BlogsHow does the EU Deforestation Regulation affect the coffee and cocoa value chain?

How does the EU Deforestation Regulation affect the coffee and cocoa value chain?

The European Union (EU) intervenes in the occurrence of deforestation with the new Deforestation Regulation (EUDR). The Regulation entered into force in June 2023, and its transition period ends on December 30, 2024. The purpose of the Regulation is to try to prevent deforestation due to agricultural use at the EU level. In the future, products or raw materials whose origin has caused deforestation may not be imported into the territory of the European Union after December 31, 2020. The Deforestation Regulation affects the following commodities: soy, oil palm, coffee, cocoa, rubber, cattle and wood. 

We met Fairtrade key account manager, Juha Tanskanen. We asked what the Deforestation Regulation means for producers, buyers, and the value chain in general. How should one prepare for the requirements of the Regulation?

Companies’ duty of care Fairtrade 

The most focal part of the EU Deforestation Regulation is the duty of care of companies. In the future, the company must have clarity about the origin of all the raw materials it uses. The Deforestation Regulation requires that the location information of the cultivation area of the raw material imported into the EU area be provided for satellite monitoring. With satellite monitoring, it is possible to ensure and monitor that cultivation has not caused deforestation in the area after December 31, 2020. 

With the Deforestation Regulation, Fairtrade has also updated its criteria for coffee production. Regarding the prevention of deforestation, all Fairtrade producers undertake to make sure that no deforestation has been caused by their production after December 31, 2013. This is a significantly more ambitious goal than the EU Regulation.

“We have even slightly more ambitious goals than the Regulation in that there would be no deforestation in the production of coffee for ten years,” Tanskanen states.

Tanskanen believes that the Deforestation Regulation will affect the demand for Fairtrade-certified products, as it is easy for coffee roasters and chocolate producers to rely on Fairtrade-certified raw materials. The criteria for Fairtrade stipulate many requirements for more ethical and environmentally friendly production, of which deforestation is one. Tanskanen also reminds us of the EU legislative obligations that are being prepared, such as the Forced Labor Act and the Sustainability Reporting Directive CSRD. Fairtrade helps companies find value chains that are certified and that comply with the law with certainty. 

“We know from Fairtrade certified raw materials that this comes from a certified source and that all the regulations in the chain are in place,” Tanskanen promises. 

Effects on the value chain

The duty of care increases the fact that manufacturers are more aware of where the raw materials come from. With the Regulation, companies’ reporting obligations increase, and they are required to take concrete actions through choices to prevent deforestation. According to Tanskanen, the biggest change for producers will be that, in the future, all producers will be subject to satellite monitoring. Fairtrade is prepared for the change, and it already has partners ready to monitor satellites. The company is currently training producers to use the system and report. 

“A good reform, but it will create a huge amount of work for the chains, as the origin of each raw material must be clear.” Tanskanen 

As an example of the extent of work, Tanskanen holds up a cocoa spread whose raw materials come from different parts of the world. In the future, the company must be knowledgeable of all its raw materials to make sure that their production has not caused deforestation. 

According to Tanskanen, at the beginning, companies may face challenges in finding a sufficient amount of raw materials that meet the requirements of the Regulation and in operators having time to take the necessary actions within the framework of the transition period. 

“In the future, it will be more difficult to introduce irresponsibly grown raw materials into the chain. Overall, the Regulation will have a positive impact because, in the future, we will be even more aware of the origin of raw materials,” Tanskanen sums up.

Companies are required to take responsibility.

The responsibility is no longer transferred to consumers, who would have to find out the value chain used by the company and its ethics, but responsibility and care are required from the companies themselves. The reporting obligation and satellite monitoring are concrete means by which the implementation of the Deforestation Regulation will be monitored. 

“In the future, the consumer in the EU area can happily enjoy coffee without a forest cut down from under it,” Tanskanen states.

Although the Deforestation Regulation of the EU is yet another step towards more sustainable production, according to Tanskanen, there is still a lot of work to be done in terms of farmers’ livelihoods. Many of the coffee and cocoa farmers still have to struggle to make a living. The price of coffee as a listed product varies a lot depending on futures, weather, and market expectations, and a price increase in the trade does not automatically mean a better income for the farmer.

“Even if we agree that coffee and cocoa are expensive, it doesn’t necessarily mean that the farmer can make a sufficient living from it,” says Tanskanen.

The Effects of the EU Deforestation Regulation on Finland

According to Tanskanen, there are still many questions in the air regarding the EU Deforestation Regulation and when the implementation will take place at the beginning of next year. According to him, the producers now have a hard job to get all the raw materials subject to the Regulation under control. Fairtrade-certified products are one way to tackle the challenges of the new Regulation. 

There may be some challenges in availability at the beginning of 2025, as there may not be enough certified raw materials on the market. Tanskanen believes, however, that the availability challenges will certainly be corrected when more and more raw material producers get certified. Although Tanskanen doesn’t think the deforestation regulation will have a big impact on the price of chocolate, for example, the price is always affected by several factors, from ethics to legislation, attitudes, and economic situations.

“There may be some small changes in the prices because the entire value chain will include a monitoring obligation, which will cause more work. However, I don’t think that there will be significant price increases just because of this Regulation,” Tanskanen ponders. 

Producer, do you find the factors of obtaining raw materials and added responsibility challenging? Start verifying the origin and responsibility of your value chain now! Turn to Fairtrade, where experts in the field are there to support you.

Suppilog The marketplace for Fairtrade products

The article was published in cooperation with Fairtrade experts because Suppilog also works as a marketplace and distribution channel for Fairtrade products. We also experience ideological cohesion in enabling smaller producers to enter the market.

More on the topic:

Reilu kauppa kirittää metsäkadon ehkäisyä kahvintuotannossa

Metsäkatoasetus ja laittomien hakkuiden vastainen ohjelma

Consilium of the European Union – Deforestation

 

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