Addis Abeba — In a heated debate over the upcoming environmental policy, a newly formed coalition of civil society organizations, known as VOCAL (Voice of Organizations in Coffee Alliance), is pushing back against demands from developing nations like Ethiopia for an extension for the enforcement of the upcoming European Union Deforestation Regulation (EUDR).
VOCAL, an affiliate organization of the Netherlands-based VOICE Network--a watchdog and advocacy group focused on social and environmental issues--contended that "timely enforcement of the regulation is crucial" for ensuring a fair competitive landscape, thereby setting the stage for a pivotal confrontation between sustainability and economic interests.
As its first action, the consortium recently published a report that directly challenges the global coffee industry's prevailing stances on regulatory adherence.
Entitled "Coffee's Regulatory Blend," the report characterizes the global coffee industry's response to the environmental, economic, and social challenges confronting the coffee sector as being "too little, too late" and marked by "resistance, disengagement, and misinformation."
This report is released less than three months prior to the scheduled enforcement of the new European anti-deforestation supply chain law, known as EUDR, set to take effect on 30 December, 2024.
The regulation is anticipated to significantly impact the global green coffee trade and, consequently, Ethiopia, Africa's foremost coffee producer and exporter, where the coffee industry comprises approximately 30 to 35% of the country's annual export earnings.
More than six million Ethiopian farmers engaged in coffee cultivation nationwide, as well as over ten million individuals involved in the extensive coffee supply chain, including farmers, intermediaries, exporters, and end consumers, are expected to be significantly affected by the EUDR.
Highlighting the challenges faced by developing countries such as Ethiopia, which have fragmented coffee cultivation systems managed primarily by smallholder farmers, Ethiopian officials have requested an extension for the enforcement of the EUDR.
During a high-level consultative meeting held in February 2024 between the Ethiopian government and representatives from the embassies of EU Member States, Semereta Sewasew, the State Minister for Finance, articulated the government's expectation for a positive response from the EU regarding the requested extension of time.
"This extension would provide Ethiopia with sufficient time to prepare and offer assurances to Ethiopian coffee buyers in the EU until the country aligns with the EUDR compliance measures," she stated.
In addition to coffee-growing nations such as Ethiopia, a consortium of large European roasters and the head of the International Coffee Organization have called for delays in the enforcement of regulatory measures, cautioning against the potential unintended consequences of the law.
They contend that significant portions of the coffee-producing world may be excluded from future European trade, leading to catastrophic economic repercussions, particularly for the most vulnerable farming populations, who often possess the least capacity for compliance.
In its report, VOCAL acknowledges these potential unintended consequences, particularly for small-scale farmers. Nevertheless, it contended that "the coffee industry's response to this evolving regulatory environment has been insufficient."
The report further states, "The sector has largely either been disengaged from policy discussions or actively opposed the new regulations. Such actions hinder the effective transition to a regulated international sustainability framework."
It also notes, "Unlike other industries, the coffee sector has been slow to engage in key discussions on implementation, resulting in a lack of comprehensive strategies for operating under the new regulation."
VOCAL emphasized that arguments against regulation, such as the potential disruptive impact on farmers, businesses, operations, and consumers, overlook the long-term viability of the sector.
"The short-term costs of implementing sustainability measures are far outweighed by the risks of inaction and the loss of viable coffee-growing land due to environmental neglect or a waning appeal of coffee farming for future generations," the report stated.
However, a recent study conducted by the Overseas Development Institute (ODI) highlights the potential adverse impact of the EUDR on the economies of developing countries like Ethiopia.
The study, titled "Avoiding a 'Green Squeeze': Supporting Least Developed Countries in Navigating New Greening Trade Measures," forecasts that the EUDR will have significant economic repercussions for Ethiopia.
According to ODI, a complete cessation of exports to the European Union--Ethiopia could confront a notable economic downturn. More specifically, the country might experience an 18.4% decline in total exports, a 5.8% decrease in imports, a 3.3% loss in public revenue, and a 0.6% reduction in GDP.
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Industry players also emphasize the potential adverse impacts of the EUDR on the Ethiopian coffee industry.
In April 2024, Gizat Worku, the general manager of the Ethiopian Coffee Exporters Association (ECEA), told Addis Standard that Ethiopia faces a significant challenge in meeting the requirements of the EUDR.
Gizat cautioned that potential non-compliance could result in a considerable loss, estimated at 35-40% of Ethiopian coffee exports to EU markets.
Ethiopia generated $1.43 billion from coffee exports during the last fiscal year. This achievement was realized through the shipment of 298,000 tons of green coffee beans to international markets.
In its report, VOCAL acknowledged that the new regulation comes with complexity.
For this regulation to achieve its desired impact, the consortium recommends that regulators provide clear guidance, robust support, and reliable compliance tools.
"Dialogue with stakeholders, particularly industry players in countries of origin, is vital," VOCAL highlighted.
