Sacks weighing up to 65 kilograms (143 pounds) are unloaded by workers wearing masks against the dust, who then tear them apart to prepare the contents for drying, sorting, and cleaning. Others gather loose beans from the floor by sweeping them into stacks.

There are cocoa beans everywhere you turn and walk. Millions upon millions are sent to comparable facilities in West Africa before being transferred to storage facilities for the best chocolatiers in the world located in Amsterdam, Hamburg, and Antwerp, Belgium.

However, a significant shift is underway that might destabilize this supply chain and suddenly raise the cost of candies, skincare products, and herbal remedies. Beginning on December 30, businesses like Cargill Inc., Ferrero Group, Nestle SA, and Mars Inc. will have to provide evidence to the European Union that no bean they bring into the continent has contributed to deforestation abroad.

This entails tracking cocoa from the pod to the port, an expensive task for a sector already strained by falling output and record-high futures prices. The EU, which consists of 27 members, is the largest purchaser of goods from Ghana and the Ivory Coast, thus the absence of proof would preclude any trade.

The president of the European Cocoa Association, an industry body, stated, “There is a gun to our head to set up systems and get ready.” “We anticipate disruption for a duration of one to two years, which may result in increased prices throughout Europe.”

The GPS coordinates of the farms where the cocoa was cultivated must be listed on every shipment, whether it is made in bulk or in bags, and this data must be entered into an EU database.

Developing their geolocation networks in Ivory Coast, the country that produces 44% of the world’s cocoa, is what Cargill, Ferrero, and Nestle said.

When asked how much they are spending on their efforts, none of the corporations would answer, nor would they address the possibility that consumers will eventually foot the bill by purchasing more costly chocolate. It’s also uncertain if farmers, who are already among the poorest people on the planet, will bear the brunt of this.

Nestle Chief Executive Officer Mark Schneider expressed his “great confidence” that the business will meet its deadline for having a supply chain free of deforestation during a Feb. 22 earnings call.

According to Barry Callebaut AG CEO Peter Feld, some are pressuring the group to postpone implementation even as they strive to fulfill the mandate.

Feld stated on a Nov. 1 earnings call, “The EU regulation came in place and actually didn’t talk to any of the players in the industry.” The participants are interacting with the European Commission in order to advocate for a transitional phase.

The EU Deforestation Regulation (EUDR) also addresses cattle, palm oil, coffee, soy, lumber, and other commodities that are known to cause clear-cutting. The legislation, which spans the Amazon, Africa, and Asia, covers both raw materials and finished goods like furniture and leather.

Without it, about 248,000 hectares (613,000 acres) of forest would be lost every year by 2030, the bloc estimated.

Companies that find beans to be non-compliant will probably sell them in the US or Asia, which are far smaller and less lucrative markets for West African farmers. Penalties for breaking the law that the EU discovers about a shipment include fines, confiscation, or a temporary restriction on trading within the bloc.

This has given rise to an urgent issue facing the industry. Since cocoa beans take 12 to 18 months to reach Europe after harvest, the current crop must abide by the rule because it will arrive after December 30.

This month in Amsterdam, at the World Cocoa Foundation meeting, regulators and business leaders crowded into a session titled “The Known Unknowns of the EUDR” out of sheer anxiety over the law.

Attendees badgered commission policy officer Zoe Druilhe for implementation specifics, but she was unable to provide them with all the information they sought.

The launch date of the EUDR website and the reference map that the authorities will utilize to verify the companies’ submissions were not disclosed by Druilhe.

According to Fuad Mohammed Abubakar, head of Ghana Cocoa Marketing Company (UK) Ltd., “traders are very nervous because the regulation will make it difficult for beans to enter the EU market.” “That will only result in higher prices.”

Bloomberg estimates that London futures are approximately $800 a ton more expensive than those in New York, based on the most active contracts.

According to BloombergNEF, the EU’s share of the world’s deforestation is 7.5%, attributable to the cocoa industry. While some corporations already use voluntary sustainability programs to track beans, the new regulation calls for a more thorough surveillance system that begins with identifying the sometimes hazy boundaries of isolated, individual plots.

In Ivory Coast, the world’s largest cocoa producer, the requirement for due diligence will be quite demanding. Despite legal prohibitions, a 2022 study report discovered that protected woods contain almost 30% of the nation’s cultivated land.

The study found that between 2000 and 2020, the growth of cocoa farms was associated with the loss of almost 360,000 hectares (890,000 acres) of forest. That is London’s double its size.

The hitches that could prevent EUDR’s deployment were discovered in late 2023 during visits by Bloomberg News to way stations around southwest Ivory Coast. Europe is attempting to control an unstable, low-tech, disorganized supply chain that is easily abused by thousands of small farmers and sly middlemen.

Currently, along its journey to the bloc, cocoa changes hands at least six times and is constantly mixed with new batches. More than 80,000 farms could supply beans to a bulk carrier, and not all of them are known to the dealers.

According to consultant for cocoa sustainability Marc Donaldson, “the EU has got itself into a deep mire of complexities they don’t understand.” It’s incredible to follow a bag of beans back to the farmer.

Approximately twenty to thirty farmers drop off their produce at a community buying center just after harvest, where it is first mixed. Ivory Coast’s cocoa belt is dotted with these tiny centers.

Beans are deposited into jute bags and sent to a local cooperative, which also gets supplies from other community centers. Up to 2,000 farmers may send products through this location.

Bags from various sources are opened, and their contents dumped onto a huge tarp outside the Casib Coop-CA in Gabiadji to dry. To expose the crop to some sun, workers shuffle across that mottled brown carpet with bare feet, much like they would kick sand on a beach.

From here, the beans are transported to a location roughly five miles from San Pedro’s port, such as the Societe Ivoirienne de Transformation des Produits Agricoles’ factory.

Conveyor belts with numerous tracks transport beans from various co-ops for joint washing, grading, and bagging. After that, they are transported to the docks for export.

The Trase consultancy predicts that up to 60% of Ivory Coast’s beans may come from a covert, parallel network, which complicates efforts to trace beans.

Local middlemen known as pisteurs utilize pickup trucks to reach outlying fields, pay farmers in cash for their produce, and transport the goods directly to warehouses, eschewing earlier inspections completely.

Major traders don’t care which farmers the beans on the truck came from; they just need that so-called “indirect” supply to fulfill client orders.

“Everyone claims that their cocoa comes from protected areas, but it’s going somewhere, and someone is buying it,” stated Alex Assanvo, executive secretary of the two countries’ Cote d’Ivoire-Ghana Cocoa Initiative. He thinks that methods managed by the government would guarantee that all farmers are counted and that the data is uniform.

“Businesses seldom reveal the percentage of their volumes that originate from indirect sources,” according to Valentin Guye, a supply chain expert at the University of Louvain in Belgium.

Some people stay away from it. According to Floriane Hédé, a traceability manager, Ferrero does not purchase cocoa that has been derived indirectly, and it is forcing suppliers to furnish additional information regarding the origin of its beans.

The world’s largest agricultural dealer, Cargill, employs over 400,000 cocoa farmers, according to Marijn Moesbergen, the lead for cocoa sourcing, who made this statement in Amsterdam. The startup is labeling every bag, providing farmers with unique QR codes to scan at community centers, and mapping plots in the Ivory Coast.

According to Jack Steijn, co-founder of the sustainable commodities consultancy Equipoise, “the risk is too high for anyone in the supply chain buying cocoa they can’t trace.”