In recent months, the European political debate has been revolving around the new EU Regulation aimed at limiting the import of goods derived from deforestation. Already named ‘Zero Deforestation’, the objective of this Regulation is to align European import policies with commitments on sustainability and against the climate crisis. The Regulation will mainly affect sectors related to soya, beef, palm oil, cocoa, coffee, wood, and some derived products, such as leather and chocolate.
What will change for the sectors and companies involved?
In this series of articles, we will explore the characteristics of the sectors affected by the new EU Zero Deforestation Regulation. The aim is to better understand how the new rules will influence markets, production, and imports. Today we talk about the cocoa sector.
The cocoa supply chain is often defined as an ‘extreme case of hourglass structure‘. At the opposite ends are the consumers and the thousands of small and medium-sized cocoa producers. In the middle, a few international players control global distribution and processing, usually huge trading and first and second processing companies. This structure is also reflected in the division of revenues. According to the World Economic Forum, on a global level, more than 80% of the revenues from the cocoa supply chain go to large producers and traders. In contrast, small farmers, who represent the overwhelming majority of the actors in the supply chain, receive no more than 6.6% of the total earnings. In this type of supply chain, ensuring that the cocoa consumed daily is not linked to deforestation and forest degradation is definitely a complicated matter. According to investigations conducted by The Guardian and Mighty Earth, in Côte d’Ivoire local traders (middlemen) buy cocoa beans illegally cultivated inside protected areas or national parks from small farmers, which are sold to multinational cocoa companies. The illegal product is then mixed, during the various stages of the supply chain, with legally produced cocoa beans. As a result, many products processed into bars or chocolates potentially include illegal cocoa.
To ensure the highest level of legality, traceability and sustainability of imported cocoa, the EU will introduce new obligations for all companies importing and trading cocoa, including the adoption of strict due diligence with ‘segregated’ standards. This calls for targeted strategies to improve farmers’ livelihoods, protect children’s rights and safeguard the environment. Thanks to decades of research and consultancy experience in the agro-forestry sector, Etifor is able to accompany companies through the transition to the new due diligence system and facilitate the integration of the new tools associated with the Regulation into company policy. We trace the supply chains from origin, following a segregated flow to ensure that illegal products are not mixed with legally produced cocoa beans at the various stages of the supply chain. We help you trace back all the farms where the beans are physically purchased to identify any problems and promote positive change directly on the ground, with the cooperatives and farmers themselves. We operate according to the principles of legality and sustainability through advanced mapping and monitoring systems, partnerships with certification bodies and other independently managed standards, and develop strategies to improve farmers’ livelihoods, protect children’s rights and safeguard the environment