Bittersweet: The influence of the EUDR on cocoa production

The expansion of agricultural land accounts for 90% of global deforestation, contributing significantly to climate change and the loss of biodiversity, which in turn threatens the cultivation of key raw materials.  

In response, the EU has introduced the Deforestation Regulation (EUDR), aimed at ensuring deforestation-free supply chains. It mandates that companies processing or trading cocoa, coffee, rubber, palm oil, cattle, timber, or soy must ensure their supply chains are free from deforestation. This means the materials cannot come from land where forests have been cleared or permanently altered. Companies must comply with these and other requirements by December 30, 2025.  

Environmental and Social Impacts of Cocoa Farming  

Over the past 30 years, more than 65% of Ghana’s rainforest and 90% of Côte d’Ivoire’s has been cleared. From 2000 to 2019 alone, 2.4 million hectares of forest were converted into cocoa plantations in Côte d’Ivoire. This deforestation is part of a vicious cycle: in many cocoa-producing nations, cocoa farming is the primary income source for 6-7 million farmers. However, the fluctuating price of cocoa often leaves farmers with insufficient income to practice sustainable agriculture. Transitioning away from monoculture farming practices is essential to preserve soil quality and prevent further rainforest loss.  

Deforestation also leads to significant biodiversity loss and reduces the earth’s capacity to absorb CO2, as trees are both cut down and release stored carbon when felled. This drives CO2 emissions and accelerates climate change. The resulting droughts and unpredictable rainfall then render farmland unusable, exacerbating the cycle.  

In 2021, approximately 1.5 million children were involved in cocoa farming, which the EUDR also seeks to address. Under the regulation, companies must prove that no child labor is involved in their supply chain and that local laws are respected.  

Cocoa as a Commodity  

Cocoa is one of the most traded commodities, with the EU as the world’s largest importer. Cocoa is grown in tropical regions across Africa, Central and South America, and Asia, with more than 65% of the global supply coming from West Africa, particularly Côte d’Ivoire, Ghana, and Cameroon. Once harvested, cocoa is processed into mass, butter, or powder, which is then used in various products like chocolate.  

The food industry is the most prominent sector associated with cocoa, as it is found in products like chocolate bars, baked goods, and beverages such as hot chocolate. As such, food companies must comply with EUDR requirements.  

Cocoa butter is also widely used in cosmetics products such as creams, lotions, and lip balms, meaning companies in the cosmetics industry are also subject to the regulation.  

Due Diligence in Complex Cocoa Supply Chains: The Importance of Data Collection  

A significant challenge for companies needing to comply with the EUDR, like chocolate manufacturers, is obtaining accurate supply chain data. The complexity of cocoa supply chains makes it difficult to trace the origin of every cocoa bean. Multiple intermediaries are often involved, and cocoa beans from various smallholder farmers are blended, further complicating traceability.  

However, companies must meet their due diligence obligations related to legal, human rights, and environmental standards. This includes ensuring fair prices for cocoa farmers, enabling them to earn a living and grow crops sustainably.  

To fulfill EUDR requirements, companies need to follow these three key steps:  

1. Collect evidence proving that products are traceable and deforestation-free, and ensure that no illegal harvesting or trade is involved. 
2.  Conduct a comprehensive risk analysis. 
3. Implement mitigation measures if any risks are identified, such as supplier audits or training programs.  

osapiens Solutions for EUDR Compliance  

osapiens offers a cloud-based software solution that helps companies comply with the EUDR. The osapiens HUB for EUDR streamlines risk analysis and risk management by leveraging AI to assess deforestation risks. This platform centralizes all supplier data, making processes more efficient and automated.  

Beyond data management and supply chain transparency, osapiens also offers process automation and ensures legally compliant data documentation. Additionally, osapiens enables integration between solutions for different regulations, allowing companies to capitalize on synergies.  

Promoting Sustainable Cocoa Farming  

To ensure the long-term sustainability of cocoa farming, everyone in the supply chain must take action. EU companies importing cocoa or processing cocoa-derived products should prioritize sustainable farming methods. A diversified farming system, such as agroforestry, is essential. In these systems, trees and crops can benefit each other, increasing resilience to climate change.  

For farmers, agroforestry offers additional benefits, as they can grow herbs, fruits, and vegetables alongside cocoa. This enhances environmental sustainability while providing a diversified source of income for farming communities.