Honduran Coffee: Balancing Sustainability and Small Farmers in the EU Market

By Bufete Mejía & Asociados

This article in based on a report from the Food and Agriculture Organization of the United Nations (FAO) Investment Centre.

The cultivation of coffee is a cornerstone of agricultural livelihoods in Honduras, driving economic growth and poverty alleviation in rural areas. It accounts for a staggering 52 percent of the value of agrifood exports in Honduras. In 2023, 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.

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

"This publication serves as a valuable roadmap for stakeholders in the coffee sector 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.”

The new EU Regulation for Deforestation-Free Imports (EUDR) stipulates that by 2025, certain commodities may only be imported to the European Union if it can be proven that they have been produced on land that has not been subjected to deforestation or forest degradation. 

In this context, the public and private actors who manage and govern the coffee supply chains in these countries must develop cost-effective traceability systems that can help farmers verify the deforestation-free origin of their coffee without worsening the economic pressures that they currently face.

The report examines the economic and political structures of the coffee supply chains in Honduras and Guatemala with respect to potential traceability systems that could satisfy the requirements of the EUDR. This publication is part of the Country Investment Highlights series under the FAO Investment Centre's Knowledge for Investment (K4I) programme.