Recently, the Financial Times quoted three officials from the European Union (EU) announcing the temporary postponement of deforestation risk classification. Instead, the EU will assess the average deforestation risk for all importing countries, thereby giving them time to adapt to the new regulations. The reason for this decision comes from needing more time for officials to perfect the previous classification system, which was divided into three levels: Low, medium and high.
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| Farmers harvest coffee in Dak Lak. Photo source: Maika Elan, Bloomberg |
Launched in December 12, the European Union Deforestation Regulation (EUDR) aims to reduce and eventually eliminate deforestation in agriculture, which is the leading driver cause climate change. Specifically, the EU will ban the import of 2022 products including: Cattle, cocoa, coffee, palm oil, soybeans, rubber and wood if actions are detected that cause forest loss and degradation during production and Processing. Businesses have 7-18 months after the EUDR takes effect to demonstrate that the product meets the EUDR requirements.
If they pass the EUDR censorship stage, items from exporting countries will be assessed based on 3 risk levels: Low, medium and high. Specifically, EU member states will inspect 9% of shipments coming from countries with high deforestation risks, 3% of shipments for countries with medium risk, and 1% of shipments from countries with low risk. low risk. In particular, items with a low level of risk but within a region/country with a high-risk item also face the risk of being considered a high-risk item by the EU.
Obstacles and opportunities from EUDR
After its promulgation, the EUDR attracted criticism from business representatives and global experts, due to concerns that coffee producers would not be able to make the necessary changes, as well as demonstrate origin of their products to keep up with the deadline set by the EU.
In Vietnam, many businesses have encountered many difficulties in proving their origin. Responding to the press, Ms. Tran Quynh Chi - Director of the Asian Landscape Region, Initiative for Sustainable Trade (IDH) said that currently 70 - 75% of coffee gardens do not have location data according to EUDR.
According to the Vietnam Coffee and Cocoa Association, up to 95% of cultivated coffee land is not under the management of state companies. Furthermore, the amount of coffee grown on small farms is very small, so traceability is very difficult.
In an interview with Perfect Daily Grind, Mr. Stuart Ritson - consultant on coffee purchasing and quality control in the Netherlands said that the EUDR classification scale currently lacks in-depth analysis, and there are many risks. big risk. “This could lead to traders, roasters or even large industry groups terminating cooperation with an entire country to avoid higher levels of scrutiny from the EU,” he said. Mr. Stuart Ritson spoke.
Sharing the same opinion, Mr. Auret Van Heerden - CEO of consulting company Equiception (Switzerland) said that the EUDR classification system could negatively affect coffee growers and small businesses, which have complied with previous regulations, but failed to meet the required data and standards.
However, Mr. Auret Van Heerden said that EUDR also brings many benefits to investors. Accordingly, businesses can more easily identify and manage social and environmental risks with the traceability technology and data that EUDR provides. Thereby, businesses can improve human rights issues for indigenous people, while improving farming conditions by conserving forests, water resources and biodiversity.
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| Coffee cherries are harvested by Vietnamese farmers. Photo source: Maika Elan, Bloomberg |
Action from EUDR decision
According to experts, Vietnamese coffee businesses can take advantage of the time before the EUDR is revised to perfect production procedures and processes. In particular, it is necessary to refer to the EUDR adaptation action plan framework to prevent upcoming policy changes.
Specifically, the plan includes actions such as: Strengthening strict monitoring of high-risk areas; build and recognize a national database on natural forests and planted areas; Identify appropriate solutions in monitoring, protecting and restoring forests and establishing a traceability system, supporting livelihoods, sustainable production, etc.
Furthermore, this is also a golden time for policymakers to focus more on small business households and coffee farmers. In particular, in countries with developed economies like Vietnam, deforestation is closely related to economic and social inequality and poverty. As the agricultural economy develops unsustainably, coffee farming will become increasingly unsustainable.
"If there is no market adjustment, farmers will stay away from unprofitable products or even completely abandon farming," he said. Mr. Auret Van Heerden shared.
In particular, Mr. Auret Van Heerden emphasized that cooperation from suppliers and buyers is the key to success in dealing with EUDR. “Most importantly, the buyer must be sure that the manufacturer can meet the expectations of the EUDR. There needs to be investment from coffee importers in training systems, establishing management systems and progress tracking, and risk identification technology for manufacturers." he said.
