A cup of coffee could soon become much more expensive due to new coffee production and deforestation rules, according to the chairman of Lavazza, Giuseppe Lavazza. The EU’s recently implemented deforestation rules could mean that thousands of farmers’ coffee bean exports to the EU could soon be rejected, due to them having been produced on land that was recently deforested.
According to Euro News magazine, although the EU’s deforestation rules are seen to have good intentions, aimed at preserving forest quality and reducing the impact of deforestation on local communities, several industry leaders fear that they may have been badly drafted and almost impossible to implement in some cases. Under the new rules, coffee manufacturers across the world will have to use satellite coordinates to digitally map how big their farms are and highlight their boundaries, to check whether any of the land has recently been deforested.
However, for several farmers in key coffee-producing and developing nations, such as Brazil, Vietnam, Indonesia, and Colombia, this would be close to impossible, due to the funds and technical expertise required FOR satellite mapping.
THE IMPACT ON THE COFFEE BUSINESS
In a conversation with journalists during the Wimbledon tennis tournament and reported in the Telegraph, Lavazza said the upshot for business would be “terrible”. The coffee boss added: “This is introducing a big limitation, a very strong distortion of the market. For all of the European roasters, this is very challenging. Think about farmers in Central America, I think very few of them are ready to be compliant with the regulation.”
Farm borders in many of countries are blurred and have been for generations, resulting in farmers not knowing the full extent of their farms exactly, and thus, unable to provide the information needed for satellite mapping.
The EU’s new regulations are also likely to create an additional regulatory burden on coffee importers in the bloc, who will now have to conduct extensive checks on their export partners, such as independent audits and risk assessments. This is likely to add to the costs and time involved, which could also mean a lot of EU coffee roasters contemplating leaving the bloc and setting up facilities elsewhere, such as China or the US, constraining coffee supplies even more.
Coffee prices have also been rising recently due to natural factors, such as droughts, as well as geopolitical factors such as the Red Sea crisis adding considerably to shipping times and supply chain backlogs.
The European Commission, however, insists the changes will not pose too much of a regulatory or cost burden to farmers.