Kenyan coffee exporters are still worried about losing EU market!

According to Kenyan media reports, the European Parliament recently voted to delay the implementation of the No deforestation Act (EUDR) by one year, starting in December 2025, giving Kenyan coffee exporters extra time to meet EU requirements. But at the same time, there are still many exporters worried that the current situation is difficult to meet the requirements of the EU EUDR.

It is reported that this decision is of great significance to Kenyan coffee exports and is the main market for Kenyan coffee. EU countries account for more than 20% of Kenyan coffee exports. And in June 2023, the Kenyan government signed an economic partnership agreement with the European Union in the capital Nairobi, allowing Kenyan agricultural products to be exported duty-free to the European Union, including raw coffee beans. Kenya will also lower tariffs on EU products.

However, according to EU EUDR rules, the EU purchases only seven types of agricultural products that can prove that trees have not been cut down after December 31, 2020, including coffee, cocoa and wood products. Although, as early as 2018, Kenya announced a 90-day logging ban, which was extended until November 24 and then extended for another year. In July 2023, the Kenyan president announced the lifting of the logging ban because of Kenya's plans to develop the domestic furniture manufacturing industry and increase exports to increase domestic taxes, but at the same time it conflicts with EU EUDR rules and may affect other agricultural industries.

Recently, however, some industry insiders said that there are many small-scale farmers in Kenya who lack understanding of the new rules and lack of preparation for decentralized peasant household structure and local cooperatives, which may lead to access to the EU market. and high compliance costs further add to the challenge.

And in recent years, although the government has been pushing for reforms, such as fully opening up the coffee trade market and proposing a direct settlement scheme (DSS) to allow foreign currency payments, the reform has not been very successful, and the income of coffee exporters has fallen sharply. And the government has shut down some processing plants that failed to obtain new business permits in time, including some well-known coffee trading companies, resulting in farmers having to choose licensed factories for processing, but the factories are limited and there is a serious shortage of processing capacity. As a result, supply can only be delayed.

And suffering from bad weather, production has declined, with coffee production reaching 51900 tons in 2022 and only 48700 tons in 2023, a drop of 6.2 per cent. As production fell, so did exports, which did not improve until 2023, but also because the European Union released EUDR, European traders worried about the difficulties of countries such as Africa in meeting the standards, so they increased their purchases, which has also led to an increase in Kenyan coffee exports and export earnings recently.

However, Kenya has been affected by the Red Sea crisis recently, although Houthi attacks on merchant ships in the Red Sea have led to more ships making a detour to southern Africa, increasing the cargo handling capacity of the ports of Mombasa in Kenya and Tanzania.

However, the obsolete port infrastructure in Kenya and Tanzania and the lack of corresponding facilities have led to a decline in the efficiency of port operations, the accumulation of goods and the continued congestion of port vessels, causing heavy losses to traders and having a negative impact on the competitiveness of products such as Kenyan coffee.

For the Kenyan coffee industry, although the current coffee export volume and income are growing, it is still facing serious domestic inflation and other problems, resulting in rising costs. If after the delay of the EU EUDR, the government and the agricultural industry can not act quickly to meet the EU requirements, it will cause serious damage to coffee and other agricultural industries.

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