(MENAFN- The Peninsula) Bloomberg
Accra: The world's top cocoa exporters, Ivory Coast and Ghana, are in talks with European officials to push back a proposed deadline that would require all cocoa beans sold to Europe to meet stricter ethical standards.
The European Union, which buys about 60% of the top producers' cocoa, is planning rules that would compel exporters to ensure all their beans are certified as early as 2024 to prove the output didn't cause deforestation or use child labor. A final vote on the rules is set to take place next year, a European Union spokesman said.
Less than 15% of Ivory Coast's cocoa and only about 12% of Ghana's output is certified, according to regulators in the nations that together account for about two-thirds of global production of the key chocolate ingredient.
'We are in touch with the European Union,” Yves Kone, the managing director of the Ivorian regulator, Conseil du Cafe Cacao, told reporters in Abidjan Wednesday. 'We are discussing deadlines,” he said, without stating what timeline they were proposing.
The EU is gearing up to make companies responsible for human rights abuses and environmental harm in their supply chain, with fines and compensation claims for those who fail to act. Major international buyers, such as Cargill Inc., Olam International Limited and Barry Callebaut AG, will have to stop buying uncertified cocoa beans after the law comes into effect in a shift that could disrupt global supply and hurt West African economies.
Cocoa is the third-highest export earner for Ghana and accounts for 8% of Ivory Coast's economy.
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'We don't need small certification programs targeting a select group of farmers. We want all our output to be certified through sustainability programs,” Kone said.
For the 27-nation bloc, child labour and deforestation, which has long been a pressing issue in supply chains, are key issues. Ivory Coast is showing signs of progress on the latter 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. Meanwhile, both West African producers have sought support to tackle farmer poverty.
The average West African grower farms no more than 3.5 hectares (8.6 acres) and supports six to eight family members, according to the World Cocoa Foundation industry group, and most live in poverty.
Ivory Coast and Ghana increased the price they pay to farmers for their crop at the start of the main harvest earlier this month by 9% and 21% respectively but the price hikes failed to offset surging inflation. In Ivory Coast, farmers have complained that middlemen pay them less than the minimum price for each ton of cocoa.
The countries, which have come together under the Cote d'Ivoire-Ghana Cocoa Initiative, combined forces two years ago by imposing a premium of $400 a metric ton over the futures prices for their cocoa. But the so-called living-income differential has been compensated by a quality discount -- of up to $200 a ton at times -- determined by supply and demand in the market.
If Nigeria and Cameroon join the initiative, the four countries would account for about 75% of global cocoa production, giving them more control over prices, said Kone. Talks are ongoing for both nations to join the initiative, he said, and allow African producers to speak in 'one voice to the cocoa industry.”