New European Union rules threaten to send the prices of chocolate, skin-care and coffee products soaring.
The EU will require companies including Mars Inc., Nestle and Ferrero Group to prove from December 30 that every cocoa bean they import into Europe did not result in forest trees being chopped down elsewhere.
It means cocoa imports will need to be traced from pod to port at a time when the price of cocoa is already rising due to drops in production and record futures prices.
Paul Davis, president of industry group the European Cocoa Association, told Bloomberg: “There is a gun to our head to set up systems and get ready.
“We expect disruption for about one to two years and that could mean higher pricing in Europe.”
Under the new rules, each cocoa shipment will have to list GPS coordinates for the farms where it was grown.
According to Bloomberg, Cargill, Ferrero and Nestle are building their geolocation networks in Ivory Coast, which supplies 44 percent of global cocoa supplies.
Peter Feld, Chief Executive of cocoa manufacturer Barry Callebaut AG, is quoted by the publication as saying the bloc’s new regulations came in place without discussions with industry players.
He said the industry is lobbying for a transition period with the EU Commission.
The European Union estimates that without the EU Deforestation Regulation, roughly 288,000 hectares of forest would be lost per year by 2030.
Other products which fall under the new rules are coffee, palm oil, timber and cattle, all of which fuel deforestation.
Fuad Mohammed Abubakar, Head of Ghana Cocoa Marketing Company (UK) Ltd said there is a high level of uneasiness among traders because the new regulation will make it difficult for beans to enter the EU market.
He warned: “That will only push prices higher.”
Cocoa hit £4,909 per metric tonne earlier this month, up from £3,443 on January 9.
Prices of the commodity had already risen massively, from about £1,904 a year ago. Last month Cadbury’s warned it was having to make “carefully considered price increases”.
Meanwhile, US producer Hershey’s said it was going to have to cut costs by £238million ($300m) and warned it would miss market forecasts.
Research by consumer group Which? last year found the price of festive chocolate boxes had risen by at least 50 percent on the year before.
Towards the end of last year, the price of chocolate had been increasing at nearly twice the speed of other food and drink at supermarkets.
In September, it emerged chocolate brand Galaxy had cut the size of its Smooth Milk bar from 110g to 100g, while the price had increased from 99p to £1.25 in Tesco.
