(Bloomberg) -- The world’s largest cocoa producers are studying a way to be paid for the burden of having to setup systems to comply with new EU regulations on deforestation and child labor.
Ivory Coast and neighboring Ghana, which account for about two-thirds of global output, are in talks with industry players and experts about the pricing mechanism, Alex Assanvo, executive secretary of the Ivory Coast-Ghana Cocoa Initiative, said.
The EU rules agreed in December require exporters to prove that any cocoa sold to Europe wasn’t grown on deforested land or using child labor.
“Both countries have started a census of farmers” to support their national cocoa traceability systems, Assanvo said. “The market price doesn’t include any sustainability costs, or any compliance costs.” The two countries are still studying how much full compliance to new EU standards would cost, he said.
The new changes “can’t just be imposed,” he said. “It has to be in agreement with all stakeholders.”
The top producers successfully worked together last year to set premiums for bean quality since a surcharge of $400 per ton to improve farmer pay was introduced in 2019.
The so-called Living-Income Differential was often offset by a discount on the bean quality component of the cocoa price.
The initiative is also in talks with two other African cocoa-growing nations, Nigeria and Cameroon, to broaden its members and exert more control on prices.
“They have presented interest and there are conversations ongoing,” he said. “There are many other interested countries outside Cameroon and Nigeria.”
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