Summary
This study provides an empirical assessment of Ethiopian smallholder coffee farmers' preparedness for the European Union Deforestation Regulation (EUDR), examining awareness, compliance capacity, and potential impacts, with particular attention to the role of Voluntary Sustainability Standards (VSS). Conducted in southwestern Ethiopia using a mixed-methods approach—including a survey of 600 households, focus group discussions, key informant interviews, and advanced econometric models (Propensity Score Matching and Endogenous Switching Regression)—the research reveals a significant gap between regulatory awareness and operational compliance capacity. While VSS certification effectively enhances farmer awareness, it yields limited and method-sensitive improvements in the technical and financial capacity required for EUDR’s stringent traceability and geolocation mandates. The analysis further identifies an "ecological paradox": farmers in biodiverse, forest-integrated systems face the highest compliance barriers despite having low deforestation footprints. The study concludes that without targeted investments in land governance, digital infrastructure, differentiated support systems, and equitable cost-sharing, the EUDR risks excluding the most vulnerable smallholders, potentially undermining both its environmental goals and rural livelihoods. Success depends on reframing compliance as a shared governance challenge rather than an individual producer burden.