Europe Faces Coffee Shortage as Deforestation Rules Lack Clarity

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The European Union is facing the prospect of a coffee shortage in 2025 as the market grapples with a lack of clarity around the implementation of deforestation regulations, according to the International Coffee Organization.

The EU agreed late last year to set mandatory rules for companies selling a raft of commodities including coffee, palm oil and cocoa to ensure products do not come from deforested land. However, ICO Executive Director Vanúsia Nogueira says there are still “many doubts and questions without answers yet.”

The rules entered into force at the end of June and most companies will have until the end of 2024 to comply with the measures, which require sophisticated tracking systems and will be enforced using the threat of fines. Critics say the regulations will penalize millions of smaller farmers from Asia to Africa.

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The “EU may not get enough coffee” in 2025 if answers on the implementation of rules aren’t properly provided, Nogueira said on the sidelines of a conference in Ho Chi Minh City, Vietnam. “The new deforestation regulations are our biggest priority and a major challenge for next year.”

Nogueira says coffee producers in Africa and Central America could be most vulnerable to the deforestation regulations, with Europe accounting for as much as 80% of total shipments for some. The EU is the world’s biggest importer of beans, according to the US Department of Agriculture.

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For companies seeking to send commodities to the EU, they must show that the products weren’t produced on land that was deforested or degraded since Dec. 31, 2020. Importers must collect data identifying the plots of land where commodities are grown, which will be checked off against historical land-use information.

The Indonesian Palm Oil Association said last month that the regulations were contributing to increased uncertainty in the market, while Vietnamese coffee exporter Simexco Dak Lak this week said the rules “are not clear at all.”

“We don’t know what type of map the EU will use,” said Le Duc Huy, general director of Simexco, Vietnam’s third-largest exporter. “We heard about geo-location requirements but we don’t know how to make declarations, how to do the traceability and how they will check against our data.”

–With assistance from Eko Listiyorini.

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