The path of cocoa from farm to global markets starts in places like San Pedro, Ivory Coast. Here, about 20 trucks daily offload cocoa for worldwide distribution.
Workers, protected from dust, handle heavy bags, preparing cocoa for the next stages.
Millions of cocoa beans from West Africa find their way to European warehouses, fulfilling the needs of top chocolatiers.
However, an upcoming shift threatens to disrupt this flow and affect prices across industries.
By the end of this year, the European Union (EU) mandates that companies like Cargill and Nestlé ensure their cocoa does not promote deforestation.
This requirement demands tracking each bean from its origin, a challenging and expensive task against the backdrop of falling production and high prices.
Failure to comply means losing access to the EU market, a major concern as the EU is a key buyer from Ivory Coast and Ghana.
Paul Davis from the European Cocoa Association predicts this could lead to supply issues and price hikes in Europe.
Shipments must now include the GPS coordinates of the originating farms.
Major companies are expanding their tracking systems in Ivory Coast, responsible for 44% of global cocoa.
The financial burden of these efforts and their impact on chocolate prices remain undisclosed. It’s uncertain if farmers, some of the world’s poorest, will bear the costs.
Despite these hurdles, companies like Nestlé are confident in meeting the deadline.
Yet, there’s industry pressure on the EU for a grace period, hinting at the regulation’s sudden impact without prior dialogue with industry stakeholders.
EU’s Deforestation Regulation and Cocoa Industry Impact
The EU’s Deforestation Regulation also targets other commodities, aiming to curb global deforestation.
Non-compliant cocoa may be redirected to smaller markets, with potential EU sanctions for violations.
This regulation presents a pressing issue for the cocoa industry. Beans take up to 18 months to reach Europe, meaning the current crop must adhere to the new rules.
At a recent World Cocoa Foundation conference, industry anxiety was palpable, with many questions about the regulation’s implementation still unanswered.
The EU’s regulatory efforts confront a fragmented and manual supply chain, complicating compliance.
Cocoa undergoes multiple exchanges before reaching the EU, blending with other batches at each point.
This complex journey from farm to trader underscores the challenges of ensuring traceability in a system marked by its intricacy and scale.