How EU deforestation laws are reordering the world of coffee
Le Van Tam is no stranger to how the vagaries of global trade can determine the fortunes of small coffee farmers like him.
He first planted coffee in a patch of land outside Buon Ma Thuot city in Vietnam’s Central Highland region in 1995. For years, his focus was on quantity, not quality. Tam used ample amounts of fertiliser and pesticides to boost his yields, and global prices determined how well he did.
Then, in 2019, he teamed up with Le Dinh Tu of Aeroco Coffee, an organic exporter to Europe and the United States, and adopted more sustainable methods, turning his coffee plantation into a sun-dappled forest. The coffee grows side-by-side with tamarind trees that add nitrogen to the soil and provide support for black pepper vines. Grass helps keep the soil moist and the mix of plants discourages pest outbreaks. The pepper also adds to Tam’s income.
“The output hasn’t increased, but the product’s value has,” he said.
In the 1990s, Tam was among thousands of Vietnamese farmers who planted more than a million hectares of coffee, mostly robusta, to take advantage of high global prices. By 2000, Vietnam had become the second-largest producer of coffee, which provides a tenth of its export income.
Vietnam is hoping that farmers like Tam will benefit from a potential reordering of how coffee is traded due to more stringent European laws to stop deforestation.
The European Deforestation Regulation, or EUDR, will outlaw sales of products like coffee from December 30, 2024 if companies can’t prove they are not linked with deforestation. The new rules don’t just seek to reduce risks of illegal logging. And their scope is wide: It will apply to cocoa, coffee, soy, palm oil, wood, rubber and cattle.
To sell those products in Europe, big companies will have to provide evidence showing they come from land where forests haven’t been cut since 2020. Smaller companies have till July 2025 to do so.
Deforestation is the second-biggest source of carbon emissions after fossil fuels. Europe ranked second behind China in the amount of deforestation caused by its imports in 2017, according to a 2021 World Wildlife Fund report. If implemented well, the EUDR could help reduce this, especially if the more stringent standards for tracing where products come from becomes the “new normal”, Helen Bellfield a policy director at Global Canopy told The Associated Press in an interview.
It’s not failsafe. Companies can just sell products that don’t meet the new requirements elsewhere, without reducing deforestation. Thousands of small farmers unable to provide the potentially expensive data could be left out. Much depends on how countries and companies react to the new laws, Bellfield said. Countries must help smaller farmers by building national systems that ensure their exports are traceable. Otherwise, companies may just buy from very large farms that can prove they have complied.
‘Winners and losers’
Already, orders for Ethiopian-grown coffee have fallen. And Peru lacks the capacity to provide information needed for coffee and cocoa grown in the Peruvian Amazon.
This is on top of other challenges, which in Vietnam include worsening droughts and receding groundwater levels.
“There will be winners and losers,” she said.
Vietnam can’t afford to lose — Europe is the largest market for its coffee, comprising 40 per cent of its coffee exports. Six weeks after the EUDR was approved, Vietnam’s agriculture ministry started working to prepare coffee-growing provinces for the shift. It has since rolled out a national plan that includes a database of where crops are grown and mechanisms to make this information traceable.
The Southeast Asian nation has long promoted more sustainable farming methods, viewing laws like the EUDR as an “an inevitable change”, according to an August 2023 agriculture ministry communiqué. The EUDR could help accelerate such a transformation, according to Agriculture Minister Le Minh Hoang.
Tam and Tu, his export partner, were quick to adapt. Even if the costs are higher, Tu said, they can get better prices for their high-quality coffee
“We must choose the highest quality. Otherwise, we will always be labourers,” Tu said, while sipping a cup of his favourite coffee at his company’s coffee-processing factory adjoining Tam’s farm. This is where trucks laden with red coffee cherries, both robusta and arabica, arrive from other farms, where the pulp of the fruit is removed and coffee beans laid out on tables to dry in the sun.
Tu already has certificates from international agencies for sustainability that will enable him to deal with the EUDR. Such certificates typically address the issue of deforestation, although some tweaks may be needed, said David Hadley, programme director for regulatory impacts at the nonprofit group Preferred by Nature in Costa Rica.