Revenue loss forecast

Ethiopia may lose up to 453 million dollars annually in coffee export revenue due to the European Union's new deforestation regulation, according to a report by the London-based think tank ODI Global, as cited by Addis Standard.

Regulation details

The European Union's Deforestation Regulation (EUDR) will take effect on December 30. It requires producers to prove their products are deforestation-free, meaning they must show that no forests were cleared to produce them.

Compliance deadline

The EU has given most micro and small businesses until June 30, 2027, to comply with these new standards. This extended period is intended to help smaller producers meet the requirements.

Compliance challenges

Up to 60 percent of coffee producers in Ethiopia may struggle to trace their coffee back to individual farms, document the legality of land use, and collect geolocation data at the plot level. These requirements are part of the EUDR's compliance process.

Industry impact

The coffee sector in Ethiopia employs 15 million people, and while 30 percent of its exports go to the European market, the potential loss from the EUDR is expected to be significant for the country's economy.

Ethiopia's vulnerability

Ethiopia's coffee industry is especially vulnerable to the EUDR because it is dominated by small growers who cultivate small plots of land, many of which are less than one hectare in size. This structure makes compliance with the regulation particularly difficult.