Coffee cargoes are flooding Europe as traders rush to stock up on beans ahead of new environmental rules that are to be implemented at the end of the year.
The EU’s Deforestation Regulation (EUDR) require importers into the bloc to prove that commodities such as coffee, beef, cocoa and timber do not contribute to destroying forest land.
Coffee is especially vulnerable to the challenges of ensuring every bean is in compliance, so traders have raced to ship as much as they can to Europe before Dec. 30.
Photo: Bloomberg
Exports from Brazil to the bloc surged about 65 percent in the seven months to last month compared with last year, while Ugandan exports saw an all-time high last month, with the bulk headed to the continent.
“This crop is effectively the last crop we can export before EUDR comes in,” Ugandan coffee trader Ted Marley said. “The next robusta crop is in October, and given the 70-day vessel time past South Africa and the processing time, almost all coffee from the next crop will have to be EUDR compliant.”
Roasters want to cover any possible deficits for the first quarter of next year, Riccoffee managing dirctor Ricardo dos Santos said.
Few traders are willing to risk shipping beans after October and miss the window for transporting uncertified beans, dos Santos said.
This comes as traders are faced with higher prices. Robusta beans, used for instant coffee, have soared to the highest since the 1970s. Higher-quality arabica beans have surged more than 30 percent this year. Increased cost of borrowing, container shortages and longer transit periods are also adding to the challenges.
Even as traders try to ship as much as they can, the path ahead continues to be uncertain as the European Commission has not published all the implementation details, said Holger Preibisch, a chief executive for a German coffee association.
Some producing nations are also more unprepared than others.
“Uganda is really lagging behind as far as EUDR compliance is concerned,” Wakanda Coffee Brokerage Services coffee broker Joab Kankiriho said. “A great number of exporters did not have sustainability programs in place until the EUDR” became a reality.
Some EU countries and industry groups have called for the rules to be revised. For now, shipments are expected to taper off, because no one wants to be saddled with a delayed cargo that does not meet the regulatory requirements.
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