With the aim of minimizing the European Union's contribution to global deforestation and forest degradation worldwide, the European Parliament adopted the European Deforestation Regulation (EUDR) on April 19th, 2023. It entered into force on June 29th, 2023. The full application of the regulation on December 30th, 2024, means that from this date, relevant raw materials (e.g. green coffee) and relevant products (e.g. roasted coffee) may only be placed on the market*, made available on the market** or exported from the EU if

• they are deforestation-free (cut-off date 31.12.2020)
  • no deforestation has taken place since this date
• they have been produced in accordance with the relevant legislation of the country of production
• they are covered by a due diligence statement (DDS)

The EUDR applies to wood, coffee, cocoa, rubber, soya, palm oil and cattle. For coffee, product group 0901 applies: coffee, whether or not roasted or decaffeinated, coffee husks and skins; and coffee substitutes containing coffee in any proportion. Product group 2101: extracts, essences and concentrates of coffee (e.g., instant coffee) do not yet fall within the scope of the EUDR.

It is important to note that coffee imported before December 30, 2024, does not have to comply with the EUDR requirements, even if it is further processed and/or resold after December 30. This means that all green coffees imported before the end of 2024, as well as all roasted coffees produced from them at any later date, will not be subject to the EUDR at any time. Proof of the import date, e.g., the import receipt, must be available for these coffees.

All operators*** in the supply chain such as importers, roasters and retailers are responsible for ensuring compliance with the regulation.

Importers ("distributors") are required to submit a due diligence declaration containing information on the following points:

• Geo-localization: Provision of all geocoordinates of each parcel on which the coffee of the imported lot was produced
  • Plots ≤ 4 ha: Geographical position of a parcel with at least one latitude and one longitude coordinate (at least six decimal places)
  • Plots ≥ 4 ha: Polygon - sufficient latitude and longitude coordinates to describe the outline

• Confirmation that the three-stage due diligence has been carried out
  • Obtaining information
  • Risk analysis
  • Mitigation of the risks

• Confirmation that there is "no or only a negligible" risk of a violation of Art. 3:
  • Coffee is deforestation-free: geolocation data is checked for deforestation using satellite imagery
  • produced in accordance with the relevant legislation in the country of production

All downstream market participants in the supply chain, such as roasters and retailers, are classified into two categories. Large companies (non-SME operators) and SMEs (small and medium-sized enterprises). While large companies are also responsible for carrying out their own three-step due diligence and passing on the DDS reference number, SMEs are only required to carry out their own three-step due diligence if no due diligence was previously carried out, i.e. no DDS reference number was passed on to them. As a rule, however, SMEs (unless they import themselves) will receive a reference number from their upstream supplier and therefore do not have to carry out their own due diligence (Art. 4 (8)).

A country benchmarking system (Art. 29) classifies all countries into high risk, standard risk and low risk, whereby products from high-risk countries are subject to stricter controls. The risk levels are to be determined by the EU 18 months after entry into force (at the same time as full application). The risk is assessed jointly for all agricultural products covered by the EUDR.

The German inspection body is the Federal Office for Agriculture and Food (BLE). The controls are carried out with the support of the customs authorities (can detain goods).The legal consequences in the event of a breach of the regulation are serious:

• IMPORT BAN
• Confiscation of the goods
• Fines (at least 4% of the total turnover on the EU market)
• Exclusion from public contracts and subsidies
• Temporary import ban for further goods
• Blocking for simplified due diligence
• Publication on the EU Commission's website

At Hacofco, we are aware of the importance of this regulation. Together with our partners in the countries of origin, we are discussing and reviewing what steps and measures are feasible to comply with the EUDR requirements. We have informed our main suppliers about these legal requirements and intend to launch pilot projects in various countries of origin to test the enforceability of the requirements. We also aim to cover both the German LkSG (Lieferkettensorgfaltspflichtengesetz) and the EUDR requirements in our risk analysis. In this way, any risk can be actively minimized.

We are aware that this regulation presents us all with major challenges. We are happy to pass on any information we receive and to participate in processes to comply with the EUDR requirements.It therefore seems important to us to point out once again that all participants in the supply chain are obliged to develop their own measures for the regulation.

* „placing on the market” means the first making available of a relevant commodity or relevant product on the Union market

** „making available on the market” means any supply of a relevant product for distribution, consumption or use on the Union market in the course of a commercial activity, whether in return for payment or free of charge

*** “operator” means any natural or legal person who, in the course of a commercial activity, places relevant products on the market or exports them;This text is an overview of the legal content of the EUDR and is for general information purposes only. It is not a comprehensive analysis and the accuracy, completeness or timeliness of the information cannot be guaranteed. This summary does not constitute legal advice. Readers are advised to consult the full text of the relevant law or professional legal counsel. The authors and distributors of this summary are not responsible for any actions or decisions taken on the basis of the information provided. Laws and regulations are subject to change and interpretations may vary, so this summary should be read with caution.