Daily Reports
EU Green Law: Rising Challenges for Coffee Farmers and Global Trade
The European Union's "Restore Nature" law aims to combat climate change and preserve biodiversity. However, this legislation poses a significant challenge to the global trade market, which is valued at approximately $110 billion yearly. By the end of the year, major companies dealing in commodities such as coffee, cocoa, soybeans, palm oil, livestock, rubber, and wood must prove that their supply chains did not operate on deforested land post-2020. This requirement applies whether the deforestation was legal or illegal.
The stringent regulations affect over 55 countries, each of which exports at least $100 million in goods to the EU annually. The repercussions depend on various factors, including the types of goods shipped, the buyers, and the available data to map farms and complete the necessary documentation. Experts warn that these measures could lead to higher prices for European consumers.
The coffee industry faces unique challenges under this law. Unlike palm oil, livestock, or soybeans, coffee is less associated with deforestation but relies heavily on millions of smallholder farmers across multiple countries. Many of these farmers lack the resources to comply with the stringent regulations. Elizabeth Teague, director of climate resilience at Root Capital, emphasized the global scale of this challenge, stating that everyone is scrambling to respond to the new European law.
Countries like Indonesia, which exports large quantities of five out of the seven affected commodities, have expressed concern over the EU's one-size-fits-all approach. Pamela Cook-Hamilton, executive director of the International Trade Center, highlighted the widespread fear among nations about the impact on their exports and economies.
While the importance of protecting forests and reducing atmospheric carbon is undeniable, some countries and industries are calling for a delay in implementing the law. They argue that there has not been enough time to prepare, citing potential shortages in Europe and increased cocoa and coffee prices this year.
Currently, several EU member states, including Australia, are pushing for a rapid review and extension of the implementation period. As efforts to comply with the new law continue, businesses and governments are racing to geotag lands worldwide. Companies like Meridia Land are at the forefront of verifying data from over 35 countries, aiming to ensure all farms meet the EU's standards within a few years.
Despite these challenges, the EU remains steadfast in its commitment to forest preservation, emphasizing its consistency with promises made at the COP26 climate summit in Glasgow in 2021.
- The highly debated law on nature restoration will return to the EU's political agenda after the European elections. The green light for the regulation, blocked in the EU Council due to the lack of a qualified majority, is included in the agenda of the EU Environment Council on June 17, scheduled to be held in Luxembourg.
- Despite its provisional status, the agenda could change based on negotiations with member governments. The Belgian presidency may seek to shift the balance by encouraging opposition countries to change their stance, especially following the June elections. So far, countries like Sweden, Italy, and the Netherlands have expressed opposition, while Finland, Poland, Belgium, and Hungary have abstained.
