Europe Extends Forest Rule Deadline But Ethiopia’s Coffee Sector Still Feels the Heat

Nov 29 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

The European Union has granted another year for compliance with its deforestation regulation, delaying enforcement until December 2026 for large businesses and June 2027 for micro and small enterprises. The extension, approved by a 402-250 vote in the European Parliament, is designed to keep products linked to forest loss off the EU market and reinforce electronic due diligence and IT systems for tracking commodities like coffee, cocoa, and palm oil.

The European Union (EU) has once again extended the deadline for its regulations on deforestation, offering another year for businesses to align with rules in keeping products linked to forest loss out of the bloc’s market.

The European Parliament, for the second time since the regulation was passed in 2023, approved the extension by a vote of 402 to 250, with eight abstentions. The decision allows large operators and traders until December 2026 to comply, and gives micro and small enterprises until June 2027. It is intended to provide more time for the block to smooth out the transition, strengthen IT systems for electronic due diligence, and shift the compliance burden to those initially placing products on the EU market, rather than subsequent traders.

For smaller operators, the process is simplified to a one-off declaration, reducing paperwork and administrative strain.

The regulation’s scope is wide, covering commodities such as coffee, cocoa, palm oil, soybeans, wood, rubber, charcoal, printed paper, and cattle products. Its declared objective is to stem climate change and biodiversity loss by breaking the link between European consumers and global deforestation. As the European Parliament readies negotiations with member states to finalise the law, the latest extension is widely expected to be the last.

The size of the stakes matches the scale of the challenge. Data from the Food & Agriculture Organisation (FAO) show that 420 million hectares of forest were lost worldwide between 1990 and 2020. EU consumption alone accounts for about 10pc of global deforestation, with palm oil and soybeans as primary drivers. Industry experts see the EUDR not only as a regulatory burden but as a strategic opportunity.

For Ethiopia, this added time offers a critical reprieve. It is a leading exporter of Arabica coffee to Europe, with nearly half of its annual shipments heading to EU markets. Last year, 40pc of the 469,000tns of coffee exported from Ethiopia was destined for European buyers, up from 37pc the previous year. The regulation’s initial deadline had given exporters barely a month to prepare, prompting widespread concern across the sector. Industry voices now see the extension as an opportunity to finish preparations, but warn against complacency.

“We've completed the preparation,” said Adugna Debela (PhD), director general of the Ethiopian Coffee & Tea Authority (ECTA).

Adugna acknowledged that the extra year gives authorities and stakeholders time to address the final details, but disclosed that buyers of Ethiopian coffee had already requested more time and that exporters should treat the window as an opportunity to improve training and compliance, not to delay further.

The coffee sector has shown growth in recent months. Coffee production has climbed 19pc over last year, meeting 84pc of the national quarterly target, according to Fitsum Assefa (PhD), minister of Planning. The global market has also moved in Ethiopia’s favour, with Arabica coffee prices jumping 87pc this year. As the acknowledged birthplace of Arabica, Ethiopia expects a bumper harvest of 1.4 million tonnes this year, a sign of improved yields and favourable international trends.

The authorities regulating the sector have launched an ambitious series of projects. The Authority has announced plans to construct 24 warehouses across four woredas within a tight 90-day timeframe, costing 100 million Br. A second phase is scheduled to add 34 warehouses for another 100 million Br. To modernise data collection and management, the Authority has distributed smartphones to key coffee-producing regions. According to Adugna, these efforts would support European compliance and help Ethiopian coffee fetch higher international prices.

A central pillar of the compliance push is the new Ethiopian Coffee Traceability Management System (ECTMS), built by a local firm, Vulcan ICT Plc. This digital platform draws on a national geo-spatial data hub, centralising information on coffee production from the farm level to export. The system integrates farm mapping, coordinates supply chains, assesses deforestation risks, and introduces transparency at every stage, aligning the sector with global sustainability standards.

“The digitalisation is not only for the EUDR," Adugna told Fortune. "It also helps manage the timing of coffee plant renewal and replacement.”

His office has set an annual export goal of 600,000tns, targeting three billion dollars in foreign exchange for the 2025/26 fiscal year. In the most recent quarter, the official plan projected exports of 152,000tns worth 622.5 million dollars. Actual exports were 114,000tns, but generated 762.5 million dollars, a 47pc rise from the same period last year.

According to Adugna, independent evaluators, including Italian inspectors, had reviewed preparations and found the sector nearly ready for the new rules. A study carried out two years ago established that 99pc of Ethiopia’s coffee is cultivated in areas untouched by deforestation, providing an advantage for compliance. Adugna warned that any complacency or lack of attention among stakeholders could undermine this progress.

Despite the positive momentum, Adugna sees remaining challenges in the grace period to refine outstanding measures. He urged exporters to use the extension to provide more training, particularly for farmers and cooperative leaders.

However, not everyone in the industry faces the same challenges.

Gizat Worku, general manager of the Ethiopian Coffee Exporters Association, find the prior one-month window too narrow for proper preparation. While he welcomed the extension, he cautioned that exporters should remain vigilant.

“The country’s coffee comes from shaded, non-deforested areas, which simplifies compliance,” Gizat told Fortune. "High data collection costs and resistance from farmers, who often view new requirements as intrusive, continue to pose hurdles."

The coffee supply chain is fragmented, with millions of smallholders contributing to exports. According to Gizat, a single container can hold beans from more than 100 farmers, complicating efforts to trace each shipment’s origins.

Some, like Ibrahim Hussen, a farmer in Jimma Zone’s Limu Kossa Woreda, in Oromia Regional State, have already adapted to the new standards. Hussen’s 205hct farm is certified for export and enjoys premium prices in global markets. He produces nine containers of coffee on his own farm, and with output from neighbouring producers, exports as many as 50 containers each year.

But for others, especially cooperative unions, compliance remains an uphill battle. The Yirgachefe Coffee Farmers Cooperative Union has gathered traceability data for only half of its 44,000 members. According to its Deputy General Manager, Andualem Bekele, most farmers do not understand the purpose or benefits of the new data requirements, and many have yet to submit information to the authorities. Lower production and higher data collection costs have forced the Union to cut its export target from 100 to 75 containers this year.

“This regulation extension gives us time to complete preparations,” Andualem said. “We need government support to ensure all farmers comply effectively.”

Samson Tizazu, a consultant and deputy general manager at Proma Partners Plc, recommended farmer-centric technologies such as GPS mapping and SMS-based data collection to ease compliance. Centralising data management at the cooperative or exporter level, integrating traceability into existing certification programs, and creating cost-sharing and price premium incentives for smallholders could make the transition smoother. He warned that without these measures, many farmers risk being shut out of lucrative European markets.

Samson also called for a strong national compliance framework, including incentives and penalties, a due diligence portal, random field audits with substantial penalties for non-compliance, and a public rating system to reward high performers.

“This is a collective responsibility,” Samson said. “Success will depend on coordination, clear roles, and a shared commitment to sustainable practices.”

PUBLISHED ON Nov 29,2025 [ VOL 26 , NO 1335]