Enhancing farmers’ gains from the EU Africa coffee trade

SEATINI | November 14, 2023

When it comes to coffee, it’s important to talk about where it comes from and ensure its sourced ethically treating everyone involved fairly. Coffee is a major global commodity worth US$495.5 billion annually making it second only to oil. Africa that accounts for 12% of the world’s coffee beans earns about US$ 2.8 Billion (0.6%) which is very small compared to the top large-scale coffee chains and commercial roasters from North America and Europe such as Starbucks with an annual revenue $32.25 billion. Therefore, most of the wealth in the coffee sector is concentrated in major consuming markets of Europe and US.

The inequality in the global coffee value chain raises concerns that coffee production and productivity in African countries will remain persistently low, earning the continent with less than it deserves. This is because trade between the Africa and with the rest of the world, especially Europe is largely based on primary goods (raw coffee bean), and this challenge of primary commodity dependence is inherently fostered by treaties and agreements regulating Africa’s trade on the global stage.

EU and Africa coffee trade governance

EU Africa coffee trade is mainly governed by the Cotonou Partnership agreement that was launched between the EU and ACP Group Members under different configurations known as the Economic Partnership Agreements (EPAs) in 2000. In addition is the EU’s General Scheme of Preferences Everything but Arms (GSP/ EBA).

Europe’s coffee consumption is estimated at 55.09 million bags in 2019/20 making the EU by far one of the largest consumer globally. Within the EU, Germany, France, and Italy are the three largest consuming countries accounting for 45% of total consumption in the bloc. Europe meets its demand for coffee by importing around 68% green coffee bean which are not subject to tariffs. About 19% roasted coffee and 13% soluble coffee are also imported, which are subject to tariffs. Coffee too is subject to the phenomenon of tariff escalation: the practice of applying higher tariffs on products that have been processed in order to protect the domestic processing industry.

The EU imports some of its coffee from Africa. Over 65% of Uganda’s green coffee bean exports go to the EU while Kenya is the largest external partner for roasted coffee to EU. On the other hand, Europe is the world’s largest exporter of roasted and ground coffee accounting to 85% of the total global volume of roasted coffee exports in 2021 and the largest external buyers of soluble coffee from EU are the Russian Federation, Ukraine, Australia, and South Africa.

Major Obstacles in EU-Africa coffee trade

Product certification measures amount to non-tariff barriers meant to deny market access to goods originating from African countries. Entering the EU markets requires meeting the General Food Law (Regulation (EC) 178/2002), General Rules on Food Hygiene (Regulation (EU) 2017/625) among other social and environmental requirements under the Emissions Trading System and more recently CBAM.

The General Food Law emphasizes the need for traceability and compels coffee buyers and roasters operating within the   and EU bloc to purchase coffee beans bearing documentation that includes the geographical source, producer name, quality indicators, source of farm labour and a summary of the farm inputs applied to them. However, small holder farmers who make the majority in Africa lack means to meet the necessary requirements to certify their coffee.

Making EU Africa coffee trade work for farmers

The EU needs to work on a mechanism that grant unconditional market access to allows for importation of value-added coffee and not only green coffee. There is need to significantly reduce non-tariff barriers to facilitate trading of value added coffee products between EU and Africa.

The EU also needs to provide technical assistance and adequate transition periods to African partners to meet the requirements and new quality standards introduced by Green Deal legislation as well as new liability obligations for companies which refer to environmental and social standards. These require investments which some countries lack and need to be supported. In that sense, companies must also be prohibited from cut-and-run behavior when human rights abuses are detected in specific value chains, as it might negatively affect producer organizations most in need of financial and technical assistance.

African nations should promote domestic consumption to expand the local market with the objectives of providing a safety net for coffee farmers against unfair or falling world prices. This will make them more resilient to external shocks and ensure farmers earn a fair share. The EU on its side could ensure that buying coffee products below their cost of sustainable production is banned through its upcoming review of the Unfair Trading Practices directive.

The EU and the African Union (AU) need to work together to support the Intra-Africa Coffee Organization and the African Continental Free Trade Area (AfCFTA), adhering to the long-term vision of a continent-to-continent free trade agreement. It can be a means of promoting regional integration and stability as well as creating a win-win situation for Africa and the EU, as opposed to the balkanization of African markets through interim EPAs trading with a single EU market.

In conclusion, coffee is vital for Africa and it is necessary to comply with the above and develop fair, inclusive and transparent policies to overcome common challenges and cooperate closely with the EU and African countries to transform coffee sector benefiting both continents and their populations.