Cocoa prices have plummeted to around $3,000 per tonne, far below the $12,000 per tonne peak in April 2024, despite the European Union’s deforestation regulation intended to boost demand for ethically sourced products. The drop has left cocoa buyers in Ghana and Ivory Coast, which produce two-thirds of the world’s supply, in a severe financial crisis, with licensed buyers accumulating $750 million in debt to local banks.

Impact on Cocoa Buyers and Farmers

The Licensed Cocoa Buyers Association of Ghana reported that cocoa buyers are struggling with low prices and a weakened banking system, which has limited their ability to secure financing. The crisis has been exacerbated by a global surplus of 365,000 tonnes for the 2025/26 season, with Ivory Coast and Ghana reporting growing stockpiles.

According to the country’s industry regulator, Cocobod, around 70,000 metric tonnes of cocoa beans remain in the fields in Ghana, indicating a significant oversupply. The situation is further complicated by Ghana’s broader debt crisis, which has forced the government to negotiate a restructure of up to $44 billion in external and local debts. As part of this, a Domestic Debt Exchange worth $910 million required domestic banks to accept a haircut on their debt, weakening their balance sheets and reducing their capacity to lend to the cocoa sector.

President John Mahama’s government has responded by reducing the fixed price it pays for bean purchases and promising a cocoa financing scheme to help buyers. However, these measures have not yet alleviated the sector’s liquidity problems, which are compounded by the accumulation of interest on the debts owed by cocoa buyers.

EU Regulation Delays and Compliance Costs

The EU Deforestation Regulation (EUDR), which was originally scheduled to be implemented in 2024, has been delayed until January 2027 at the earliest. This delay has not stopped countries from stepping up their compliance efforts, as the regulation requires importers to source commodities from farmers they know are compliant, with penalties of up to 4 percent of their global turnover for non-compliance.

Last September, the EU commission proposed another year’s delay due to concerns that its in-house IT system would be overwhelmed by up to 1 billion compliance statements per year. The commission also proposed to simplify the reporting requirements under the regulation. However, the impact of these changes is already being felt in other sectors, such as coffee, where some European buyers have stopped purchasing from Ethiopian smallholder farmers.

Ghana has announced plans to split its cocoa market, charging an additional $200 per tonne for ‘sustainable’ cocoa. The Cocoa Marketing Company stated that European buyers have signaled their willingness to pay the premium to avoid EU fines. The EU accounts for more than 60 percent of Africa’s cocoa exports, making compliance with the regulation a critical factor for the industry.

Regional Compliance and Traceability Efforts

In Nigeria, 17,000 cocoa, oil palm, and coffee farmers in 17 local government areas of Cross River State were registered under the newly introduced Cross River State Traceability System. Meanwhile, Cameroon, Africa’s third-largest cocoa producer, has implemented a 100 percent traceability system covering the product from plot to port. The country remains committed to its 2021 pledge to achieve ‘Zero Deforestation Cocoa’ and to double cocoa production by 2030.

These regional efforts highlight the growing importance of traceability and compliance in the cocoa industry, even as prices fall and financial pressures mount. The long-term success of the EUDR and its impact on global markets will depend on how effectively these compliance measures are implemented and how they affect both producers and consumers.