New EU Regulations to Impact Coffee Trade: What You Need to Know

For coffee enthusiasts, the day often starts with a steaming cup of their favorite brew. Globally, approximately 2 billion cups of coffee are consumed daily. However, a new law from the European Union (EU) could significantly affect coffee supply chains and the farmers behind them.

The Deforestation-Free Mandate

Beginning in 2026, coffee sellers within the EU market will need to demonstrate that their products are “deforestation-free.” This means that every bag of coffee beans, jar of ground coffee, or espresso capsule must come from coffee plants grown on land that has not been deforested since December 31, 2020.

This legislation is part of the EU Deforestation Regulation, aimed at curbing the consumption-driven deforestation happening globally.

Why Is the EU Taking Action?

Deforestation is a critical driver of biodiversity loss, contributing to approximately 10% of global greenhouse gas emissions. Coffee, cocoa, soy, and palm oil production—targeted by this regulation—are known contributors to forest loss in certain regions.

Under this regulation, companies must trace their coffee back to specific origins, including the exact farm plot where the beans were harvested. They will need to provide geolocation data to EU authorities and use satellite images to prove that the land was not forested prior to the 2020 cutoff date.

While the rules were initially set to take effect in early 2025, they were delayed due to pushback from various countries, particularly in Latin America, Africa, and Southeast Asia, concerned about the regulations’ ramifications for small farmers.

Impact on the Coffee Supply Chain

The coffee supply chain is intricate, involving millions of farmers before beans reach grocery shelves. The new regulations introduce additional checkpoints, documentation requirements, and sourcing strategies.

Small farms may face challenges meeting these demands, potentially losing market access if they cannot supply the necessary geolocation data and deforestation documentation. This trend could incentivize buyers to favor larger estates or organized co-ops that can easily comply.

Conversely, larger growers with pre-existing traceability systems might find themselves at an advantage, whereas the new regulations may slow trade from countries with higher deforestation risks, leading to shifts in sourcing.

Opportunities for Small Farms

For small farms to succeed under the new regulations, they will require access to affordable tools and technical support for tracking their products. Some nations are developing tracking systems and urging the EU to invest in their infrastructure.

Small farms that can meet compliance through cooperatives may become appealing suppliers for larger buyers seeking reliable sources of sustainable coffee. Additionally, a rise in demand for sustainability certifications like Rainforest Alliance may bolster these small farms, but they will still need to provide the required documentation.

The Role of Agroforestry

Arabica coffee, the most widely consumed variety worldwide, naturally grows as an understory shrub, thriving in cooler, well-drained environments often shaded by trees. This points to agroforestry as a potential path for farmers to mitigate deforestation risks while continuing to cultivate coffee.

Agroforestry, which involves integrating trees into coffee plots, can help to maintain tree canopies that buffer environmental stresses like heat and drought. Research highlights reduced irrigation needs and fertilizer demands in these systems.

Traditions of agroforestry are prevalent in Ethiopia and parts of Central America, yet even these farms will need to verify that no forest has been cleared post-2020.

Implications for Coffee Drinkers

For European consumers, the new EU rules promise a more sustainable coffee experience, although they may also lead to increased prices if compliance costs trickle down the supply chain.

Globally, shifts in trade patterns may affect the pricing and availability of coffee. With EU buyers prioritizing traceable beans sourced from nondeforested areas, coffee roasters in other regions may face higher costs or tighter supplies for verified product lines.

This article is republished from The Conversation under a Creative Commons license.