Ivory Coast Seeks EU Flexibility on Sustainability Rules

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Ivory Coast, the world’s top cocoa producer, appealed to the European Union for flexibility as the country prepares to comply with the bloc’s proposed sustainability legislation, which could threaten exports of the key chocolate ingredient.

The EU measures, set to be introduced later this year, aim to protect forests, curb child labor and end farmer poverty. The bloc “needs to be flexible in its enforcement,” said Yves Kone, managing director of Le Conseil du Cafe-Cacao, Ivory Coast’s cocoa regulator.

The 27-nation EU buys almost 70% of Ivory Coast’s cocoa. Quick compliance with such broad legislation may pose challenges for the West African nation in selling its beans, according to the regulator.

“It will be a social issue for us to demand 15% of our farmers, who are in protected forests, to suddenly stop farming there,” Kone said during an interview in the economic capital, Abidjan. “If we take the necessary steps, in principle, we could plant and harvest again in three or four years, but it could take as long as five years to get everyone out.”

Deforestation has long been a pressing issue in supply chains, but Ivory Coast is showing signs of progress after losing more than 80% of its forest cover since the 1960s. It now seeks to expand forest area to 20% of its territory by 2030.

Farmer Poverty

The regulator is intensifying efforts to curb production to 2 million tons in an effort to increase prices. Farmer poverty remains a challenge, and excess supply of cocoa in the market could exacerbate this situation.

If farmers continue to plant, they’re working against themselves, said Kone. The so-called living income differential, a $400-per-ton premium to the futures price, was introduced on Oct. 1 to guarantee farmer income, but a drop in consumption caused by Covid-19 restrictions led to fewer bean sales. At the same time, the country is looking at new markets, and talks with buyers in Russia and Indonesia are underway, he said.

Even so, another record crop is expected for the 2020-21 season as arrivals to ports already stand at 2.07 million tons since the beginning of October. Source: Bloomberg