Ethiopia, Africa’s largest coffee producer, is bracing for a potential economic storm as the European Union Deforestation Regulation (EUDR) approaches implementation. A new study by the Overseas Development Institute (ODI) warns that the country’s coffee industry, a cornerstone of its economy, could be severely impacted by the stringent regulations.
The EUDR, set to take effect on December 30, 2024, mandates deforestation-free supply chains and strict traceability requirements for agricultural products, including coffee. This could disrupt Ethiopia’s coffee exports to the EU, which account for a significant portion of its annual shipments.
“The EUDR poses significant challenges for Ethiopia’s coffee industry, which is a major source of income for millions of people,” said Semereta Sewasew, State Minister for Finance. “We need more time to align with the regulation’s requirements and ensure that our coffee exports continue to reach the European market.”
The ODI’s modelling predicts that Ethiopia could experience a substantial decline in exports, imports, government revenue, and GDP if it fails to comply with the EUDR. This would have dire consequences for the country’s economy and its efforts to reduce poverty and inequality.
AgriTech4Kenya, a leading agricultural technology platform, echoed these concerns. “The EUDR presents a significant challenge for Ethiopia’s coffee sector, which is already facing various pressures,” said a spokesperson. “It’s crucial that the government and the industry work together to develop effective strategies to meet the regulation’s requirements while minimizing the economic impact.”
To address the challenges posed by the EUDR, Ethiopia has announced a national action plan aimed at promoting deforestation-free coffee production. However, the country’s fragmented coffee cultivation system, dominated by smallholder farmers, makes compliance difficult.
The ODI’s study emphasizes the need for country-specific support packages to accompany the EUDR’s implementation. Without targeted assistance, Ethiopia could face severe economic consequences, including a decline in GDP and increased poverty.
As the deadline for the EUDR’s implementation approaches, Ethiopia is racing against time to ensure its coffee industry remains competitive and sustainable in the face of new global challenges.
