FAO.org

The cultivation of coffee is a cornerstone of agricultural livelihoods in Honduras and Guatemala, driving economic growth and poverty alleviation in rural areas.

It accounts for as much as 14 percent of the value of agrifood exports in Guatemala and a staggering 52 percent in Honduras. In 2023, one fifth of all Guatemalan coffee and half of the coffee exported from Honduras was destined to the European Union (EU).

The recently agreed European Union Deforestation Regulation (EUDR) is set to transform coffee production in Central America, bringing more sustainable practices which conserve forests and the environment.

Yet the practical implications for smallholder farmers in Latin America and the Caribbean are uncertain.

FAO Investment Centre, in collaboration with the World Bank, has launched a publication titled ‘Can smallholder farmers in Honduras and Guatemala export deforestation-free coffee to the European Union?’

The publication sheds light on the challenges in adapting to the new EU rules, while unveiling strategies to boost rural livelihoods and forest preservation.

"This publication serves as a valuable roadmap for stakeholders in the coffee sector in Honduras and Guatemala, and highlights new challenges and opportunities on the policy and investment sides in the two countries," said Diego Arias, Manager of the Agriculture and Food Global Practice of the World Bank. "Our operations in Central America are taking onboard the findings of this analysis to inform specific activities that will support farmers to adopt sustainable practices and enhance market access.”

Balancing the needs of vulnerable coffee growers with deforestation mitigation

In light of the EUDR's implementation, EU coffee importers will embark on meticulous due diligence processes starting in 2025, to ensure the legality and deforestation-free nature of imported coffee.

Simultaneously, farmers in Honduras and Guatemala are required to realign their production methods with the new sustainability standards outlined in the EUDR.

Yet, as the publication highlights, it is vital to strike a delicate balance between mitigating deforestation and safeguarding vulnerable coffee growers.

Most coffee is produced by smallholders whose incomes already face significant threats from climate change and rising production costs. Collecting and managing information needed by importers for due diligence is an additional burden.

Honduran and Guatemalan smallholders, producers’ organizations, local cooperatives and trade associations need ongoing assistance to establish the deforestation-free origin of their coffee.

There is an opportunity for public and private actors who oversee coffee supply chains in Honduras and Guatemala to develop cost-effective deforestation-free monitoring and traceability systems.

In particular, the publication shows how producers need comprehensive support mechanisms to embrace digital traceability tools and information-sharing platforms.

This infrastructure should be backed up by policy frameworks and capacity-building initiatives that empower coffee producers to adopt technological and sustainable practices, and navigate evolving market dynamics.

Ekaterina Krivonos, Chief for Latin America and the Caribbean Service at the FAO Investment Centre, underscores the urgency for comprehensive, collective action to advance sustainable coffee practices, enhance traceability, and ensure the continuity and expansion of EU coffee exports from Honduras and Guatemala that would benefit smallholder farmers.

“This publication serves as a call to action for all stakeholders – including producers, exporters, government bodies, development partners, and investors – to rally behind the cause of sustainable coffee production and export,” said Krivonos. “Through fostering collaboration, innovation and investment, we can surmount any challenges posed by the EUDR, and chart a course towards a more sustainable and profitable future for coffee production in the region.”