Cachoeira Farm, in Campo das Vertentes, Minas Gerais State. Photo credit: K. J. Yeung, courtesy of RGC Coffee.
As the world’s largest coffee exporter and a hotspot for deforestation, Brazil has much at stake in Europe’s coming ban on imports linked to habitat loss. But no one is panicking.
Europe’s Green Deal is a big deal for the hundreds of millions of farmers, cooperatives, and companies around the world that sell agricultural goods into the European Union.
Under the proposed legislation, announced on December 6, 2022, any company in the EU market that imports, sells, or exports certain commodities like palm oil, cocoa, soy, beef, and coffee is subject to fine if they lack documentation that the goods were not produced on land deforested after December 2020. The law aims to reduce agriculture-related loss and degradation of forests to protect the climate, environment, and biodiversity.
Brazil is categorized as one of the countries deemed as “high risk” under the law, due mostly to illegal clearing of forest to expand the farming of soy and cattle. The proposal’s announcement prompted concern and discussion in Brazil’s coffee sector. Europe is Brazilian coffee’s number one market abroad, taking 45% of the sector’s exports in 2022, according to the Brazilian Coffee Exporter’s Council (CaCafé).
The law will impose higher costs on producers, and smallholder farms might especially be affected. Now they will need to upload traceability data for the coffee they grow, e.g., GPS coordinates, which will be mapped against satellite photos of farms and forests. This record-keeping burden will add to a growing list of problems confronting coffee farmers: inflation, price volatility, adverse weather events, labor shortages, and so on.
But panic? Not so much. In Brazil’s case, the farming of coffee is linked to little deforestation these days. And systems for compliance are partly in place. Much of Brazil’s crop, especially for specialty production, is already audited under international certification programs as well as the nation’s own laws and regulations.
Instead of alarm, the outlook among many Brazilian coffee stakeholders appears to be one of cautious optimism. The nation’s industry has a deep vein of capital, companies, collaboration, talent, technical capabilities, technology, and government support. Despite Brazil’s loss of reputation from the illegal destruction of forest land in the Amazon region, its environmental laws and regulations ensure protections in most of the nation.
The upshot may well be that the EU law actually reinforces Brazil’s leadership in coffee, expanding its market share — potentially at the expense of other countries like Peru, where coffee-linked deforestation remains a problem, or Colombia, where smallholders have fewer technical resources and less support, even if they don’t harm habitats.
“Brazilian coffee is ‘safe’ in this matter,” says Henrique Sloper, owner of Fazenda Camocim, a specialty farm in Espírito Santo State. He cites Brazil’s Legal Reserve Area law, set in 1935, which requires rural landowners to put aside a high proportion of their property, ranging from 20–80% across different states, for wild growth of native trees and vegetation.
After a major new forest law was enacted in 2012, the Reserve Area requirement has been reinforced by digital tracking under the Rural Environmental Registration (Cadastro Ambiental Rural, CAR). “Without our CAR, there is no way we can run our farm,” Sloper says.
These observations are echoed by Fabricio Andrade, CEO of SanCoffee, a B-corp cooperative in Minas Gerais state: “The law should have little impact, because Brazilian legislation does not allow deforestation in areas where coffee is produced.” Instead, he says, Brazilian producers should see this law and the global sustainability movement as an opportunity to add value to their coffee.
Similarly, Gustavo Victorio, an auditor and agribusiness specialist, sees Brazil’s forestry code as a competitive advantage for the coffee sector.
“There is no other commodity exporter country with this sort of requirement.” He believes that the EU code will shape similar laws around the world, further giving Brazil an edge.
“All players in our coffee chain must be in tune, and traceability through blockchain technology, for instance, may be of great help in this,” Victorio says. A few Brazilian exporters have already begun using blockchain to validate their beans, prompted by demand for low-carbon coffee and compliance with Geographic Indication tracking and other certifications
What about “Big Coffee”? The EU is the second largest market for Brazil’s huge exports of instant coffee, and the sector is speaking up.
ABICS, the Brazilian Association of Instant Coffee Industries, has said that the aims of the EU Green Deal are good, but the law should be applied judiciously in the case of coffee.
“Brazilian coffee production makes no pressure whatsoever in deforestation, because it is grown in regions that have been consolidated as farming regions through many years. Even though there may be growth in farming areas, there will not be the need to deforest. Quite the opposite, coffee production in Brazil has been long known as an environmental protective activity, of reforestation and watercourse protection,” ABICS comments in a group statement.
Some stakeholders point to the unilateral nature of the European proposal and its potential negative impacts on small farms. “One-sided rules weaken international trade, and with that, it also causes social exclusion,” says Marcos Matos, CEO of the Brazilian Coffee Exporters’ Council (CeCafé).
“We need to advance a proactive agenda and explain the progress happening in the countryside. To show that what really empowers sustainability is to broaden trade, acknowledge good practices, and not just impose risks, costs, and red tape on commerce. That could create a societal disruption risk at the farm level,” Matos says.
ABICS, too, has called out the issue of red tape. “It is a laborious process, because not only the technological solutions must be in place, but all agents in the coffee value chain must be involved — which bring us to the additional costs of the traceability system, and yet we are not certain if the market or consumer is eager to pay for it,” ABICS states.
As for red tape, Matos says that not all details of the Green Deal’s implementation have been settled, and there are 18 to 24 months to get ready. No panic.
With or without the EU law, producers might be able to sell more coffee at better prices if they can show it doesn’t harm nature, since consumers care. A GlobeScan survey in Europe in 2022 found that 78% of interviewees believe that products that cause deforestation should be banned.