EU deforestation rules could make it harder for small Brazilian coffee growers to export

New European Union (EU) deforestation rules could make it harder for Brazilian coffee cooperatives and family farmers to sell into the bloc, according to a study by the Federal University of Rio de Janeiro (UFRJ).

The study, released Friday (26) by Agência Bori, says the European Union Deforestation Regulation, also known as EUDR, will create stricter traceability requirements for products entering the EU market. The rules are expected to apply gradually, reaching micro and small producers by June 2027.

The findings are part of the project “Decarbonization and Industrial Policy: Challenges for Brazil,” conducted by UFRJ’s Institute of Economics.

The study notes that the EU bought just over half of Brazil’s coffee production in 2024, accounting for 51.2% of the total. That makes coffee one of the Brazilian export sectors most exposed to the new European environmental requirements.

Recent Datamar data shows that Brazil exported 32,646 TEUs of coffee beans in the first four months of the year. The chart below provides a breakdown of Brazil’s monthly coffee export figures:

Coffee Exports | Jan-Apr | 2022 – 2026 | TEUs

Source: DataLiner (click here to request a demo)

How the EUDR works

The EUDR was created by the European Union to discourage deforestation in countries that supply the bloc.

Under the regulation, access to the EU market will depend on proof that products were not grown or produced on land deforested after December 2020. Without that proof, imports can be blocked.

UFRJ researchers Kethelyn Ferreira and Marta Castilho note that the EU classifies Brazil as a “standard risk” country. That means exporters must go through a stricter process of verification and traceability to certify the sustainable origin of their products.

The study estimates that 5.3% of Brazil’s total exports are exposed to the new rule. It identifies seven commodities as relevant under the EUDR: coffee, cattle, cocoa, palm oil, rubber, soybeans and timber. Among them, coffee is the most dependent on the European market, with more than half of Brazil’s production shipped to the bloc.

Small coffee growers face the biggest challenge

The study says micro and small coffee producers are likely to face the greatest difficulties because of technical limitations and gaps in land regularization, which can make it harder to trace and document whether a property was free from deforestation after 2020.

The EUDR was originally scheduled to take effect at the end of 2024. After two postponements, implementation is now expected to begin gradually: on Dec. 30, 2026, for large and medium-sized companies, and on June 30, 2027, for micro and small companies.

Ferreira said the regulation has a legitimate environmental goal: reducing deforestation linked to global production chains. Still, she said it could also function as a form of “green protectionism,” using environmental standards in a way that may shield European producers from foreign competition.

“Its design and commercial effects raise questions about potentially discriminatory impacts on exporting countries such as Brazil,” Ferreira told Agência Brasil.

“Access to the European market will depend on compliance with strict traceability and due diligence requirements,” she added.

For the researcher, those requirements create additional costs for exporters, especially in developing countries, and may operate in practice as non-tariff trade barriers.

The study also criticizes the EU regulation for treating legal and illegal deforestation in the same way.

The European mechanism is expected to take effect months after the Mercosur-EU free trade agreement entered into force on May 1. The agreement eliminates tariffs on goods and services traded between the blocs. On the South American side, the treaty includes Brazil, Argentina, Paraguay and Uruguay.

Possible consequences

Ferreira said it is not possible to say that Brazil will necessarily lose share in the European coffee market. But she said there are signs that the EUDR could favor larger producers.

“It is reasonable to expect medium and large producers to have better technical, financial and administrative conditions to implement traceability systems and prove that their production is not linked to deforestation after 2020,” she said.

Another possible consequence is that European buyers could shift part of their sourcing to countries classified as “low risk,” which are subject to lighter due diligence procedures. Ferreira cited Vietnam as one example.

In 2024, Brazil was the EU’s largest coffee supplier, accounting for 21.8% of the bloc’s purchases. Vietnam ranked second, with a 9.1% share.

“It is plausible to assume that some European importers may replace Brazilian suppliers with Vietnamese ones,” she said.

Possible paths forward

The UFRJ researchers said the postponement of the EUDR creates a strategic window for diplomatic negotiation by South American agribusiness.

The study says one possible way to soften the restrictions would be for the EU to recognize monitoring systems already in place in Brazil, such as the Soy Moratorium and the Rural Environmental Registry, known as CAR.

The Soy Moratorium is a voluntary agreement under which companies avoid buying soybeans from areas in the Amazon that were deforested after 2008. CAR is a national registry that links rural property locations with environmental information.

The researchers also defend the creation of European funds to provide technical and financial support to small producers in South America.

Source: Agência Brasil

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