By Benjamin Fox

NAIROBI - More than three-quarters of the EU’s cocoa supply is not traceable to the farm where it was produced, with only months to go until the introduction of a new EU law requiring companies to prove that their products are not linked to deforestation.

The data is part of a new report by the Retailer Cocoa Collaboration, a coalition of 11 UK and EU retailers, including Tesco, Aldi, Ahold Delhaize and Carrefour.

The average proportion of a trader’s direct supply of cocoa traceable to farm has jumped from 52 percent in 2022 to 71 percent in 2023. Three traders were able to report near-full traceability of their direct supply chain.

Traceability of traders’ indirect supply of cocoa increased significantly in 2023, but still reached 22 percent compared to nine percent in 2022.

“Traders source as much as 97 percent of their cocoa indirectly, so this means that overall, the sector is not yet ready for the EUDR (EU deforestation directive),” said Holly Cooper, the report’s lead author, though she added that the traceability gap is expected to continue to close in 2024.

Though indirectly-sourced cocoa can still be EUDR compliant it is often not fully covered by a trader's sustainability commitments and actions.

“More fundamentally, this lack of traceability means the sector has significant blind spots in its ability to understand and address sustainability risks in the cocoa supply chain.”

“Traders have told us that there is a significant resource burden being felt for EUDR compliance,” Cooper told EUobserver.

She adds that while traders of palm oil — another product covered by the new law — could choose to sell non-compliant produce to the Asian market, this is less of an option for cocoa since the EU is accounting for 56 percent of the world’s cocoa imports.

“Retailers bear a lot of risk, but they are a long way from the risk. Each supermarket has to define what is ‘no or negligible risk’ because there is no set EU definition,” she added.

Companies found in breach of the compliance rules face fines of up four percent of turnover in the EU and potential bans on their ability to trade across the bloc.

The EU’s regulation on deforestation-free products applies to cattle, cocoa, coffee, palm oil, rubber, soya, and wood. It also covers products like leather, chocolate, charcoal and printed paper, which have been made using these commodities.

It was hailed last year by EU lawmakers as a landmark move towards responsible business practices.

The legislation comes into force from January 2025, although it will initially only apply to large companies, requiring them to screen their global suppliers and publish annual due diligence reports to guarantee that they have not caused deforestation.

In March, the government of Ivory Coast increased cocoa prices by 50 percent in an attempt to encourage farmers to increase production which has been hit by crop disease and poor weather.

That, combined with the compliance burden caused by the EU law, is likely to lead to price increases for chocolate and other cocoa-based products in supermarkets and high streets across Europe.

However, there is more preparedness in the cocoa sector than for the likes of coffee.

Officials in Ivory Coast and Ghana, who accounted for over 55 percent of the world’s cocoa bean production last year, followed by West African neighbours Cameroon, have stated that they will be ready for the law’s implementation.

Around five million smallholder farmers — mostly west African — produce 80 percent of the world's cocoa.

In contrast, Ethiopian officials say they will negotiate with the EU executive for more time to comply, while in Uganda the government says that it has secured an agreement with the EU Commission allowing the Uganda Coffee Development Authority to present due diligence certificates for batches of coffee, rather than individual farmers.

In April, EU environment commissioner Virginijus Sinkevicius announced a series of EU-funded programmes to help Ivory Coast and Ghana to implement the new regime during a three day visit to West Africa.

 

 

 

 

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