“Deforestation-free products are the market of the future”

EU imports are responsible for around 19 per cent of global deforestation. Two products that contribute to deforestation are coffee and cocoa. The EU wants to stop this trend with its Regulation on Deforestation-Free Products (EUDR). But what does this mean for hundreds of thousands of smallholder farmers and for producer countries? Researchers of CDE and the Alliance of Bioversity International and CIAT have conducted a study in Peru to explore the difficulties and opportunities associated with EUDR implementation.

“Producer countries such as Peru are now rushing to comply with the EUDR requirements, but its implementation involves complex challenges”: Jimena Solar Alvarez. Photo: CDE


Interview: Gaby Allheilig

According to the FAO, up to 90 per cent of global deforestation is due to agriculture – including cultivation of coffee and cocoa. In Peru alone, over 2.7 million hectares of Amazon forest were destroyed between 2001 and 2021. Will the new EU Regulation on Deforestation-Free Products (EUDR) solve this problem?

The EUDR aims to minimize the EU’s contribution to global deforestation. But in the case of Peru, for example, deforestation can’t be attributed to a single cause, but rather has various direct and indirect causes at the local, regional, and national level. Key drivers include agriculture, cattle ranching, mining operations, commercial logging, and road expansion. Here, EUDR implementation depends on how Peru succeeds in incorporating its requirements into laws and policies at the national level, as well as on their enforcement at the local level.

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“Smallholder farmers risk becoming even more dependent”

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The EU is the largest importer of Peruvian coffee and cocoa. Over 300,000 producers, most of them family farmers, grow these products. In your study, you say that small-scale producers might become more dependent on buyers. Why is that?

For example, if we think about the EUDR requirement to collect geolocation data from plots, this means that farmers must have access to technologies like GPS, drones, and satellite images. But they also need training in how to use them effectively. At the moment, most smallholder coffee and cocoa farmers are unable to meet such a requirement. As a result, they risk becoming even more dependent on buyers, intermediaries, or providers of professionalized geolocation and management services in order to access the EU market – or they may be excluded from the market.

Almost 30 per cent of the coffee and cocoa that Peru exports to the EU is certified organic. Organic products already require geodata. Wouldn’t it be relatively easy to scale this up?

Obtaining detailed information for each production unit, including geolocation data and risk-zone information, comes at an extra cost. In the case of Fairtrade or organic products, these kinds of costs are paid for by premium prices. For conventional products, the costs aren’t covered, so it isn’t easy to apply this model on a broad scale. It would require additional investment among medium and large cocoa and coffee companies and, in the medium term, higher prices for cocoa and coffee beans.

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“In the long term, with the EUDR, Peru’s government will pay much closer attention to these value chains”

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Wouldn’t the new requirements offer a chance to boost cooperatives and strengthen smallholder families?

Less than 30% of Peru’s cocoa and coffee producers are organized in cooperatives or other organizations. We also don’t know how much of small farmers’ current output makes its way to international supply chains via intermediaries or informal traders. In order to comply with the EUDR, the government will have to pay much closer attention to these value chains and how they can be better integrated into the formal economy in the long term. This is certainly one possible benefit of the new regulation.

Another possibility is that producers might export their goods not to the EU, but rather to markets with less stringent regulations.

That’s a concern, and also the reaction of some Peruvian producers. But they also realize that they belong to markets and value chains that must meet the EUDR requirements. And there is another trend: While the EU has been at the forefront of this movement towards deforestation-free agricultural crops, other (non-EU) countries are considering similar regulations. It may be complicated for producer countries to meet these requirements at the moment, but it’s becoming clear that this is the market of the future. So, the whole process can also be viewed as an opportunity.

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“Improvements in spatial planning and governance are needed to make land use more sustainable”

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Peru has adopted several strategies, laws, and measures in recent years to curb deforestation and greenhouse gas emissions. So, the country should be well equipped for the EUDR.

Indeed, Peru has a robust national legal and policy framework, including international commitments aimed at curbing deforestation. Unfortunately, its deforestation rates nonetheless remain high. One reason for this is lack of enforcement of regulations on spatial planning. Improvements in spatial planning and governance are needed, particularly at regional and local levels, in order for land to be used more sustainably.

Dialogue, information exchange, and coordination between relevant authorities should also be promoted – especially at decentralized levels where production areas are located. Today, there is limited state presence at these levels for proper implementation, monitoring, and reporting.

In your study, you propose that Peru’s government, among other things, should reform the granting of land titles and management concessions. Normally, such processes take longer than the deadline set by the EU for implementation of the EUDR.

The short timeline to implement such a regulatory change is a challenge, and it is being discussed in the EU at the moment. Given the lack of details on required documents and assessment procedures, countries like Peru prioritize the requirements that are clear – such as collection of geolocation data. At the same time, we are seeing process of transformation in the supply chains and their regulation, which requires adaptive management and continuous improvement to ensure successful implementation.

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“Incentives could help enable smallholders to obtain better prices for their products”

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What else can Peru do to implement the EUDR in a way that reduces possible harms to small producers and value chains?

We identified entry points to address key risks of EUDR implementation. For example, it would help to have a coherent set of incentives that encourage smallholders to grow diverse crops, breed animals, and obtain carbon certification for their forestland. Such incentives could foster a more sustainable long-term approach to cocoa and coffee value chains, enabling smallholders to obtain better prices for their products and meet their needs.

You also highlight an EUDR risk that particularly affects Peru: namely, that small producers might drop out of EU supply chains and switch (back) to illegal activities – such as coca cultivation. How significant is the risk that the EUDR might unintendedly undermine decades of efforts to replace cultivation of drugs with coffee or cocoa?

Cocoa and coffee production in Peru emerged and expanded largely thanks to government intervention. Peru’s government incentivized family farmers to abandon coca and enter the formal economy by growing and marketing cocoa and coffee. One of the unintended risks of the EUDR is, indeed, that farmers might return to illegal activities. But given the current high prices for products such as cocoa, the risk is rather low at the moment.

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“I hope the EU will offer producer countries incentives that improve their ability to respond”

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What gives you hope that Peru can overcome all these challenges?

Significant efforts are required by producer countries to comply with the EUDR provisions, and Peru is following suit. For example, Peru’s Ministry of Agriculture has initiated a public register of agricultural producers that includes the geolocation of plots. But these measures must be supported by the private sector and international actors. A positive sign in this regard is that the EU plans to include Peru in upcoming cooperation projects aimed at better linking its new agricultural register and the needs of the private sector. Once all the procedures for implementing the EUDR have been clarified, I hope incentives will be provided to producer countries that improve their ability to respond. 

You mention the need for support from international actors and the private sector. What about consumers in the global North?

If societies in the global North want to fight deforestation, they should acknowledge all these efforts by other countries – and be consistent with their consumption preferences. Producer countries such as Peru are rushing to comply with the EUDR regulations. It’s critical to ensure that these countries maintain access to the EU market. Solving global problems like deforestation isn’t a task for isolated actors. Bringing together stakeholders from producer and consumer countries – from the global North and South – clearly demands a coordinated, global commitment. It’s not just the responsibility of governments, but of everyone who can contribute.

Soon to be published: “Human rights and environmental due diligence regulations for deforestation-free value chains? Exploring the implementation of the EU Deforestation-free products Regulation in the Cocoa and Coffee Sectors of Peru”, a study by Jimena Solar Alvarez et al.