FT: Hundreds of thousands of tons of coffee and cocoa could be destroyed in the European Union

The Financial Times reports that the deforestation law will sharply raise the price of coffee and cocoa, and their stocks stored in European warehouses are in danger of being destroyed.

This is a law that came into force in June 2023, which prohibits the import of goods produced as a result of deforestation and the use of child labor. explains FT. Now in stock in EU About 200 thousand tons of cocoa and 150 thousand tons of coffee beans are stored. Manufacturers will need to manage to implement them during the transition period – until December 2024, says Pamela Coke-Hamilton, chief executive of the International Trade Centre.

The ban will mainly affect producers from Ghana and Ivory Coast, which account for 70% of the global cocoa market. Negative consequences will also threaten companies from Brazil, Vietnam, Colombia and Indonesia – countries that play a leading role in the production of coffee beans.

Manufacturers have two options for how to deal with huge quantities of coffee beans and cocoa. The first involves the sale of products outside the EU, the second involves the destruction of these goods. In addition to coffee and cocoa, the law prohibits the import of other types of products popular in Europe, such as palm oil grown in areas of deforestation. The ban also affects the import of rubber.

In mid-August, Reuters, citing market participants, predicted an increase in global coffee prices by the end of 2023 due to the expected drought in Indonesia, which is the fourth largest producer of this product in the world. We are talking about a possible increase in the cost of Robusta coffee, which has a richer and bitter taste than Arabica.

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