Fairtrade: the unbearable compliance costs of EU deforestation law for small-scale farmers

Fairtrade International (the Bonn-based global organisation, co-owned by more than 2 million farmers and workers, to promote fairer prices, and a worldwide-recognised label of sustainability) is deeply concerned that many small-scale cocoa and coffee producer organisations will be cut off from trade with the European Union market because of the EU Deforestation Regulation (EUDR) that will start to apply on 30 December 2024. 

This is not because these producers farm on deforested land but is due to the ambiguities in the regulation.

The producers need clear definitions of key terms, a thorough explanation of the rules on the traceability requirements and data governance across supply chains, and specifications of the criteria that will be used to verify compliance from the European Commission, and they need it now, not later.

Small-scale farmers are also facing big challenges when it comes to collecting, managing, and submitting the regulation’s required data. And while they can and want to scale up and add the data management systems and capacity, they need financial support to do so. 

Fairtrade strongly believes in the objectives of the EUDR to tackle deforestation and forest degradation by prohibiting products linked to deforestation on the EU market, and it does support a shared responsibility across supply chains when it comes to meeting these goals. 

We have been working hard over the last two years so that farmers and cooperatives will be ready for the regulation and able to provide their trade partners with the information they need.

For example, we updated our standards for cocoa and coffee to include geolocation mapping, deforestation monitoring, risk assessments, mitigation plans, and support for producers to mitigate deforestation risks. Meanwhile, the audits carried out by our independent certifier FLOCERT will translate to an additional layer of verification on these issues.    

The producers need clear definitions of key terms, a thorough explanation of the rules on the traceability requirements and data governance across supply chains, and specifications of the criteria that will be used to verify compliance from the European Commission, and they need it now, not later

There are about 845,000 Fairtrade coffee farmers in 624 producer organisations, and 471,000 cocoa farmers in 407 producer organisations for a total of 1.3 million farmers in more than 1,000 small producer organisations. Based on 2022 data - for coffee, there are 30 countries, and for cocoa, 19 countries, with Fairtrade producer organisations.

Plus, to help cooperatives and their deforestation risks, we partnered with nature tech firm Satelligence.

Satellite geo-mapping

The Fairtrade certified producer organisations provide geolocation data for each of their members’ farm plots. The platform verifies the data and then detects any deforestation activity within members’ boundaries, and whether or not farms are located in protected areas. It also flags deforestation near the farm, an important piece of information that contributes to risk assessments.

Finally, the system generates reports that cooperatives can use themselves and provide to their customers or potential customers.  

According to a new study about deforestation by KIT - Royal Tropical Institute, Chain Collaborative, and Expressing Origin, Fairtrade farmers are in a better position when it comes to protecting forests and complying with the EUDR.

The study also found that Fairtrade cooperatives and farmers were using their extra resources, such as the Fairtrade Premium, an additional sum of money that goes into a communal fund for workers and farmers to use to improve their social, economic, or environmental conditions, to invest in some of the EUDR requirements such as the required geolocations data collection.

However, Fairtrade believes that small-scale farmers should not have bear the compliance costs linked to laws imposed by the EU. This is simply unfair as long as the terms of trade remain unchanged.   

Throughout the years Fairtrade has been working to tackle deforestation from its root causes, such as poverty. Fairtrade prices support better incomes for farmers thanks to its minimum prices, and we have so far set living income reference prices in two countries for cocoa and seven countries for coffee, which companies can choose to pay to make progress toward farmers being able to farm sustainably and support a decent standard of living. Fairtrade programmes contribute to be key enablers of forest protection by smallholder farmers, such as climate adaptation and agroforestry systems.

The European Commission’s intervention in the form of updated information and financial support is necessary today or the EUDR will disproportionately affect small-scale farmers by hindering their participation in EU market.

This, however, is just the beginning because much more is needed to reverse forest degradation, protect forests, and build on the livelihoods of smallholder producers and their landscapes.