Warehouses in EU countries hold stocks of coffee beans and cocoa beans that may be destroyed. This has become relevant after the adoption of the new law.
In June 2023, a bill was passed that prohibits the import of goods produced using child labor or contributing to deforestation. If these facts are confirmed, all stocks of coffee beans and cocoa beans are subject to destruction.
“There are a total of 150,000 tons of coffee beans and nearly 200,000 tons of cocoa stored in warehouses affected by the new law. The transition period during which producers can sell their goods to avoid losses will end in December 2024,” said Pamela Coke-Hamilton, Executive Director of the International Trade Centre (ITC).
Major difficulties may arise for cocoa producers from Ghana and Côte d'Ivoire, which account for up to 70% of the global cocoa market. These countries are facing issues with deforestation and the use of child labor. Leading coffee producers from Indonesia, Brazil, Colombia, and Vietnam may also face negative consequences, as similar problems are not uncommon in these countries, according to the Financial Times (FT).
Currently, companies have two options to address the issue with batches of goods that may cause difficulties: either urgently sell their stocks of coffee beans and cocoa beans in countries where this law does not apply, or destroy them.
The largest chocolate producer, Barry Callebaut, reports significant financial losses due to the new law. This company processes about 20% of the world's cocoa harvest, and EU countries are an important market for it.
However, the law also affects other popular products in Europe, such as palm oil obtained from deforestation, as well as rubber.
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