• Wednesday, April 24, 2024
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How EU’s new supply Chain Law will impact Africa’s cocoa-producing nations

Adopting gas-powered operations will benefit future of cocoa industry — MD Premium Cocoa

The European Union’s deforestation regulation for the cocoa sector, set to take effect at the year’s end, could significantly impact countries like Côte d’Ivoire, Ghana, Cameroon, and Nigeria—Africa’s top cocoa-producing nations.

When we indulge in chocolate bars, the intricate supply chain and the origins of cocoa, along with their effects on people, forests, and biodiversity, often go unnoticed. For instance, Ghana and the Ivory Coast, the world’s leading cocoa producers, have seen dramatic forest losses of 94 percent and 80 percent, respectively, over the past six decades, with about a third due to expanding cocoa production. As the realities of these impacts become more apparent and as nations and consumers increasingly prioritise sustainability, the demand for products that mitigate such negative effects grows.

Q: “This legislation aims to ensure that cocoa beans imported into the region are not linked to deforestation, heralding a significant shift in the cocoa supply chain.”

This is where the EU Deforestation Regulation (EUDR) comes in, a law that mandates companies to verify that the products they import into or export out of the EU are not associated with deforestation.

The EUDR is a non-discriminatory law that doesn’t impose a country ban but applies to certain commodities, including cocoa, coffee, palm oil, soy, wood, rubber, charcoal, and printed paper products, whether imported or produced within the EU. This legislation aims to ensure that cocoa beans imported into the region are not linked to deforestation, heralding a significant shift in the cocoa supply chain.

It calls for traceability from farm to port, a challenge for an industry already facing production declines and escalating prices. While efforts to comply are in motion, the burden of cost and implementation looms, potentially affecting consumer prices or falling on impoverished farmers. The law’s complex tracking requirements and hefty fines for non-compliance pose a significant challenge for millions of small farmers lacking the resources to adhere.

What does this mean for Africa and the global cocoa sector?

Apparently, this move will disrupt current supply chains, possibly leading to higher prices for European chocolate products. And as companies scramble to meet these requirements, further disruptions and influences on pricing dynamics and supply chain structures are anticipated globally. But what does this mean for Africa and the global cocoa sector?

Approximately 70 percent of the world’s cocoa beans originate from four West African countries: Ivory Coast, Ghana, Nigeria, and Cameroon. Any industry shift will undoubtedly affect these countries. Meanwhile, the EU stands as the world’s largest cocoa importer, accounting for 60 percent of global