Indian coffee exporters are witnessing a surge in demand from European buyers, who are building up their stocks ahead of the deadline to comply with the proposed EU Deforestation Regulation (EUDR) norms.
Eudreforce regulation
- In December 2022, the European Union and its member states signed the EUDR agreement to take measures to prevent deforestation and forest degradation caused by imported products.
- The aim of the EUDR is to minimise imports of products linked to deforestation.
- EU members are mandated to comply with the requirements of the EUDR norm from 30 December 2024.
Key Criteria
- The EUDR obliges producers and manufacturers to certify their products as environmentally friendly and sustainable, i.e. during the process of production, manufacturing or distribution, the product has not resulted in deforestation practices.
- Importers are required to provide geolocation data of production areas to ensure traceability.
- This data helps verify compliance with deforestation-free requirements.
- Traceability also provides a transparent way to verify the authenticity of products, reducing the number of counterfeit products entering the market.
Key Product Categories
- Currently, the regulation targets seven product categories, which mainly apply to agricultural products.
- The products included in the list are: animal products (including meat), cocoa, palm oil, soya, rubber, wood, coffee.
- These seven products have contributed largely to environmental degradation due to their widespread use and market demand.
Coffee Production in India
- India is the seventh largest producer of coffee and also the fifth largest exporter after Brazil, Vietnam, Colombia and Indonesia.
- More than two-thirds of the coffee grown in India is exported.
- Nearly 60% of Indian coffee exports go to Europe, where Italy, Germany and Belgium are the major buyers of the commodity.
Rise in India’s Coffee Exports
- With the advent of the EUDR, advance purchases of coffee are increasing significantly, as European customers are buying ahead of the deadline.
- India’s coffee shipments during the period January 1 to June 21 this year grew by 16% to over 2.37 lakh tonnes as against 2.04 lakh tonnes in the same period a year ago.
- Shipments of coffee grown in India during this period have seen a growth of 15% to over 1.83 lakh tonnes as against 1.59 lakh tonnes a year ago.