KAMPALA – The story of Europe’s morning coffee is usually told from the café counter. But to understand the consequences of the European Union’s new deforestation rules, you have to start much farther away, in the hills of eastern Uganda or the shaded terraces of Sumatra, where smallholder farmers tend coffee trees that no longer yield as they once did.
For decades, these farmers have lived in a fragile balance between forests and markets. Now, a single date, December 31, 2024, the cut-off established by the EU’s Regulation on Deforestation-Free Products, threatens to reorder that balance entirely.
A new study by researchers Azizah Fauzi and Regean Mugume, released by the Economic Policy Research Centre, warns that the EU’s landmark green trade policy may unintentionally push thousands of small farmers to the edge of the global market. The problem is not the intention. Few dispute the need to slow the clearing of forests. The problem is who pays the price.
A rule written in Brussels, felt in Africa and Asia
In Uganda, coffee is the country’s second-largest export. In Indonesia, it brought in more than $1.15 billion in 2022. Yet 98 per cent of the coffee in both countries is grown by smallholders working less than ten hectares, men and women whose plots are too small to absorb new compliance costs and too remote to plug neatly into the EU’s supply-chain software.
Under the EU regulation, every shipment of coffee entering Europe must be traceable to land that has not been deforested since 2020. That means GPS coordinates, risk assessments, digital reporting systems, and full legal compliance.
For European policymakers, this is climate leadership. For farmers, it is a demand for proof that many have no tools to provide.
Digital traceability sounds straightforward in Brussels, but in rural Indonesia or northern Uganda, it often means:
- mapping farms that have never been formally registered
- uploading data from villages with irregular electricity
- paying for certification schemes that offer little or no price premium
The study shows that these costs will fall hardest on farmers already struggling with falling productivity. In Uganda, yields have dropped from 620 kg per hectare to 540 kg over the past decade. In Indonesia, adoption of recommended farming practices remains low, largely because farmers lack the capital or labour to implement them.
The result is a double bind: farmers must modernise to comply with EU rules, yet they lack the resources to do so.
In theory, the new regulation should help reduce deforestation. In practice, the report warns, it could deepen the very pressures that push farmers into forests.
Uganda’s coffee-growing area expanded by 92 per cent between 2014 and 2022, while forest cover fell by 12 per cent. Declining yields drove expansion; expansion drove deforestation. Without financial and technical support, the authors argue, farmers may either abandon the EU market or clear more land to compensate for rising costs.
The EUDR could be a brake or a trigger.
Uganda is especially exposed. Sixty-one per cent of its coffee exports went to the EU in 2023, up from forty-two per cent a decade earlier. Losing access to that market would ripple through the countryside, shrinking incomes for hundreds of thousands of rural households.
Indonesia is less dependent on Europe, but not immune. Its EU market share has already fallen from 25 percent to 16 percent.
This is not just a trade adjustment. It is a potential restructuring of who gets to sell coffee to the world’s largest single market.
Governments are trying—but the gap is wide
Both Uganda and Indonesia have taken steps toward sustainability, but neither has a fully aligned system to meet the EU’s new requirements.
Uganda’s Coffee Development Authority is piloting traceability tools with private partners. Indonesia’s social forestry programme gives farmers legal access to forested land. But pilot projects and partial programmes cannot meet the pace or scale demanded by the EUDR.
As the authors note, the challenge is not willingness but capacity.
Some of the most promising solutions are coming from corporate initiatives rather than state policy. Nestlé, for instance, has doubled yields among participating farmers through long-term training and monitoring, while supporting satellite-based traceability.
But these pockets of progress are exceptions, not the norm. Most certifications still bring no meaningful price premium, making compliance financially irrational for farmers on the brink.
The report argues that the EU should reconsider how it rolls out the regulation. A phased approach, perhaps extending smallholder compliance deadlines to 2026, could prevent sudden exclusion from the market.
More importantly, the EU must invest in tools that make compliance feasible: digital access, farmer training, shared data platforms, and partnerships that bring companies, governments, and farming communities into the same conversation.
Climate justice, the authors argue, cannot stop at the border of the Global South. A deforestation rule that protects forests while impoverishing farmers would be a contradiction, and a failure.
A green ambition with two possible futures
The EU wants coffee that does not cost the planet. Farmers want coffee that can still sustain their families. Both ambitions are legitimate. The question is whether they can be reconciled.
As one Ugandan official put it during the study interviews, “If we are locked out of the EU, the forest will not save us. We shall have no alternative.”
That is the paradox at the heart of the EUDR: a policy written to protect the world’s forests could become a new barrier for the people who live closest to them.
Whether it becomes a green bridge or a green wall will depend on how quickly, and how fairly, the world responds.
