How the New EU Regulation on deforestation-linked commodities threatens future export of Ghana’s Cocoa, Coffee and Timber
Pressure is mounting on Ghana and other exporting countries as the European Union (EU) seeks to finalize its proposed new regulation on deforestation-linked commodities. The proposed law will see to it that the importation of products like cocoa, coffee, palm oil, timber, soya, beef and some of their derivatives coming from supply chains associated with deforestation or forest degradation are minimized or prohibited, whilst simultaneously increasing the demand and trade in legal and ‘deforestation-free’ (the condition of the goods produced on land that has not been subject to deforestation or forest degradation after December 31, 2020) commodities and products in Europe.
The EU’s position on this regulation demonstrates their commitment to meeting sustainability targets, as countries pledged to halt and reverse deforestation by 2030 at the COP26 U.N.’s climate conference last year. Moreover, it comes at a time where investors have become keen on environment, social and governance practices in an era where the impact of have reached unprecedented levels. The proposed bill so far has received majority support by Members of EU Parliament with 453 votes in favor, 57 against, and 123 abstentions awaiting further negotiations with EU member states on the final text.
According to the EU, once the final law is approved, businesses would be obliged to verify and provide the assurance that commodities and agricultural products sold in the EU were not produced on “deforested or degraded land anywhere in the world”. The EU remains the largest importer of commodities such as cocoa and coffee accounting for more than 60% imports of the world’s cocoa and more than 50% of the world’s coffee. The proposed EU standards on imports of deforestation-linked commodities therefore pose serious threats to the economies of exporting countries that fail to meet the new standards.
This would not be the first time that Ghana have to bear the consequences of EU import regulations and sanctions. Eight years ago, the EU banned the importation of vegetables from Ghana due to the heavy infestation of pests. As a result, the country lost about US$30 million in revenue between 2014 and 2017 for failing to meet EU vegetable export quality standards.
This new EU legislation comes at a point in time when Ghana’s forest is being lost at an alarming rate due to cocoa farming, illegal logging and mining activities. The Global Forest Watch reports that between 2001 to 2021, Ghana lost 1.41Mha of tree cover, equivalent to a 20% decrease in tree cover since 2000, and 740Mt of CO₂ emissions. In 2021, it lost 101kha of natural forest, equivalent to 62.9Mt of CO₂ emissions. As indicated in Ghana’s National REDD+ Strategy, agricultural growth is responsible for at least 50% of deforestation, with cocoa being a major contributor and wood harvesting contributing 35%.
In Ghana, the bulk of cocoa, coffee and timber produced are exported. Data from COCOBOD reveals that, the EU remains the largest export destination of the country’s cocoa beans and coffee. In the 2018/2019 crop year, 44% of total cocoa beans output was shipped to the EU. In April 2021, the Forestry Commission of Ghana also reported that, timber exports to the EU amounted to €8.35 million (16.98%) and remains the second export destination of the country’s timber and other wood products. Obviously, Europe is a huge market for the country’s major commodities and failure to meet the requirements of the new proposed bill would have both social and economic ramifications for the local cocoa, coffee and timber industry.
Commenting on the threat of the new EU legislation on Ghana’s future export of cocoa and coffee, the Minister of Information Mr. Kojo Oppong Nkrumah after a two-day meeting with some EU officials at the “Alliances in Ghana: Coffee and Chocolate at the Table” forum in Brussels, Belgium on Friday, 30th September 2022, posted on facebook that “In Europe, there is a new legislation that could soon make Ghanaian cocoa and coffee unexportable to many international markets.
However, the EU Ambassador to Ghana Mr. Irchad Razaarly speaking at the second edition of the Orange Cocoa Day 2022 in Accra allayed fears that the EU will not ban cocoa exports from Ghana. He noted “There is no ban on Ghana’s cocoa. On the contrary, we want more of Ghana’s cocoa, and we are in support of Ghana and Côte d’Ivoire amongst all of the producers who meet these requirements…The call for more sustainable cocoa production is growing globally. And our citizens in Europe are increasingly demanding measures for ensuring that cocoa and other commodities are produced in a socially environmentally sustainable way. This explains EU’s legislation on afforestation and forest degradation and must not be seen as a threat to Ghana’s cocoa.”
Clearly the introduction of the new EU legislation brings some benefits as it would lead to the restoration and preservation of the country’s depleting forest cover thereby reducing greenhouse gas emissions and climate change impact. However, Ghana’s failure to meet these new requirements would have dire consequences on the country’s economy and the livelihoods of smallholder farmers and producers, who would be the most adversely affected.
There is therefore the need for industry players and all major stakeholders across the value chains of the ‘deforestation-linked’ commodities to come together, dialogue and collaborate to ensure that proper systems and interventions are put in place to promote the sustainable production of these commodities in line with EU priorities so the country does not lose export to the region.