European Union Deforestation Regulations

06 October 2023

In recent months, the coffee industry has been abuzz about the European Union Deforestation Regulation (EUDR), a new legislation that aims to prevent deforestation in global supply chains. 

The legislation is poised to change coffee in Europe, and potentially globally. As such, we’ve been following the developments of EUDR with close attention. 

But what is EUDR? How will it affect you? And what will be the impact on coffee in the future?

Here is a summary of what we know and what to expect. 

What is EUDR?

The European Union Deforestation Regulation is a new piece of legislation which will reform the existing European Union Timber Regulation (EUTR). The EUDR aims to identify, address, and report on deforestation risk in global supply chains. 

EUDR applies to seven commodities: coffee, cocoa, soya, palm oil, rubber, cattle and wood, and many derived products such as leather, books and, importantly for us, roasted coffee.

The new legislation will ensure goods imported into and exported from the EU do not result from recent deforestation, forest degradation or breaches of local environmental and social laws. 

The European Commission expects the new rules will:

“Avoid that the listed products Europeans buy, use and consume contribute to deforestation and forest degradation in the EU and globally
Reduce carbon emissions caused by EU consumption and production of the relevant commodities by at least 32 million metric tonnes a year
Address all deforestation driven by agricultural expansion to produce the commodities in the scope of the regulation, as well as forest degradation”

The EUDR defines deforestation as “conversion of forest to agricultural use” and designates recent as “after 31 December 2020”. Therefore, any of the goods listed above grown on land converted from forest to agriculture from 1 January 2021 will not be able to be imported into the EU. 

What does EUDR mean for coffee?

Fundamentally, the EUDR stipulates that all coffee imported into or exported from the EU must be:

Deforestation-free
Produced in line with the relevant legislation of the country of production
Covered by a due diligence statement indicating no more than a negligible risk of non-compliance

How are companies to prove this? 

The EUDR sets out a pathway for companies to conduct due diligence that involves three steps. 

1. Collect additional information on products

Data collection will include info such as the description of goods, tariff code, quantity (kg), country of production and buyer and seller details. However, the data requirements also specify that each coffee be traceable to the farm(s) that produced it through geolocation data. If the farm is under 4 hectares, one data point is enough to cover this. Farms over 4 hectares will need a polygon of 3 or more vertices. Other information includes verifiable confirmation that the product was produced in line with the legislation of the country of production.

2. Carry out a Risk Assessment

Farm geolocation data will be used to map risks using satellite technology. Risk assessments must be carried out for each product to identify non-compliance risks with the EUDR, which will be measured through risk categorisation of the country of production (yet to be published by the EU Commission). Risk categorisation will label producing countries as ‘high risk’, ‘standard risk’ or ‘low risk’. 

3. Mitigate Risks 

Once identified, companies must mitigate any risks in their supply chains. This work could include gathering more data and working directly with suppliers or independent auditors. 

Who does EUDR apply to?

A key difference between the EUTR and EUDR is the reversal of the “Burden of Proof”. Whereas in the EUTR, the burden of proof of non-compliance rested with the national authorities, for the new EUDR, the burden of proof rests with the “Operator” bringing goods into the EU. This means it is the obligation of the company placing goods onto the EU market to prove they are deforestation-free. Companies that do not comply may face a penalty of up to 4% of their turnover in the EU. 

For most cases in green coffee, the “Operator” would be an importer such as DRWakefield. However, for roasters sourcing and importing coffee directly from producers, the responsibility would lie with them. 

The regulations will apply if you are a roaster shipping roasted and/or ground coffee into Europe. However, interestingly, they won’t for soluble coffee. 

Importantly, if you purchase green coffee from DRWakefield, EUDR compliance will be covered for all coffee we import into the EU after the legislation kicks in. 

When does EUDR come into force?

The bill for the European Union Deforestation Regulations passed in December 2022, and the legislation entered into force on 29 June 2023. 

We are currently in an 18-month transition period, with the main legislation aspects kicking in for large companies on 29 December 2024 and for SMEs on 29 June 2025. 

The crucial date is 29 December 2024, the deadline for coffee entering the EU to be EUDR compliant. 

Do the regulations apply to the UK?

Not yet. The UK government are still to announce their plans on deforestation legislation. However, any UK legislation is expected to mirror that of the EU Commission. 

How will EUDR shape coffee in the future?

We are gradually learning more about the EUDR as the legislation continues to take shape. How the regulations will impact the coffee industry, however, has yet to be determined. 

Producing countries have voiced their opinions on how the regulations may increase the burden and cost on already struggling producers. Exporters and importers will also face administrative costs for implementation and data collection. Where will these costs be absorbed in the supply chain?

This is one of many pertinent questions looming over the legislation.

Will the EUDR deter exporters from sending coffee to the EU?
Will we see a two-tier market between Europe and the rest of the world?
Will there be enough compliant coffee to meet EU demand?
What happens to coffee in bonded warehouses before December 2024 but placed on the EU market in 2025?
How will this all affect the coffee market?

Only time will tell. 

For the moment, what we do know is that the EUDR will change the way we work in coffee. And, with such a tight deadline before the regulations come into effect, the EU Commission and the coffee industry both have a lot of work to do.

For ourselves at DRWakefield, we’re already working on finding the right solution for us and our supply chain, ahead of gathering the relevant data and do our due diligence to become compliant in time for next year. Our primary objective is to continue our supply chain relationships as best we can and support our supplier network through the transition. 

We will continue sharing details as we learn more. We’ve shared some useful links at the bottom of this article, where you can find more information on the EUDR. 

If you’d like to learn more about EUDR or have any questions, don’t hesitate to contact the Trade Team. 