2. Background and General Information

According to the European Commission (2023), one of the main drivers  of deforestation is the expansion of agricultural land linked to the production of specific commodities. The EU’s consumption of these products significantly contributes to global deforestation.

To tackle the issue of ‘imported deforestation’, the EU introduced EU Regulation 2023/1115 on deforestation-free products, commonly known as the “EUDR”, which took effect on June 29, 2023. Starting December 30, 2024, seven key commodities -coffee, cocoa, soy, palm oil, cattle, wood and rubber -along with certain derived products (listed in Annex 1 of the Regulation) cannot be placed on or exported from the EU market unless it can be demonstrated that:

1. They did not contribute to deforestation, defined as any conversion of forest ¹ into agricultural use, whether human-induced or not, after the cut-off date of December 30,2020.
2. They were produced in accordance with relevant national legislation in the country of production, including regulations on land tenure, environmental protection, taxes and anti-corruption measures, and the protection of third-party, human, labor and indigenous rights (as outlined in Annex 1)

The EUDR mandates that operators (the first importers of green/roasted coffee) provide geolocation data for all production areas associated with the product, as well as sufficient information to prove compliance with these two criteria (as detailed in Article 9 of the Regulation.) Additionally, due diligence obligations require operators to conduct a risk assessment to evaluate the provided information (Article 10) and, if there is potential non-compliance, to implement risk mitigation measures (Article 11).

Once the documentation confirms there is no or negligible risk of non-compliance, operators must submit a Due Diligence Statement (DDS) through the EU Information System (TRACES) before shipment. This submission generates a DDS reference number (RN), which is necessary to release the product for free circulation within or export from the EU market. Downstream operators (such as processors, including decaffeinators) and large traders (such as resellers for distribution, consumption, or use) have similar due diligence obligations and must submit a DDS based on a previous RN. SME² traders are exempt from due diligence and data collection obligations, except for obtaining the RN.

EU Member States will impose proportionate and dissuasive penalties for non-compliance, which may include confiscation of goods, fines of at least 4% of turnover on the EU market, and temporary bans on further imports. Competent Authorities designated by each Member State will conduct controls using a risk-based approach (i.e. 1%, 5%, or 9% of operators respectively from low-, standard, or high-risk countries³), and on the basis of substantiated concerns raised by third-parties.

To facilitate understanding and implementation, the European Commission has created a ‘Frequently Asked Questions’ page and will be releasing additional guidelines in the future.

3. Supplier Data Requirements

While the EUDR places the responsibility for compliance on Operators, EFICO expects its suppliers to adhere strictly to the regulatory requirements. EFICO depends on suppliers to provide all necessary information and supporting documentation to demonstrate EUDR compliance, to communicate openly about potential risks, and to collaborate on mitigation strategies.

Starting October 1, 2024 (with exceptions detailed in Section 9), EFICO will require the following data for each consignment (i.e., per Bill of Lading, or, in the case of multiple lots/contracts on the same BL, per purchase contract).

1. Harvest period of the product: start and end month + year (mm-yyyy)
2. Geolocation dataset for each plot of land : Must adhere to the format requirements specified in Annex 4
3. Self-declaration of legality: confirmation that the relevant products have been produced in accordance with the applicable legislation of the country in production, as outlined in the requirements in Annex 1
4. Supplier’s traceability system and level (see Section 4):
   • ‘Full chain of custody (A)’: if full traceability is available up to farm/plot level
   • ‘Declaration in Excess’ at organisational level (B1): if traceability is maintained up to cooperative/mill level (B2).
   • ‘Declaration in Excess’ at regional level: if traceability is maintained up to a certain territorial level
5. Source of geodata (and supporting documents):
   • Collected by farmer
   • Collected by farmer and verified by an external third-party auditor
   • Independent third-party auditor
   • Publicly available geo-information (e.g. cadastral database, land registry)
   • Other (please specify)
   • Unknown
6. Source of legality declaration (and supporting documents – see Annex 1):
   • Self-declaration of farmer
   • Part of a certification documentation
   • Publicly available data
   • Other (please specify)
   • Unknown
7. Source of supplier’s traceability system (and supporting documents):
   • Supplier’s self-declared traceability information
   • Supplier’s internal traceability system verified by third-parties
   • Third-party traceability system service provider
   • Certification’s system own traceability system
   • None
   • Unknown
8. Other potential documents to be provided:
   • External risk assessment report providing conclusive and verifiable evidence that the relevant product is deforestation-free (for engagement level 2 and 3, see Section 7)
   • Documentation of potential critical deforestation cases detected by service providers (see Section 8)
   • Supporting documents on the source of the geolocations, traceability system and legality declaration (see Annex 1 and Annex )

EFICO will provide this information, along with general supplier details (including name, address, and email), and product descriptions to the Competent Authorities, in compliance with data protection regulations.

IMPORTANT NOTES:

1/  Definition of ‘Plot of Land’: According to  EUDR Article 2 (27), a “plot of land” is defined as land within a single real estate property, recognized by the laws of the country of production, with sufficiently homogeneous conditions to assess the aggregate level of risk of deforestation and forest degradation associated with the commodities produced there. This implies:

• One coffee farm with multiple coffee plots should provide one geodata for each plot, requiring unique plot IDs in addition to any existing farm IDs.
• If multiple coffee plots are located nearby, it is not allowed to draw a polygon around all coffee plots (e.g., encompassing an area around a producing village or washing station).
• A coffee plot should include only the coffee plantations of a farm, whether under full sun or shaded systems, and exclude other distinctly grown agricultural commodities or standing forest.

2/ Preference for Polygons: Polygons are preferred due to their higher accuracy in assessing deforestation risk. Deforestation risk assessments are based on a buffer area around a GPS point, which may not align perfectly with the actual producing area. This can result in ‘false positives,’ where deforested zones might be inaccurately identified. Such cases must be documented and justified.
For more information on manual and automated polygon data collection methods and best practices, click here.

3/ Update Frequency: Geolocation data must be updated at least annually to ensure that the agricultural frontier has not expanded into forested areas, addressing the root causes of deforestation as specified by the Regulation.

4/ Data Transfer to Non-SME Clients: Geolocation data must be provided to EFICO’s non-SME clients, who have similar due diligence obligations, in compliance with data protection regulations. Access will be secured through the EU IT System using DDS reference and verification numbers and communicated via EFICO sales invoices.

4. Two Traceability Approaches for Compliance

According to the readiness of each supplier and country regarding traceability, there are two approaches for defining the list of declared plots:

5. Deforestation Risk Assessment

In addition to providing geolocation data, operators must demonstrate that there is a ‘no or negligible risk of deforestation’ on the declared plots. While the EUDR does not specify a single methodology or provide a forest base⁴ map for validation, satellite imagery combined with on-site inspections offers an effective and scalable approach for evidence collection.

EFICO has partnered with two service providers, using private satellite imagery: GRAS and Enveritas, which use distinct methods (see Section 4) in selected origins (see Annex 3) and support various engagement levels (see Section 7). Both partners assist EFICO in assessing risk by evaluating the overlap and proximity of declared plots to forest areas, deforested zones, and indigenous lands. They also provide national and/or regional analyses of legal and risk factors, including forest presence, deforestation prevalence, governance, human rights, and indigenous issues   (see Annex 1 & Annex 2).

Nevertheless, other service providers also offer deforestation and/or legal risk assessment services

To avoid double efforts and costs of verification, EFICO allows suppliers to provide risk assessments conducted by other service providers (see Level 2 in Section 7). The organisation and methodology used must be pre-approved by EFICO on a case-by-case basis. In certain situations, such as high-risk zones or inadequate methodology/map resolution, EFICO may perform a secondary risk assessment with one of its approved service providers. If discrepancies arise, a ground-truthing report will be required from the supplier.

IMPORTANT NOTE:

Certification schemes do not guarantee EUDR compliance and do not replace the operator’s responsibility for due diligence. While certifications provide valuable information, operators must carefully analyze and ensure alignment with EUDR requirements, as they are liable for non-compliance.

External service providers’ risk assessment/compliance reports must clearly state:

1. The date of analysis
2. Traceability approach (Full Chain of Custody or Declaration in Excess at organizational/regional level)
3. Number of plots analyzed with ‘no or negligible deforestation risk’ (including a link to or file with geolocation dataset in the required format)
4. Underlying methodology (base map/model, change detection method, satellite imagery source, resolution and year, resolution/mitigation for high-risk cases, etc.)

If available, country/region/supplier analysis on legal/risk assessment topics (see Annex 1 & Annex 2)

6. Due Diligence Statement

Operators must make a Due Diligence Statement (‘DDS’) available to Competent Authorities via the EU IT System⁶ before placing a product on the market or exporting. DDS information (see example in Annex 5) must include general supplier and product information, geolocation data in GeoJSON format and the Self-declaration that ‘Due Diligence has been conducted and that no or only negligible risk was identified.’

However, the DDS does not cover all the information requirements specified in Article 9, nor the risk assessment in Article 10 or the mitigation measures in Article 11. Operators must still retain this information for 5 years and provide it to Competent Authorities upon request.

Operators may appoint an ‘Authorized Representative’ to submit the DDS on their behalf. This representative could be a supplier, service provider, or a national system⁷ integrated with the EU IT System via an API (see Level 3 in Section 7). The operator retains responsibility for compliance. This arrangement must be discussed and formalised with EFICO during the contracting phase, including obtaining an official mandate from EFICO. The supplier is responsible for providing promptly the DDS reference and verification numbers to EFICO.

7. Engagement level of EFICO suppliers

Based on each supplier’s readiness for EUDR compliance, EFICO has established several engagement levels for providing verified geolocation data, in addition to the minimum data requirements outlined in Section 3.

For the time being, geolocation data and risk assessment reports should be emailed for each consignment to efico@efico.com, with the subject line including the purchase contract number “EFIXXXXXXXX” and “EUDR DUE DILIGENCE INFORMATION”. Suppliers must clearly specify the engagement level and the data required in Section 3 in the email. In the future, updates may be made through a dedicated link.

8. Management of high risk plots

If the automated risk assessment identifies high-risk plots and detailed analysis is insufficient to mitigate the risk, EFICO will provide the plot ID numbers to the supplier, who will then need to submit:

• Documentation and verification of high-risk plots, including the following data:
  • Identification of Causes of Deforestation:
    Details on activities leading to deforestation (e.g., intensive pruning in agroforestry systems).
  • Plantation Establishment Date
    Date when the plantation was established to confirm land use at the time of deforestation.
  • Ground-Truthing/Audit Report
    An audit report by an external auditor, including visual evidence (photos) and other verification details to confirm the current state of the plots and historical land use
  • Supplier’s No-Deforestation Policy and Compliance Measures:
    The supplier’s no-deforestation policy, including their monitoring and verification system, regular updates based on results, complaints mechanism, and communication and reporting on efforts to mitigate risks.

If the documentation fails to provide sufficient proof of compliance, the product cannot be imported into the EU. In such cases:

• Obligation: Set up a segregation mechanism to differentiate between compliant and non-compliant products, and document this process.
• Options to Avoid Exclusion of Non-Compliant Smallholder Farmers:
  • Export non-compliant products to markets outside the EU.
  • Support farmers in transitioning to alternative crops.
• Heads Up : The European Commission currently does not allow any form of remediation.

9. Timing

• Suppliers must submit the required data for each EFICO consignment shipped after October 1st , 2024, for all origins except:
  • Ethiopia, Papua New Guinea: July 31, 2024
  • Uganda, DRC, Burundi, Rwanda: August 15, 2024
  • Brazil: September 15, 2024
• Suppliers must submit required data no later than 48 hours after EFICO approves pre-shipment samples -this is approximately one month prior to shipment, in order to manage:
  • Potential Data Quality Issues: Addressing problems such as formatting errors, duplicates, or polygons that are incorrectly located outside coffee production areas, agricultural zones, or the specified country/region.
  • Management of Critical/Non-Compliant Plots: Handling necessary documentation, conducting ground-truthing, and other related activities.
  • Implementing Risk Mitigation Measures: Carrying out additional audits, independent surveys, and other risk management actions as required.
  • Organizing Segregation: Ensuring the segregation of EUDR compliant and non-compliant product flows along the whole supply chain.

10. Footnotes

¹ Forest defined by the FAO as land spanning more than 0.5 ha with trees higher than 5m and a canopy cover of over 10%, or trees able to reach those thresholds, excluding land under agricultural or urban land use.

² Small and Medium Enterprises defined according to Article 3 of Directive 2013/34/EU of the European Parliament and of the Council: Enterprises which on a consolidated basis, do not exceed the limits of at least two of the three following criteria on the balance sheet date of the parent undertaking: (1) Balance sheet total: EUR 20 000 000; (2) Net turnover: EUR 40 000 000; (3) Average number of employees during the FY: 250.

³ Until the Commission publishes the country benchmarking, all countries start with a ‘standard’ level of risk. This means controls conducted on 5% of operators and no access to simplified due diligence process.

⁴The JRC global forest cover map for 2020 issued by the European Commission in January 2024 is highly inaccurate and cannot be used for verification purposes.

⁵ Rainforest Alliance (FA) offers EUDR-aligned deforestation risk assessment (using open-source maps) and legality checks to farm Certificate Holders (‘CH’) who opted-in to EUDR criteria prior to audit. Buyers can access key data and reports via MultiTrace. Farmers who comply with EUDR criteria but did not opt-in (i.e. consent for data-sharing policy) can share reports bilaterally with their buyers. Farm CH with a running license can request retroactive EUDR conformity check with additional fee. The service will be soon available to non-certified farmers. More info here.

⁶ The EU IT System for EUDR will be TRACES NT, the platform used by the EU for Organic certification. More information on the Technical specifications for API  and further developments of the platform are available. Training videos and user materials will be published in September, and training sessions will start in October. Registration of operators will be possible as of mid-November, and the system will open as of mid-December.

⁷ To date and to our knowledge, only Enveritas and the national platforms of Brazil and Costa Rica are planning to act as an Authorized Representative.

11. Annexes

Annex 1: EUDR legality topics and supporting documents for suppliers

According to Article 2 (40), ‘relevant legislation of the country of production’ means the laws applicable in the producing country concerning the legal status of the area of production in terms of:

IMPORTANT NOTES:

• Self-Declaration: Suppliers will be required to self-declare in EFICO purchase contracts that the purchased goods have been produced in accordance with relevant national legislation in the country of production. This declaration must cover compliance at the supplier level, as well as with upstream suppliers, down to the farmer level.
• Supporting Documentation: Suppliers must provide supporting documentation if requested during audits by Competent Authorities.
• Internal Audits: EFICO may conduct annual internal audits of its suppliers to assess the risk of non-compliance. These audits will be integrated with compliance verification for other forthcoming EU Regulations, such as reporting directives.

Annex 2: Country Risk Assessment

To ensure that relevant products placed on the EU market have no or negligible risk of non-compliance with EUDR, operators have the obligation to carry out a risk assessment taking into consideration the following criteria outlined in Article 10:

Annex 3: Country Coverage by Service Providers according to Approach

Updated country list as per August, 2024. Additional countries may be added in the next months.

Note: Service providers using open-source maps provide worldwide coverage.

Annex 4: Format requirements for geolocation data

The form of the coffee farm and plot lists which are submitted by suppliers should comply with the minimum requirements for the EU IT system, with uniquely identifiable points that can be individually assessed. With this in mind, suppliers are asked to follow the following guidance:

General

• One geolocation per farm AND/OR per plot in case of multiple plots per farm:
  • For plots <4ha: GPS points incl min. one latitude and one longitude coordinate
  • For plots > 4ha: Polygon with min. 4 coordinates describing the plot outline
• Geolocation in WGS84 projection (EPSG:4326) – no “N/S/W/E” or ° signs
• Preference for GeoJSON format with all points and polygons in a consolidated GeoJSON file
• CSV/Excel files preferably not for polygons unless geometry described in WKT format
• GFW Pro only supports zipped Shape files at this moment

CSV files, including Excel files:

• Mandatory columns:
  • Plot ID: unique identifier code per coffee plot (not farm! – in letters and numbers)
  • Plot area: area of the coffee plot in hectares
  • Geolocation column(s) in WGS84 projection can be:
    • Latitude and longitude: a minimum of 6 decimal digits (for points only)
    • WKT: geometry description in WKT format, with a minimum of 6 decimal digits for each pair of coordinates
  • Optional columns:
    • Timestamp of data collection (dd.mm.yy)
    • Description of the plot to facilitate identification (e.g. farm ID/name)
  • Column titles must be in row 1 (no column headers)
  • No duplicated rows (two rows with exactly the same geolocation will return error)
  • Must use comma separators (semi colons will return an error)
  • Encoding must be UTF-8
  • Tip: you can generate a csv file from Excel by clicking “Save As” and selecting “CSV UTF-8”
  • Templates:
  • Enveritas: see latitude/longitude or WKT
  • GRAS: see here
  • GFW Pro: here

Shape files / GEOJSON / GPKG / KML / KMZ

• Must include the following attributes (and similar optional attributes as above):
  • Plot id: unique identifier code per plot (not farm!)
  • Plot area for points: area of the coffee plot in hectares
• Shape files must be zipped
• Templates:
  • GRAS: see here
  • GFW Pro: here

Annex 5: Illustration of DDS template

Note: This template has been designed according to the information requirements in Annex II of the EUDR. The information will have to be entered in the EU Information System, either manually or automatically via an API, by the operator or an Authorised Representative.

DUE DILIGENCE STATEMENT

By submitting this due diligence statement the Operator confirms that due diligence in accordance with Regulation (EU) 2023/1115 was carried out and that no or only a negligible risk was found that the relevant products do not comply with Article 3, clause (a) and clause (b) of that Regulation.

Signed for and on behalf of Operator: ________________________________

Name and function: _________________________________________