Combining EUDR Compliance and Sector Transformation in African Coffee

Creating Long Term Solutions out of a Short Term Challenge.

December 9, 2024

Despite the one-year implementation delay announced by European Commission President Ursula Von der Leyen, the expectation of the planned EU Deforestation Regulation has put commodity producing countries under pressure, with many working hard to find ways to comply. In Africa, thanks to its systemic approach to change, UNDP is encouraging governments to combine immediate EUDR compliance with long-term transformation of their agricultural sector.

The new regulation requires companies that sell a range of products - including coffee – on European markets to show that these products have not been grown on land deforested after 2020, that they are produced in accordance with local regulations, and they must be traceable back to the farm. The fear is that risk-averse international companies will seek to concentrate purchases in production countries best organized to meet the regulation, leaving more vulnerable African producing countries out in the cold. At least one significant buyer of Ethiopian coffee, Dallmayr, has announced plans to abandon its longstanding commitment to Ethiopian coffee.

Proving that coffee has been produced without deforestation in a continent of smallholder farmers is a challenge. Informal, porous supply chains make traceability difficult, and it is unclear how many farmers know of or stick to local regulations. But maintaining access to the European market is vital – in some producing countries a quarter of the population depend on coffee for their livelihood.

Given the oncoming regulation and the risk of losing significant export income, rushing to a solution would be understandable. However, exporting countries should consider how solutions can contribute to a more long-term transformation of their commodity sectors that will bring prosperity to future generations of farmers. EUDR preparedness can jump-start some of the necessary change processes:

“If all this effort is going into ensuring EU DR compliance, how can we make sure that the African coffee sector gets the maximum long-term benefit from this work?”

Andrew Bovarnick, UNDP’s Global Head of Food and Agricultural Commodity Systems.

EU DR preparedness can feed into structural changes which will help strengthen the coffee sector’s organization and governance, build production and exports of more profitable specialty coffee, and put the focus on increasing production on existing land, thereby avoiding deforestation and increasing profits.

Towards future-proof coffee sectors in Ethiopia and Rwanda

With the EU DR implementation deadline ahead, the challenges for the coffee sector in several African countries are immense. For this reason, UNDP supports governments and all key players in Ethiopia and Rwanda to help prepare for EUDR compliance, while also addressing long-term strategic challenges in their coffee sectors. UNDP combines support for specific, technical solutions, such as farmer support systems and traceability with a broader effort to align stakeholder action guided by a shared vision for change:

“UNDP’s long experience in setting up multistakeholder National Commodity Platforms (NCPs) will be extremely valuable for the collective action required to achieve EUDR as they will help make such complex processes efficient and start fast, building on all the lessons learned from over a decade of designing, initiating and supporting such platforms.’’

Leif Pedersen, UNDP Senior Commodities Adviser.

In Ethiopia, coffee represents about one third of the country’s exports, it is the main source of foreign exchange, and the EU is the largest market with around 30% sent to the bloc. UNDP support in the country aims to pave the way forward through skilled convening and facilitation of multistakeholder dialogues with the joint objective of meeting the EUDR requirements and improving the coffee sector overall.

In Rwanda, thanks to the Fit for Fair initiative funded by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), UNDP works alongside the Rwanda National Agriculture and Export Development Board (NAEB) to support the coffee industry in transforming the sector to meet the challenges of the future, setting up a multistakeholder working group focused on supporting the livelihoods of Rwandan coffee farmers. By ensuring continued access to key markets, Fit for Fair will move the sector from pure compliance to strategic transformation, setting it up for compliance with the new EU due diligence regulations: the EUDR, the Corporate Sustainability Due Diligence Directive (CSDD), and the German Supply Chain Due Diligence Act.

UNDP has supported transformation processes in commodity sectors for many years, combining its technical expertise in sustainable commodity production and trade with effective multi-stakeholder collaboration necessary to create lasting transformation of production sectors. Through its long-standing partnership with the Swiss State Secretariat of Economic Affairs, SECO, UNDP has developed and utilized methodologies and tools to engage stakeholders in long-term change processes and to strengthen the collaboration between them.

“The governments of Ethiopia and Rwanda know that national solutions to EUDR challenges are complex, country-specific, require collaboration across ministries and stakeholders, and may take years to implement.” said Bovarnick. “They recognise UNDP’s track record in structural and sectoral transformation, alongside political, technical, technological, and financial solutions. We look forward to fruitful collaboration amongst all stakeholders”.