EU regulations are hurting the cocoa trade. West Africa is struggling with the costs

Cocoa traceability remains a major challenge

Producers and exporters in West Africa are preparing for new EU rules on deforestation. The problem is that a large portion of cocoa is still not covered by systems that allow for the precise identification of the plantation from which it originates.

In Nigeria, more than half of the production may initially fail to meet the new requirements. Similar difficulties apply to Côte d’Ivoire. This is because companies must demonstrate that the cocoa sold to the EU comes from specific farms and was not grown on recently deforested land.

EU requirements may affect prices and the availability of cocoa beans

Meeting the new requirements means mapping plantations, collecting data, and tracking the entire supply chain more closely. The cost of these measures could range from $30 to $80 per metric ton of cocoa, which places an additional burden on trade and reduces the scope for maintaining current profit margins.

However, exporters have limited ability to pass on these higher costs to buyers in the EU. With a reduced supply of cocoa that meets the new requirements, the market may therefore face lower availability and higher prices.