Ivory Coast wants rich consumers to bear the cost of making cocoa sustainable, and it’s threatening to hold off signing new sales contracts until it gets its way.
(Bloomberg) — Ivory Coast wants rich consumers to bear the cost of making cocoa sustainable, and it’s threatening to hold off signing new sales contracts until it gets its way.
The world’s top cocoa grower will send a delegation on Sept. 11 from its industry regulator to negotiate with the European Commission in Brussels on the matter, according to people familiar with the plans. The bloc adopted new rules in June to prevent deforestation, but Ivory Coast is worried who will carry the cost — and thinks it should be chocolate multinationals, rather than local farmers.
Securing an agreement will be a condition for resuming 2023-24 forward cocoa sales and starting contracts for 2024-25, the people said, asking not to be identified because the plans are not yet public. In July, Ivory Coast suspended forward sales for the season that starts next month.
The European Union legislation requires exporters to prove their supply to Europe wasn’t grown on deforested land. Suppliers have 18 to 24 months to adjust. The EU is typically Ivory Coast’s top cocoa market.
A spokeswoman for Yves Kone, managing director of industry regulator Le Conseil Cafe-Cacao, confirmed he will be on a mission in Brussels for a series of meetings. The aim is to strengthen advocacy on EU regulations related to imported deforestation and the directive on due diligence, she said.
A European Commission spokesperson did not immediately comment on the talks. It’s unclear how any deal would work in practice.
Ivory Coast’s forward sales for the season that starts next month amounted to 1.3 million tons before the suspension, compared to about 1.8 million tons in contracts that are sealed annually, one of the people said.
Meanwhile, global cocoa supply is tightening due to adverse weather in the West African cocoa belt, putting the market on track for a third annual deficit. Ivory Coast’s main crop harvest is forecast to drop by a fifth in 2023-24.
Ghana, which together with Ivory Coast produces two-thirds of the world’s cocoa, held talks with its neighbor earlier this year on finding a common way to be paid for the burden of having to set up systems to comply with the traceability rules. The two countries are still studying how much full compliance with the new EU standards would cost.
The rules are intended to help fight climate change and biodiversity loss, according to the European Commission. The regulation is neither punitive nor protectionist, but creates a level playing field, it said last month.
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