NKG: EU anti-deforestation rule harms coffee farmers – 03/06/2024 – Café na Prensa

The European Union’s Deforestation-Free Regulation (EUDR) is being implemented in a way that is detrimental to most producing countries, tells Coffee in the Press David M. Neumann, CEO of Neumann Kaffee Gruppe, the largest seller of green coffee in the world – around 10% of all coffee traded on the planet passes through the company’s hands.

Despite recognizing the promising idea and the worthy concept, Neumann says in an exclusive interview, via email, that the standard could even cause companies to abandon areas considered to be at high risk of deforestation, opening up space for regions where agriculture is currently practiced. sustainable areas are deforested to make way for pastures.

The EUDR prohibits the import of products from areas with identified deforestation until December 2020. The law comes into effect on December 30, 2024 and applies not only to coffee, but also to soy, wood, cocoa, palm oil, beef and rubber.

The law classifies certain regions by the risk of deforestation. The greater the risk of deforestation in that region, the greater the requirements to prove that the product did not come from a deforested area. Therefore, given the high cost of providing such evidence, businesspeople may stop buying coffee from these areas and purchase it from regions with less risk, according to Neumann.

“For example, there are projects underway in the Brazilian Amazon to promote shade coffee cultivation as a means of providing income to local communities, while also ensuring that biodiversity corridors are kept intact compared to other crops such as livestock “, says Neumann.

“This may be a better option from a deforestation, biodiversity and climate perspective. However, in a risk assessment, any coffee sourced from this area will always be at high risk of deforestation and will require costly traceability and monitoring systems to prove compliance It is much cheaper and less risky under the EUDR to source coffee from large farms far from forests than to get involved,” says the businessman.

Thus, Neumann says that, with the EUDR, he sees “the risk that the regulation will provide incentives for European companies to exit risk areas, rather than engage in risk areas and avoid future deforestation.”

He also criticizes the fact that the law indirectly penalizes small producers, who are precisely the majority in the sector. As we know, coffee cultivation is mainly practiced by small landowners, unlike other crops, such as soybeans.

“The cost to obtain a GPS point or a polygon is similar whether we consider a 0.5 hectare farm or a large property. This can also distort costs in relation to earning power to the detriment of the small producer, who produces the large majority of the world’s coffee,” he says.

Thus, according to Neumann, the rule will harm countries with more precarious structures. This is the case, for example, of several producers in Africa and Central America. “We are critical of the fact that a promising idea and a worthy concept is being executed in a way that is detrimental to the less sophisticated majority of coffee producing countries, while neutral to positive for only a few producing countries, including Brazil.”

He refers to Brazil as one of the countries possibly benefiting from the standard because, in general, the country has more structure to provide the data requested by the European regulation.

“Brazilian coffee exporters, through Cecafé [Conselho dos Exportadores de Café do Brasil]have taken the regulation seriously since before its implementation and have developed country-wide solutions that support the requirements faced by EU-based companies,” he says.

Thus, he states, “Brazil is beyond the curve.” The transition will be much more difficult for other countries, in Neumann’s view.

According to the businessman, the regulation could also have negative side effects for European consumers. “Europe is likely to see higher prices for coffee and coffees from fewer origins, reducing diversity in the cup and creating future supply risks, especially in the face of climate change,” he says.

REGENERATIVE AGRICULTURE ‘NOT A SILVER BULLET’

Asked about regenerative agriculture, which has become a fashionable term in the sector, Neumann says that the practice is important in the current climate scenario, but cannot be considered a “silver bullet”. He also remembers that coffee farming is predominantly small producers and that it is necessary to discuss who will pay the bill for the transition from traditional to regenerative practices.

“We need more solid data on farm economics and honest conversations about financing transitions and payments for ecosystem services provided by farmers under regenerative agriculture,” he says.

“In summary, we see regenerative agriculture as part of the puzzle when it comes to NKG’s sustainability strategy and one that can drive mitigation and adaptation in agriculture. However, it is not a silver bullet and needs to be implemented for each farm , which will not be easy or welcome everywhere”, he states.

BUSINESSMAN SET CARBON REDUCTION GOALS, BUT SAYS HE CANNOT SUPPORT THE COSTS ALONE

Asked about his goals for reducing greenhouse gas emissions and transitioning to clean energy sources, Neumann says that this is one of the group’s main concerns, but that it involves costs that the company cannot bear alone.

“In line with our commitment to address environmental challenges, NKG has set specific emissions reduction targets for both energy and agriculture-related emissions. For the year 2024, our goal is to achieve a 3% reduction in energy-related emissions , followed by a more ambitious target of a 6% reduction in 2025”, he says.

Despite being a leader in the sector, the company needs the involvement of other players in the coffee chain, says the businessman. He says the group is working to translate its customers’ demands for more sustainability. However, he says, “this comes at a cost and work that we cannot bear or do alone.”

“To truly make a difference, the roasting industry will eventually have to recognize the needs and possibilities as pre-competitive and in everyone’s interest,” he says.

Among the projects that the company has to reduce emissions, Neumann cites the construction of factories that use renewable energy sources and the installation of solar panels at Fazenda da Lagoa, owned by the company in Minas Gerais.

X-RAY | DAVID M. NEUMANN, 60

Third-generation managing partner of the founding family, oversees the entire Neumann Kaffee group.

X-RAY | NEUMANN KAFFEE GRUPPE

• Thirst: Hamburg (Germany)
• Performance: 27 countries
• Sales volume (2023): 16.2 million bags (60 kg), which represents 9.6% of global coffee demand, serving around 6,000 commercial customers
• Employees: 3,200
• Mainly competitors: Olam Food Ingredients, Ecom, Volcafe, Sucafina, Louis Dreyfus

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