EU will postpone the implementation of deforestation regulations (EUDR) and plan a grading system

Recently, the European Union announced that it will postpone the deforestation regulations (EUDR), which was issued in June last year and implemented on December 31, 2024, and will classify them as risk categories by country, and provide more adaptation time by category.

Experts believe that agriculture, including coffee production, is the biggest cause of deforestation around the world, with large-scale agriculture accounting for 75% of global deforestation. Deforestation is also one of the most pressing sustainable development issues for the coffee industry. Felling trees to increase land area for agricultural and commercial use can exacerbate soil erosion and release carbon dioxide into the atmosphere, leading to weather problems.

As a result, the European Union has introduced a new regulation that hopes to minimize and eradicate imports of products related to deforestation. In effect, EUDR allows traders to prove that the supply chain of their products is not involved in deforestation since December 30, 2020, otherwise the EU will ban imports of these products.

After the release of the new regulation by the European Union, it has had a significant impact on the staff of the coffee industry, and because many manufacturers are unable to implement reforms in time, the law has been criticized and questioned. In particular, coffee-producing countries such as Vietnam, Brazil, Indonesia and Colombia, where the European Union is one of the larger export markets, will greatly increase the export costs of these countries. In addition, earlier, the European Coffee Federation (ECF), an European coffee industry trade organization, including international well-known coffee brands and coffee traders, including Nestl é, Starbucks and Piay, sent a letter to the European Commission, hoping to delay the implementation of new EU deforestation regulations.

As a result, the European Union is currently meeting to discuss whether to postpone the implementation of the legislation, and to divide exporting countries into three levels: low-risk, standard-risk and high-risk. If an exporting country is defined as high-risk, it is considered to be a serious deforestation problem and will be subject to the highest level of scrutiny. On the contrary, low-risk countries will be subject to less inspection. According to the risks set by different countries, it will give producers and traders more time to adapt to the new regulations.

However, some people in the industry said that the regulatory plan lacks nuances and will produce bad results. High-risk countries also have exporters who strictly comply with the requirements of the regulation, but traders, bakeries and other industry participants are no longer working with them to avoid stricter scrutiny, which is unfair to exporters. and a large number of small farms may lose the market because it is difficult for small farms to obtain relevant data and meet standards. Moreover, the classification system requires both governments to strengthen inspection and law enforcement mechanisms. Although many countries are cooperating with a number of agencies to meet the requirements of the law, there are still many underdeveloped countries in Africa and Asia that lag far behind in this regard.

Although the ultimate goal of the EU is to minimize and eradicate the problem of deforestation, for enterprises with complete production links, meeting EU sustainability standards is an opportunity to enhance brand value. However, in the short term, it will increase the production cost of the country of origin and the difficulty of exporting to the EU country, and may even raise the purchase price of local consumers, so it is necessary to delay the implementation of the regulation.