffee distributor Scafina, said: “Every time[coffee]changes manufacturers, we lose a little bit of visibility into where that coffee comes from. It will happen,” he said.
Another country where coffee passes through multiple layers of middlemen is Ethiopia. Gizat Worku, general manager of the Ethiopian Coffee Exporters Association, said it may take two years to determine the geographic locations of all 5 million coffee-growing households. The issue is not that coffee is grown on deforested land, but how to prove otherwise, which small-scale producers may struggle with, he said.
Things are a little easier for West Africa’s cocoa industry. The industry has been working on traceability for some time, motivated in part by concerns about child labor. Ghana and Cote d’Ivoire, which together account for more than half of the world’s cocoa exports, have both established national traceability systems, which are expected to begin operation soon. This is a major undertaking. For example, a recent study in Ivory Coast found that as of 2019, less than half of the country’s cocoa beans could be traced to origin using public data.
The EU has announced an initial package of around $78 million to help countries build deforestation-free value chains, but companies and cooperatives pay most of the cost of mapping farms, and countries Only ad hoc adjustments are being made by the government. Several countries, including Ethiopia and Uganda, are trying to get the EU to introduce a “territorial approach” that would declare large areas free of deforestation without having to identify the geographic location of individual farms. The method, developed by the nonprofit organization Enveritas, combines deep learning models with high-resolution satellite imagery.
Compliance with the EUDR means more work for farmers. For example, Obed Owusu-Addai of the Cocoa Platform, a civil society in Ghana, said many farmers grow crops in several different fields and need to store beans from each field separately. That might mean harvesting from different fields on different days or using separate drying mats. He supports the EUDR and believes it is essential for the future of cocoa farming, but worries that farmers will get “nothing” for the extra work.
Others in East Africa’s coffee industry take a more pessimistic view. One Ethiopian sector leader, speaking on condition of anonymity, said the EUDR was a “disaster” for farmers. If implementation is cumbersome, trade could tilt toward countries such as Brazil, where large farms are ready to map their fields and commercial plantations are more prevalent.
Despite widespread concerns, many African farmer representatives are hopeful that the EUDR’s traceability requirements will make supply chains a little more fair. In July, a platform representing 120 civil society and farmers’ organizations in Ivory Coast and Ghana sent a letter to the EU supporting the regulation.
Supply chains are currently rife with harsh practices, from the use of fraudulent scales by intermediaries (a way of paying farmers less than their produce sold) to paying below mandated minimums. . Farmers from Uganda to Ivory Coast claim they’ve been ripped off, but exporting companies, usually subsidiaries of large multinationals, often turn a blind eye to wrongdoing by the intermediaries they buy from. . Their ignorance about their supply chain allows them to wash their hands of responsibility.
In Ivory Coast, for example, farmers complain that pistères (men on motorcycles and trucks who buy cocoa) are cheating them out of promised sustainability premiums or paying them less than the government-mandated minimum wage. is leaking. The country’s regulators are trying to solve this problem by introducing direct electronic payments alongside new traceability systems. These documented transactions make it difficult for intermediaries to bend the rules.
“Many farmers see (the EUDR) as an opportunity to sell their cocoa at a guaranteed price,” said Bacary Traore, executive director of the Ivorian nonprofit Initiative for Regional Development and Forest Protection. said. Pressure from the EUDR has also accelerated national efforts to develop traceability systems.
The EUDR will not change the global power imbalance between smallholder farmers and multinational traders. But at the local level, it could bring about the most profound changes in the way Africa trades coffee and cocoa in decades. If successful, it could shorten the supply chain and increase accountability a bit. If done poorly, they could impose burdensome rules on farmers and drive small farmers out of the market altogether. Farmers should not have to pay a price for protecting forests.
