The European Union’s ambitious new regulations on deforestation aim to bolster sustainable and ethically sourced cocoa production.
However, for cocoa-producing nations such as Ghana, Cote d’Ivoire, and Cameroon, these well-intentioned regulations present a complex financial dilemma that could significantly impact their economies and the livelihoods of their farmers.
The Cost of Compliance
Joseph Boahen Aidoo, CEO of the Ghana Cocoa Board, recently voiced his concerns at the World Cocoa Conference in Brussels, highlighting the economic challenges posed by the EU regulations.
“Ghana is very much aligned to implementing the European Union regulations but this will come at a cost to farmers and producing countries which is likely to increase the cost of cocoa from Ghana, Cote d’Ivoire and Cameroun”, he stated.
Ghana, for instance, has already invested in the Cocoa Management System (CMS), a critical component for cocoa traceability. Despite these proactive measures, Mr Aidoo emphasized that the cost implications of compliance could escalate the price of cocoa from producing countries.
The new EU regulations require stringent measures, including the implementation of advanced technologies and training programs, to ensure traceability and sustainability in cocoa production. For countries already grappling with economic pressures and struggling farmers, the additional financial burden could be untenable.
Who Bears the Cost?
A critical issue that Mr Aidoo raised is the lack of consideration in the EU regulations regarding who bears the financial responsibility for compliance.
The implementation of the required technologies, such as polygon mapping and real-time data systems, is costly and likely beyond the means of individual farmers.
“So now the conclusion is that having done all that, who pays for the cost, right from the polygon maps, bringing in the technology and the training because you need real-time data to make it work, which means that since this has not been factored in the new EU regulations, the operator has to pay and this is going to make cocoa from Ghana, Cote d’Ivoire and Cameroun very expensive”, he added.
Given the substantial investments needed for compliance and the economic challenges faced by cocoa-producing countries, there is a growing argument that the financial burden should be shared with the wealthy nations that are the primary consumers of cocoa.
A Call for Support from Developed Countries
Advocates argue that developed countries, including EU member states, should provide financial support, technical assistance, and capacity-building programs to help cocoa-producing countries meet the new regulations.
This could include funding for the adoption of new technologies, training programs, and infrastructure development aimed at promoting sustainable and environmentally friendly practices.
Furthermore, consumers and companies in developed countries can contribute by supporting fair trade and ethical sourcing practices, thereby paying fair prices for cocoa and helping to offset some of the compliance costs.
While the EU Regulations on Deforestation represent a significant step towards promoting sustainability and ethical sourcing in the cocoa industry, the financial challenges and burdens faced by cocoa-producing countries cannot be ignored.
A collaborative and equitable approach involving both producing and consuming countries, as well as the private sector and civil society, is essential to ensure that the transition to sustainable cocoa production is fair, economically viable, and beneficial for all stakeholders involved.
Source: Norvanreports