EU regulation impacts Ethiopia's coffee exports

The European Union, which imports nearly a third of Ethiopia's coffee, may face challenges in meeting new regulations aimed at preventing deforestation. A study by ODI Global, published on October 16, suggests Ethiopia could lose between 160 and 453 million USD in potential coffee export revenue due to compliance difficulties with the European regulation against deforestation (EUDR).

EUDR compliance deadlines set

According to the European Commission, the main obligations of the EUDR will apply from December 30, 2026, to large and medium operators, and from June 30, 2027, to most micro and small operators. These obligations require that products like coffee do not come from deforested land after December 31, 2020, comply with producing country laws, and undergo required due diligence.

Ethiopia's coffee production structure

Ethiopia's coffee is mostly produced by around 4 million small-scale farmers, who account for nearly 95% of the country's coffee output. These producers typically sell their harvests through multiple intermediaries, including local collectors, processing stations, and exporters, before reaching international markets.

Challenges with informal supply chains

The report highlights that 57.4% of Ethiopia's coffee is sold through local collectors or informal channels outside officially designated marketplaces. While these intermediaries help gather coffee from scattered farms, their informal nature hampers traceability, quality control, and transparency, increasing the risk of non-compliance with the EUDR.

Solutions for traceability

The EUDR allows for the mixing of coffee from multiple farms, as long as all contributing plots are identified and the coffee is compliant. ODI Global suggests strengthening traceability by supporting local collectors and cooperatives, clarifying legal documentation, and offering economic incentives. However, the cost of data collection and verification remains a significant barrier for many producers.

Ethiopia's response to EUDR

To meet the EUDR requirements, Ethiopia formed a national steering committee in early 2024 and developed a three-year action plan. This plan includes improving traceability through geolocation of farms, digitizing supply chains, and creating a national database. With support from the German cooperation (GIZ), the Ethiopian Coffee and Tea Authority (ECTA) has developed the Ethiopian Coffee Traceability Management System (ECTMS).

Implementation of the traceability system

The ECTMS tracks coffee lots, volumes, processing methods, transport permits, warehouses, and shipping details. It includes a mobile application and integrates land use rights certificates to link coffee lots to specific plots. More than 32 million agricultural plots are already registered in Ethiopia's national land administration system, and the ECTA states the platform is now fully operational for European buyers.