EU deforestation law to force compliance even on non-EU coffee supply chains, study finds

By May Angel

LONDON, Sept 2 (Reuters) - The EU's new anti-deforestation law will push many coffee firms to ensure all their products meet the bloc's rules, not just those destined specifically for EU markets, according to a study by the non-profit Trase.

From end-December, the EU Deforestation Regulation will require importers to prove their products weren't made with raw materials from deforested land by, amongst other measures, tracing the materials back to the plot they were grown on.

For coffee producers that ship most, but not all, of their coffee to the EU, Trase found it would often be less costly to extend EUDR-compliance across their entire supply chain, rather than running segregated EU and non-EU chains.

• The EU accounts for about 40% of global coffee imports, but according to Trase, firms that supply the bloc handle nearly 80% of the world's coffee shipments.

• Coffee major JDE Peet's ships 84% of its beans to the EU, while trading firms Louis Dreyfus and Neumann Gruppe ship 63% and 53%, respectively.

• "For such companies, extending traceability requirements across their supply (chains) may be most cost effective. This means the deforestation law could punch far above the EU's weight," said Trase.

• The EUDR has long faced criticism it will lead to segregated supply chains that cut small-scale farmers in remote, rural areas out of the lucrative EU market, with exporters loath to ship their beans to the bloc as they will have to trace them.

• The Trase study calls into question this critique.

• "The fact that many companies ship to both the EU and other markets suggests similar standards may be more easily adopted by those companies beyond the EU," it said.

• Deforestation is the second leading cause of climate change after the burning of fossil fuels. The EUDR aims to end the 10% of global deforestation fuelled by EU imports.

(Reporting by May Angel; Editing by Jan Harvey)