The authorities are scrambling to comply with the European Union’s forthcoming regulation on deforestation, a move that threatens a significant portion of coffee exports to the economic bloc. The Ethiopian Coffee & Tea Authority (ECTA), under the Director General, Adugna Debela (PhD), is spearheading a national action plan estimated to cost 2.2 billion Br to meet the stringent European requirements.

The regulation, which aspires to curb deforestation by ensuring imported commodities do not contribute to forest degradation, is poised to affect a third of Ethiopia's coffee exports.

Coffee is the spine of Ethiopia's economy, with the country earning 1.4 billion dollars in exports last year. However, the coffee sector experienced a downturn in the fourth quarter of last year, with revenues falling by 17pc and volume dropping 15.4pc to 78,000tns. The decline in export performance is attributed to various factors, including fragmented land holdings among smallholder coffee farmers, poor data management, and the looming cost of compliance with EU regulations.

The EUDR, set to be enforced in less than a year, mandates that suppliers adhere to labour and human rights laws, including the rights of indigenous communities. A consequential aspect of the regulation is the requirement for due diligence statements establishing that commodities, such as coffee, have not contributed to deforestation since December 2020. The potential sanctions for non-compliance include fines of up to four percent of a company's annual turnover, confiscation of goods, and temporary bans from participating in EU procurement or tenders.

Adugna's action plan, unfolding over the next three years, includes seven strategic targets designed to ensure compliance with the EUDR.

"It's time for compliance, not complaints," said Adugna, pressing the urgency during last week's meeting at the Skylight Hotel on Africa Avenue (Bole Road). "Farmers can only ask how they could benefit from subscribing to the requirement."

A national steering committee has been established, comprising representatives from various federal agencies and ministries, the Coffee & Tea Authority, the Geospatial Institute, regional agriculture bureaus, coffee growers, and exporters. It wants to compile a national database up to the Wereda (district) level. Significant investments in digital assets, including laptops, GPS devices, smartphones, and training programs for farmers and exporters, are on the table.

Gizat Worku is a general manager of the Ethiopian Coffee Exporters Association, a powerful industry lobby group. Although he was hoping for more private sector participation in its drafting, he is relieved with an action plan which exhibits a professional touch. However, he urged the importance of understanding how Europeans would react to the challenges Ethiopia faces, pinning hopes on the georeferencing of Ethiopian coffee to address the impact.

"It depends on how the Europeans react now," he said.

The European Commission estimates compliance-related costs for companies to range between 170 million dollars and 2.5 billion dollars annually. Continued appeals are made, and objectives to begin the risk assessment process by March are outlined.

According to Umar Shafi, deputy director of the Authority, cooperation along the entire coffee supply chain to safeguard Ethiopia's interests in the face of EU regulations is essential.

"All participants in the coffee supply chain will rally together," he told  Fortune.

However, the authorities worry that mapping the 5.2 million coffee farmers within the EU's timeframe is daunting, particularly given the unique nature of coffee cultivation, which predominantly occurs in forested areas. The EUDR’s geolocation requirements, which demand a polygon survey for plots larger than four hectares and a point reference for smaller plots, complicate compliance efforts. Over 85pc of coffee is farmed on plots around half hectares, demonstrating the complexity of meeting these standards.

Experts from the Geospatial Institute suggest validating existing satellite maps and aerial photographs to meet the EU's geolocation demands. The Institute is considering launching a project to verify the available data through onsite surveys, acknowledging the difficulties of accurately mapping large expanses of land in the short timeframe available for compliance.