Vietnamese coffee meets standards, market remains hot despite EUDR's postponement

By Vietnam Expo On 28-10-2024 at 2:52 am

(VAN) Vietnam's coffee industry will persist in its proactive compliance with the EU Deforestation Regulation (EUDR) in order to enhance the quality of export cargoes, regardless of whether the EU temporarily delays its implementation.

Vietnam is regarded as a forerunner in the implementation of the EU's Deforestation and Forest Degradation Regulation (EUDR) among the world's coffee-exporting countries.

Vietnam was the first country to actively implement EUDR, according to Mr. Do Ha Nam, Vice Chairman of the Vietnam Coffee and Cocoa Association (VICOFA). The government, particularly the Ministry of Agriculture and Rural Development (MARD), has demonstrated a significant level of interest and support in the enforcement of the EUDR in pertinent sectors, such as the coffee industry.

MARD has recently issued an action framework that VICOFA has been working closely with to assist enterprises in satisfying EUDR requirements. The association's administration has translated documents related to the EUDR into Vietnamese, shared them with members, and published them on VICOFA's website. MARD's International Cooperation Department established the Q&A group on EUDR, which the association has also participated in. Additionally, the association has participated in technical meetings to develop an EUDR compliance guide.

The Vietnamese coffee industry has essentially met EUDR standards as a result of these efforts. The majority of Vietnam's coffee exporters are prepared to adhere to EUDR as originally intended on January 1, 2025.

In contrast, other coffee-exporting countries encounter obstacles and disputes in the implementation of EUDR, with some even opposing it. Despite the fact that some countries are making an effort to comply, they are not receiving adequate government support.

Therefore, as the EUDR implementation date approaches, numerous European importers have shifted their focus to Vietnamese coffee, as Vietnam is presently the sole supplier capable of ensuring EUDR compliance. This has substantially increased the cost of Vietnamese coffee, which is now among the most expensive in the world. In some cases, the price of Robusta coffee has surpassed that of Arabica, a phenomenon that was previously unforeseen.

Nevertheless, the European Commission's proposal to postpone the implementation date of the EUDR has resulted in a "setback" for Vietnamese coffee businesses. Robusta coffee prices on the London exchange experienced a substantial decline immediately following this proposal. As per Mr. Nguyen Quang Binh, a coffee market analyst, Robusta prices have decreased by approximately USD 800 per ton from the September apex of over USD 5,300 per ton since the commencement of the 2024/2025 season on October 1, 2024.

In the meantime, the expense for businesses, including foreign-invested enterprises (FDI), to comply with EUDR has not been negligible. Many European importers have signed contracts with Vietnamese businesses for coffee shipments that comply with EUDR standards, despite the high costs associated with meeting EUDR standards. As a result, numerous Vietnamese businesses are now apprehensive about the potential for purchasers to continue honoring contracts for EUDR-compliant coffee, as Robusta export prices have decreased as a result of a potential EUDR delay.

Mr. Do Ha Nam responded to these concerns by noting that numerous prominent European coffee traders have recently stated that, despite the postponement of EUDR, it will ultimately be implemented in the EU. Consequently, they are prepared to fulfill their EUDR-compliant coffee procurement contracts with Vietnamese businesses and have made clear that Vietnamese businesses continue to provide EUDR-compliant coffee for these contracts.

VICOFA encourages Vietnamese coffee enterprises to maintain their concentration on the implementation of EUDR in the forthcoming period, without disrupting the process. This method will guarantee that the Vietnamese coffee industry is consistently prepared to comply with EUDR requirements whenever the EU formally enforces the regulation.

In the middle of October, the Council agreed on its position on the targeted amendment of the EU deforestation regulation, postponing its date of application by 12 months.

This postponement will allow third countries, member states, operators and traders to be fully prepared in their due diligence obligations, which is to ensure that certain commodities and products sold in the EU or exported from the EU are deforestation-free. This includes products made from cattle, wood, cocoa, soy, palm oil, coffee, rubber, and some of their derived products.

This would give legal certainty, predictability and sufficient time for a smooth and effective implementation of the rules, including fully establishing due diligence systems covering all relevant commodities and products. These due diligence systems include identifying deforestation risks in supply chains as well as monitoring and reporting measures to prove compliance with EU rules.