Specialty green coffee traders, sourcing from 26 origins on behalf of over 1000 roasters.


Developing story – EU Deforestation Regulations – Part 2
Regulations Tabs6

Kate Monteiro, Director of Sustainability

(5 minute read)

With the EU’s latest FAQ document now in hand, we have clarity in some areas (record keeping, limitations on polygons including farm and non-farm land), but many open questions and challenges remain. In my last piece on this, I focused on four major things that the regulation will need to address from the outset if it is to achieve its aims: costs (who pays for it), data protection (of the farmers for whom it will be necessary to share personal data) legal deforestation and, (perhaps most worryingly) the potential for an austere regulatory environment to inadvertently cut vulnerable farming families out of supply chains.

We are very fortunate at Falcon to have a great network of strategic supply chain partners operating within our origins of sourcing activity. One such partner is TechnoServe, the non-profit with whom we work in Ethiopia on our Stumping Project.

Paul Stewart is TechnoServe’s Global Coffee Director, overseeing a portfolio of partnerships with the world’s leading coffee companies, foundations, and public sector agencies to increase the coffee income of farmers across Africa and Latin America. Over the course of a 20-year career at TechnoServe, Paul has helped build its coffee practice into a recognised leader in “shared value” solutions that reduce poverty for farmers while developing sustainable supply chains for coffee businesses. A noted industry expert, Stewart has spoken before the Specialty Coffee Association, the SCA World of Coffee, the African Fine Coffees Association, and other sector organisations. He holds a degree in Agricultural Economics from Queen’s University in Belfast and has spent over 20 years in eastern Africa. I put some of my questions and concerns to Paul to get his take on EUDR as well as his insights on how TechnoServe, who work with farming communities in some 30 countries, are preparing for it.

What positive outcomes do you anticipate from EUDR?

The most important benefit is that it creates a solution for farmers and coffee trading businesses to show that their coffee is deforestation-free. But another important benefit is that it kick-starts a process of farmer organizations and coffee businesses digitally collecting information from their farmer suppliers that will help them improve the performance of their businesses and better support farmers. Imagine a wet mill owner in Ethiopia having a map of all their farmer suppliers for the first time; not only will that enable compliance with EUDR, but they can better plan their coffee collection and, over time, collect more information digitally that enables them to better understand farmer needs while providing price transparency to customers. 

What challenges or unintended consequences do you see from EUDR?

The biggest issue is that farmers and coffee businesses will lose access to the EU market if they lack the ability to comply–not because they are engaged in deforestation, but simply because they don’t have the technology in place to demonstrate compliance. Thousands of small coffee trading and wet mill businesses don’t have smart phones to collect and share GPS/farm map data and don’t have the technical know-how even if they had access to the technology. This will be a disaster for small business owners who have spent years building relationships with importers and roasters who now won’t be able to buy from them. And of course, this impacts the farmers in these supply chains as well. 

The biggest challenge is going to be in places where supply chains are longer, and coffee passes through multiple traders. How does an exporter convince a village trader who may not be literate to collect the GPS coordinates of each farmer supplier? This new regulation is going to be disruptive; some small traders are going to lose out while it will create opportunities for others to professionalize and scale up their businesses.

How would you envision costs being shared as we work toward compliance with EUDR?

I foresee three cost components, each of which will be funded in different ways. First, there’s an initial development cost to create data collection and management tools and provide training to users. Some of this is underway as larger importers already have their own digital tools that they are rolling out to their supply-chain partners. We’re currently developing an open-source Android tool that will allow smaller coffee businesses to collect and share GPS/farm map data. Our plan is to make this tool free for download from Google Play Store and we expect a lot of sharing and training will organically happen as coffee roasters and importers advise their suppliers. I also expect the EU and European governments will make funds available to support the cost of workshops and training across many coffee producing regions. The second cost will be the purchase of smartphones, which coffee businesses will need to purchase. The third cost is the ongoing expense of collecting GPS/farm map data from farmers, which will become an ongoing business expense that will add to the cost of production.

How do we grapple with the rights to data privacy and the demands for readily available, future-proof (e.g. will be routinely updated as farms change) polygons?

When we buy a product in the supermarket, we expect the seller knows the factory or farm where it was produced, which gives us confidence that the product is safe. In the same way, it’s reasonable to ask that importers know which farms produced the coffee they sell, and that means collecting data about those farms. But importers will also have to ensure that these solutions comply with GDPR and local data privacy/security regulations. In terms of future-proofing the data, I don’t think that is possible. Farms change ownership and farmers sell to different buyers each year, so GPS/farm map data will have to be updated on an annual basis.

With data privacy in mind, do you think any opportunities remain for pre-competitive collaboration on a single tool or database?

Yes! As previously mentioned, tools are already being developed, but I believe there is a need for an open-source digital tool that is freely available to all coffee businesses. We will share our progress on this work as it develops and look forward to collaborating across the industry to ensure it meets the needs of all potential users. The new regulations come into effect in late-2024, so in the near-term, coffee businesses will need to capture GPS/farm maps from their supply chain and share these directly with customers. An industry-wide solution could come later, but this will require significant collaboration between the major coffee importers in Europe.

Do you think that smallholders in regions labelled “high risk” by the EU will be disproportionately impacted by EUDR? In what ways? If so, how can we address this, in advance, as an industry?

I don’t think so. But the greater scrutiny of data from coffee businesses in high-risk regions means they will need to ensure their data is accurate and up to date. And, of course, they need to be sure they aren’t selling coffee from recently deforested land. The smallholders at greatest risk are those in areas where there is a lack of trust in the quality of data, as coffee importers could avoid these regions. As an industry, we need to ensure all coffee businesses have access to simple data collection tools and receive support to adopt them.

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