Ethiopian coffee is threatened by European deforestation regulations

PARIS, May 30, 2024 – The export of Ethiopian coffee, a major source of foreign exchange for the country, is facing severe threats from European Union [EU] regulations aimed at combating deforestation worldwide.

The law, voted in Brussels in 2023, targets soy and palm oil crops as the two biggest threats to tropical forests. In a few months, it will also force coffee importers to prove that their supply chains do not contribute to deforestation using satellite data and geographical coordinates.

Compliance with the new European standards could take up to five years, as Ethiopian diplomats and exporters warn that complying with the new European standards could take up to five years. The United Nations Food and Agriculture Organization [FAO] estimates that around 10 million hectares of forest disappeared worldwide every year between 2015 and 2020. However, coffee-growing’s contribution to the destruction of Ethiopia’s forests is very limited, with 90 percent of growers respecting regulations and few chemical inputs used in plantations.

The EU will require full traceability from the moment cherries are harvested and their arrival on European soil. This means that a single container of coffee en route to Europe can contain beans from a thousand producers, which means you would have to provide a thousand GPS coordinates when it reaches Europe. More than half of Ethiopian exports to Europe are at risk, and European companies whose imports don’t meet the new standards face heavy penalties, amounting to at least 4 percent of their EU sales. As a result, buyers are already turning away from Ethiopia.

Addis Ababa, Ethiopia’s main export base, is struggling to diversify its export base. Although Ethiopia is a relatively marginal partner for the EU [accounting for less than 5 percent of its imports], foreign currency from Europe is vital for Addis Ababa, wracked by an economic crisis marked by inflation and dollar shortages. Brussels refused to grant the Ethiopian government an extension, pushing it to announce a plan to modernize its coffee sector. Addis Ababa would like to finance this program with the help of international partners.

Faced with the EU’s inflexibility and the risk of seeing its exports plummet, the country of 120 million inhabitants finds itself with its back to the wall and struggling to diversify its export base. Although Chinese demand for coffee is enjoying strong growth, it concerns specialty and premium products, which are scant in Ethiopia.

Dutch company JDE Peet’s is developing a technology “combining satellite images and artificial intelligence” to determine from the air the major deforested and non-deforested areas before 2020. This territorial division would make it possible to identify coffee production eligible for export to Europe and avoid Ethiopia having to embark on a cumbersome procedure of manual surveys that would take several years. This system appears to be Addis Ababa’s last chance, but it is not yet under consideration by the European authorities and could scare away importers.

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