Ethiopia’s Coffee Crisis: EU’s Deforestation Regulation Impact

by | Sep 28, 2023 | Sustainability | 0 comments

Are big coffee buyers leaving Ethiopia? Is Ethiopia’s coffee business at risk because of European rules? Why?

When I heard that Dallmayr, a well-known German coffee trader, is thinking about leaving the Ethiopian market soon, I was surprised. This news shows that many people’s worries about the EU’s new deforestation rules were right. The Swiss news outlet, Tagesanzeiger, link, says this possible move is because of the detailed tracking needs of the new European Union (EU) deforestation rules.

Dallmayr’s decision is a clear warning. If such a big coffee buyer is thinking about changing its relationship with Ethiopia, who else might do the same?

I’ve spoken to people in the industry, and they are clearly worried about these new rules. One coffee buyer told me, “Right now, we only know about the possible fines, but we don’t know when they might happen.”

The deforestation rules are part of the European Union’s plan to help the environment and people’s rights around the world. While the plan’s goal is good, it’s causing problems for some businesses.


    EU's New Regulation on Deforestation-Free Products

    The EU has introduced new regulations to ensure that products consumed by its citizens do not contribute to global deforestation or forest degradation. This move aims to reduce greenhouse gas emissions, combat biodiversity loss, and promote the consumption of ‘deforestation-free’ products.

    Key Points:

    • Effective Date: The Regulation on deforestation-free products came into force on 29 June 2023.
    • Main Concern: Agricultural expansion, driven by commodities like soy, beef, palm oil, wood, cocoa, coffee, rubber, and their derivatives (e.g., leather, chocolate, tyres, furniture), is a significant contributor to deforestation.
    • EU’s Role: As a major consumer of these commodities, the EU acknowledges its part in the problem and is taking steps to address it.
    • Regulation Details: Any business introducing these commodities to the EU market, or exporting from it, must verify that their products are not linked to recent deforestation or forest degradation.
    • Repeal: This new regulation replaces the EU Timber Regulation.
    • Implementation Time: Businesses have 18 months from 29 June 2023 to comply. Smaller businesses, including micro and small enterprises, are granted a more extended period to adapt and have specific provisions to assist them.

    Challenges Ahead: While the regulation’s intention is praiseworthy, its practical application may be difficult for many businesses, particularly those in areas with complex supply chains. The primary focus is on protecting the environment, but there are concerns about the potential negative impact on the livelihoods of countless small-scale farmers.

    Dallmayr’s withdrawal: a sign of things to come?

    Many have said that the regulations could seriously affect current business practices. “The new supply chain law might make European coffee roasters leave Ethiopia,” Sebastian Brandis from „Menschen für Menschen” (Eng: People for People) mentioned to FAZ, link.

    Before all the details of the rules are even finalised, we’re already seeing their possible effects. Dallmayr has said they’re thinking about leaving Ethiopia because “The EU wants digital tracking that Ethiopia can’t give,” according to Johannes Dengler, part of Dallmayr’s leadership team, in the Swiss newspaper Tagesanzeiger, link. Dallmayr is one of the biggest buyers of Ethiopian coffee.

    Ethiopian farmers are worried about this, thinking other companies might do the same.

    Who’s really paying the bill?

    This article talks mainly about coffee from Ethiopia, but many goods from small farmers in poorer countries face similar issues. These farmers find it hard to make enough money for their families. On top of that, changing weather patterns are making it tough for them to grow their crops.

    It’s sad to think that these farmers are paying a high price for climate change, even though places like Africa cause less than 4% of the world’s pollution. We’re asking a lot from them to fix problems caused mainly by richer countries.

    Now, with these new rules, there’s a chance Europe might buy less from them.

    These farmers, already dealing with weather challenges, might lose important business partners. This could hurt their local economies and might even lead to more problems, like political instability, civil wars and people trying to move to Europe for a better life.

    So, I have to ask: Is this fair? Will this really help our forests? I’m worried it might make things worse, especially for Africa, leading to more conflicts and people leaving their homes.

    Should we support or abandon them? The answer could be simpler than we think

    Ethiopia, known for its deep-rooted coffee culture, is struggling with new demands. Dallmayr’s decision to leave has worried Ethiopian farmers. They’re concerned that more companies might do the same. This could mean they will have to sell more coffee to places with fewer environmental rules, like China, as mentioned by Kurier link. But this could upset the market and drop prices.

    The main worry is that these new rules, while good for the environment, might hurt small farmers in poorer countries.

    I want to be clear: I support these new rules. They could make big companies more responsible. But why are forests being cut down now? Isn’t it because richer countries have been buying these goods? We’ve benefited from these countries for so long. We can’t just turn our backs on them now. Isn’t it time we step up and do what’s right? Don’t investors want to be part of a good story? Maybe it’s time for a new approach.

    The brighter side? Finding a solution might be simpler and better than we think. We just need to work together. By involving those who truly understand the local situation, we can come up with rules that help everyone.

    A call to action: inclusive solutions needed

    I recently spoke with an industry expert who said, “The EU has to choose between the stick or the carrot. The stick might seem straightforward, but the carrot often works better.” We should consider this advice, focusing on forest protection and reforestation without unfairly blaming those not responsible for the problem.

    Sebastian Brandis, in his LinkedIn post link, highlights the urgent need for a supply chain law. Yet, the current European debate seems off-target. Companies worry about red tape, and politicians take a moral position, but small farmers and their representatives are left out. Brandis offers a solution:

    • Voice: Countries and farmers affected should be part of legal text negotiations. Their knowledge is crucial to create laws that truly protect them.
    • Support: We need ways to quickly improve traceability. Collaborating with origin countries and using practical digital tools can help.

    Personally, I couldn’t agree more. The upcoming EU discussions should keep these points in mind to ensure laws protect without causing harm.

    And there’s still hope. We need solutions that consider both regulations and the real-world situation. AgUnity is helping by digitising cooperatives, particularly in Ethiopia. Our free service lets cooperatives record member, location, and transaction data, making EU regulation compliance easier and affordable. We’ve begun this with OCFCU, Ethiopia’s largest coffee union, which represents over 560,000 farmers.

    In conclusion, the EU’s deforestation rules are crucial for global sustainability. However, we need to consider their impact on the ground. By collaborating – the EU, businesses, and producer countries – we can craft regulations that benefit everyone, while also promoting biodiversity and the rich coffee varieties we all cherish.

    So, while we sip our coffee, let’s consider: Are our choices harming or supporting Ethiopian coffee growers?

    For feedback and comments, please reach out to me directly or by commenting below. I am curious about your thoughts.

    Note: This article is among others based on information sources mentioned below and the EU website. The views expressed are personal and do not necessarily reflect the official policy or position of any organisation.



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