There are indications that coffee importers in the European Union (EU) are beginning to reduce their purchases from smallholders farmers in Africa and other regions. This is in anticipation of a historic EU regulation that would outlaw the sale of products connected to deforestation, which contributes to climate change.

According to industry insiders, the EU Deforestation Regulation (EUDR), which goes into effect in late 2024, will be costly and difficult to comply with, which means it is already having unforeseen effects that will eventually change the structure of the world’s commodity markets.

Four mentioned a decline in coffee orders from Ethiopia in recent months, a country where coffee is a staple crop for about five million rural households. They cautioned that firms that implement sourcing strategies ahead of the law ran the risk of making small-scale farmers even poorer and driving up prices for EU consumers, all while weakening the EUDR’s beneficial effects on forest preservation.

A representative of German roaster, Dallmayr, which purchases around one per cent of the world’s exported coffee, Johannes Dengler, stated: “I see no way of buying significant quantities of Ethiopian coffee going forward.”