Tonnes of cocoa in EU warehouses face being destroyed because of red tape regarding new deforestation law

The new regulation sets strong mandatory due diligence rules for companies that want to place relevant products on the EU market or export them. Operators and traders will have to prove that the products are both deforestation-free (produced on land that was not subject to deforestation after 31 December 2020) and legal (compliant with all relevant applicable laws in force in the country of production).

When the new rules enter into force, all relevant companies will have to conduct strict due diligence if they place on the EU market, or export from it: palm oil, cattle, soy, coffee, cocoa, timber and rubber as well as derived products (such as beef, furniture, or chocolate). These commodities have been chosen on the basis of a thorough impact assessment identifying them as the main driver of deforestation due to agricultural expansion.

Since the EU is a major economy and consumer of these commodities, regulation is meant to stop a significant share of global deforestation and forest degradation, in turn reducing greenhouse gas emissions and biodiversity loss.

Once adopted and applied (at the end of 2024), the new law will ensure that a set of key goods placed on the EU market will no longer contribute to deforestation and forest degradation in the EU and elsewhere in the world.

Futures trading platform ICE (Intercontinental Exchange), issued a warning in a joint communique with the UN’s International Trade Centre, after the EU ruling was passed in June this year.

Speaking to the Financial Times, Pamela Coke-Hamilton, executive director of the International Trade Centre, said. “If it lands on the market within the transition period that’s fine. But if it is held and released after the end of the transitional year, it may not be … it could be extremely difficult . . . [the goods] won’t be allowed in because [producers] wouldn’t have . . . done anything that would make it compliant with the new regulations​.”