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Coffee cargoes are flooding the European Union as traders rush to stock up on beans ahead of new environmental rules that kick in at the end of the year.
The EU’s Deforestation Regulation, or EUDR, will require importers into the bloc to prove that commodities like coffee, beef, cocoa and timber do not contribute to destroying forest land. However, a lack of clarity on the details has left many businesses inadequately prepared, making some supply disruption inevitable.
Coffee — a crop that is largely reliant on millions of small growers across a wide swathe of the globe — is especially vulnerable to the challenges of ensuring every bean is in compliance. So, traders have raced to ship as much as they can to Europe before December 30.
Exports from top coffee producer Brazil to the bloc surged about 65 percent in the seven months to July compared to last year. Uganda — increasingly crucial for Europe’s robusta supplies after a massive shortfall in top grower Vietnam — saw exports touch an all-time high last month, with the bulk headed to the continent.
“This crop is effectively the last crop we can export before EUDR comes in,” said Ted Marley, a coffee trader in Uganda. “The next robusta crop is in October and given the 70-day vessel time past South Africa and the processing time, almost all coffee from the next crop will have to be EUDR compliant.”
Roasters want to cover any possible deficits for the first quarter of 2025, according to Ricardo Dos Santos, managing director at European coffee supplier Riccoffee (UK). Few traders are willing to risk shipping beans after October and miss the window for transporting uncertified beans, he added. — Bloomberg
Online Reporter
Bongani Ndlovu