Cocoa price slumps, despite EU deforestation law

The EU’s much-maligned, and two-years delayed, anti-deforestation regulation was supposed to lead to a spike in cocoa prices – at least, that was the expectation of the chocolate industry. 

In 2024, months before the EU Deforestation Regulation (EUDR) was originally supposed to be implemented, prices rose by 177 percent. Cocoa futures were retailing at $12,000 per tonne in April 2024, driven by poor harvests and weather issues.

Those price rises were not expected to continue, but combined with the compliance costs of the EUDR, they were not expected to fall.

That would mean the price of popular chocolate-bar brands, such as Mars or Twix, and other daily coffee accompaniments going up for Europeans.  

Aside from the EUDR, which requires that buyers of cocoa and a raft of other commodities, including coffee, timber and palm oil, certify that the products they buy are not linked to deforestation, new rules were introduced in 2019, which require exporters to demonstrate full compliance with EU organic regulations and traceability requirements before products can enter European markets. 

Put together, those new EU laws were expected to push up prices by creating a premium product of ethically sourced cocoa.  

Yet the reverse has happened.

Cocoa buyers in Ivory Coast and Ghana, where two thirds of the world’s cocoa beans are produced, are in crisis. In Ghana, licensed cocoa buyers are in debt to local banks to the tune of $750m (€647m), according to the Licensed Cocoa Buyers Association of Ghana, caused by low prices and the country’s weakened banking system.  

Demand has also slumped.

The price of cocoa has fallen to around $3,000 per tonne and traders estimated that in 2025/26 there was a global surplus of 365,000 tonnes and Ivory Coast and Ghana were reporting hefty and growing stockpiles. 

Around 70,000 metric tonnes of cocoa beans are still in the fields across Ghana, says the country’s industry regulator Cocobod.  

Ghana’s debt crisis, which led the previous New Patriotic Party government to negotiate a debt restructure of up to $44bn in external and local debts, also involved a Domestic Debt Exchange worth $910m that required domestic banks to take a haircut on some of their debt. 

That, in turn, has hurt bank balance sheets and reduced banks’ capacity to lend to local businesses, including the cocoa sector.  

Debts accruing

In the meantime, the debts owed by cocoa buyers are rapidly accruing interest, deepening the sector’s liquidity problems. President John Mahama’s government has responded by reducing the fixed price it pays for bean purchases and promising a cocoa financing scheme to help buyers. 

That the EUDR will not be implemented until January 2027 at the earliest has not stopped countries from stepping up their compliance efforts. 

Last September, the EU commission proposed another year’s delay – much to the chagrin of the major chocolate companies, who complained that they had invested millions in compliance – because of fears that the commission’s in-house IT system would be overloaded by up to 1bn compliance statements per year.  

The commission then proposed to further strip down the reporting requirements under the regulation. 

But though farmers will not have to file compliance certificates on the EU’s IT system themselves, importers will only source commodities from farmers that they know are compliant. Failing to comply could see European buyers risk penalties of up to 4 percent of their global turnover. 

The effects are already being seen in the coffee sector. In Ethiopia, one of Africa’s largest coffee exporters to Europe, officials have reported that some major European coffee buyers have already stopped buying coffee produced by Ethiopian smallholder farmers. 

Ghana has said that it plans to split its cocoa market to charge more for ‘sustainable’ cocoa. The Cocoa Marketing Company says it will charge an additional $200 per tonne for the ‘sustainable’ product and that European buyers have signalled their willingness to pay it to avoid EU fines. The EU accounts for more than 60% of Africa’s cocoa exports. 

Last week, 17,000 cocoa, oil palm and coffee farmers in 17 local government areas of Cross River State in southern Nigeria, which borders Cameroon, were registered under the newly introduced Cross River State Traceability System.  

Cameroon, meanwhile, Africa’s third largest cocoa producer, has said that its cocoa is now subject to a 100 percent traceability system that covers the product from plot to port.

It says that it is still sticking to a 2021 commitment to “Zero Deforestation Cocoa” and to doubling cocoa production by 2030