Monday, June 17, 2024

Ethiopia at risk of losing its coffee export to the EU


By our staff reporter

Ethiopia is at risk of losing of its coffee export to the European Union (EU) due to its failure to implement the new decision of the EU Deforestation Regulation (EUDR). The EUDR aims to address deforestation concerns associated with agricultural production and requires countries to take measures to combat deforestation, particularly in the agricultural sector.

Importers of coffee to the EU are reportedly scaling back their purchases in anticipation of the new law, which will prohibit the sale of goods associated with deforestation.

The EU’s commitment to combating deforestation and its associated environmental impacts is reflected in this landmark law. By banning the sale of goods linked to forest destruction, the EU aims to address the role of consumer demand in driving deforestation and climate change. This law is likely to have a direct impact on various sectors, including the coffee industry.

The scaling back of purchases from small farmers in Africa and other regions can be seen as importers’ proactive response to align their practices with the upcoming regulation. Importers may be taking measures to ensure that their supply chains comply with the new law, including sourcing coffee from producers who can demonstrate sustainable and responsible farming practices that do not contribute to deforestation.

The European Commission has also expressed its commitment to supporting producing countries and smallholders in complying with the EUDR. At COP28, the EU and its member states pledged 70 million euros for initiatives aimed at assisting these countries. These initiatives likely focus on providing resources, technical assistance, and capacity-building programs to help countries meet the requirements of the EUDR.

However, implementing the EUDR can be challenging in some developing countries like Ethiopia. Patchy internet coverage can hinder the mapping of land and monitoring of deforestation activities. Additionally, land rights disputes, weak law enforcement, and clan conflicts may further complicate efforts to gather accurate data on farm ownership and enforce regulations related to deforestation.

These challenges highlight the complexities involved in addressing deforestation and implementing regulations in developing countries. It underscores the need for comprehensive strategies that address not only environmental concerns but also socio-economic factors and governance issues to ensure sustainable agricultural production and trade.

The EUDR requires companies to digitally map their supply chains down to the plot where the raw materials were grown, which could potentially involve tracing millions of small farms in remote regions.

Moreover, because companies often don’t deal directly with farmers, they could be relying in part on data provided by multiple local middlemen, some of whom they also might not deal with directly or trust.

Coffee plays a crucial role in Ethiopia’s economy, generating approximately 30-35% of the country’s total export earnings. Furthermore, nearly a quarter of Ethiopia’s coffee is sold to the EU smarket.

Given the importance of coffee exports to Ethiopia’s economy, any potential decrease in exports, particularly to the EU, could have significant economic implications. It underscores the urgency for Ethiopian authorities to address the concerns raised by EUDR and ensure compliance to maintain access to the European market.

To mitigate the potential impact on the coffee sector, it becomes even more crucial for Ethiopia to prioritize implementing measures that promote sustainable and responsible coffee production. This may involve addressing deforestation concerns, enhancing land management practices, improving transparency in supply chains, and ensuring adherence to international standards and regulations.

“Efforts to meet the requirements of the EUDR and maintain access to the EU market should be accompanied by initiatives to support smallholder farmers, improve infrastructure, strengthen governance, and promote sustainable agricultural practices. By doing so, Ethiopia can not only protect its coffee export market but also contribute to the long-term sustainability of its coffee industry and the well-being of its coffee farmers and communities,” said one coffee exporter.

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