With cocoa prices reaching record levels and farmers in Central and West Africa suffering from the effects of climate change, the sector is rushing to adapt to the European Union Deforestation Regulation (EUDR), which will come into force from January 2025.
Consumers in the European Union have been particularly affected by rising cocoa prices. According to European Commission data, the European Union is the world's largest importer of cocoa, accounting for 60%. World imports.
In March, during the highest period of chocolate sales in Europe (Easter), cocoa prices on the New York futures market rose to PLN 10,000. $ (about 40.3 thousand Polish zlotys) per ton and remained at this level on April 25.
High prices and low supplies of cocoa beans
The increase in prices coincided with dwindling supplies of cocoa beans from major cocoa-producing countries and increasing demand for chocolate products.
The decline in production particularly affects the European Union's main cocoa suppliers, namely Côte d'Ivoire, Ghana and Cameroon. The outlook remains pessimistic.
In his speech at the 2024 World Cocoa Congress held in Brussels this week, Michelle ArionThe executive director of the International Cocoa Organization (ICCO) has warned that the factors driving high prices are likely to persist.
This includes: on climate change, growing demand for chocolate in emerging markets, and the impact of bud bloat virus on cocoa trees, especially in Ghana.
The same causes are likely to continue to produce the same consequences – Arion told reporters at the conference.
He noted that major producers, including Ghana and Côte d'Ivoire, have reached a “tipping point” and will now struggle to return to previous production levels.
A recently published International Timber Organization (ICCO) report shows that one of the most destabilizing factors for the market situation is tree aging, because new trees can produce maximum production only after ten years.
Farmers do not earn
Cocoa farmers, most of whom live in poverty, benefit little from higher prices.
For example, Ghana and Côte d'Ivoire use centralized pricing systems. These measures include farm-gate pricing, which provides farmers with a basic income but limits their profits when production declines.
An Oxfam analysis presented at the aforementioned conference showed that the chocolate giants – Swiss Lindt, American Mondelez and Swiss Nestlé – earned $4 million from chocolate sales last year.
The capital of the Italian company Ferrero and the American company Mars rose to $160.9 billion in the same period. This is more than the GDP of the world's largest cocoa suppliers, Ghana and Côte d'Ivoire, which account for more than half of global production.
Both countries offered a bonus of $400 per ton of cocoa in 2018 to improve the living conditions of farmers. However, the Oxfam report shows that this solution failed because importers negotiated price cuts.
– This is hypocrisy – Chocolate giants now pay high prices when the market demands it, but not when the farmers demand it – He said Bart van Biesen Z Oxfam.
EU regulations
New EU regulations aimed at preventing deforestation will not make life easier for cocoa producers.
Companies wishing to place products covered by the new rules – which include livestock, cocoa, coffee, palm oil, soybeans and wood – on the EU market will have to prove via geolocation coordinates that these products were not sourced from deforested or degraded land. December. 2020.
Han VanderstegenThe regional advisor at Trias, an international NGO based in Belgium that supports farmers in developing countries, praised the EU's development goal of halting deforestation, but expressed concern that it could affect small farmers.
She stressed that farmers in countries such as the Democratic Republic of the Congo, an important cocoa producer, may find it difficult to adapt to the new regulations because cocoa production there is less centralized than in Ghana and Côte d'Ivoire.
– Importers want to trace supply chains, but this affects many producers, (…) This is not Walnut's intention, Vanderstegen emphasized in an interview with EURACTIV.com.
– According to the EUDR, the importer's obligation is to ensure that the so-called value chains were balanced, rather than choosing those (farmers – editor) who have the most money.
Producer organizations stress the need to support farmers.
Producer organizations in Ghana and Côte d'Ivoire are optimistic about ambitious EU regulation, but stress the need to support farmers.
Ali ToureAn ICCO producer spokesperson and Côte d'Ivoire's ambassador told EURACTIV that the country is ready for the EUDR, aided by “constructive” exchanges with the EU leadership.
“As a citizen of Ivory Coast, I can say that we will comply with European Union regulations before January 1, 2025,” Toure said. He said other cocoa-producing countries “will certainly face difficulties” in implementing anti-deforestation rules.
Joseph Bohen EddoThe Chairman of the Ghana Cocoa Board warned that the EUDR could lead to higher costs for farmers, and this could lead to further increases in cocoa prices.
Some EU countries also oppose the new regulations. They are pushing for a delay in implementation for fear that the new regulations will increase administrative burdens on member states and European farmers.
source: www.euractiv.pl
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