A Cocoa Industry in Flux
The cocoa industry is at a crossroads. While global cocoa prices have skyrocketed by more than 300% in just 16 months, many smallholder farmers—who produce 90% of the world’s cocoa—continue to live below the poverty line. Regulatory pressures such as the EU Deforestation Regulation (EUDR) and increasing consumer demand for ethical sourcing force cocoa supply chains to become more transparent. However, as traceability efforts expand, new challenges emerge, particularly around smallholder inclusion, indirect supply chains, and compliance costs.
The Cocoaradar Spotlight Paper (March 2025) examines the state of global cocoa supply chains, mapping key players, market dynamics, and sustainability trends. Below, we unpack some of the most important findings.
The Cocoa Supply Chain: A System Under Strain
Smallholder Farmers: The Backbone, Yet Still the Weakest Link
Despite their critical role, cocoa farmers struggle with low incomes, climate risks, and limited access to financial services. While Ghana and Côte d’Ivoire introduced the Living Income Differential (LID) scheme to stabilize prices, a 2023 Oxfam survey found that cocoa farmers’ net incomes in West Africa declined by 16.38% over the past three years.
“Cocoa prices may be at record highs, but the benefits are not trickling down to farmers.”
Cocoaradar Spotlight Paper (March 2025)
Farmers remain at the mercy of middlemen and aggregators, who often dictate pricing and terms. Access to direct market channels and financial support programs is essential for breaking this cycle.
The Compliance Challenge: EUDR, CSRD & The Cost of Traceability
The European Deforestation-Free Regulation (EUDR) is set to change the game, requiring full farm-to-market traceability. However, concerns remain:
- Traceability Costs: Polygon mapping and satellite tracking are expensive, and smallholder farmers lack the resources to implement them.
- Market Disruptions: Non-compliant cocoa risks exclusion from the EU market, creating instability.
- Enforcement Gaps: Some suppliers might seek less regulated markets without harmonized industry standards.
With the EU revising the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) to simplify reporting requirements, industry players must stay ahead of evolving compliance landscapes.
“Traceability is no longer just a requirement—it’s a market access tool. Those who fail to comply will struggle to sell into regulated markets.”
Cocoaradar Spotlight Paper
Beyond Cocoa: The Rise of Alternative Ingredients
As traceability pressures mount, some brands explore cocoa-free alternatives to hedge against supply chain risks.
Emerging trends include:
- Cell-cultured chocolate: Sustainable, lab-grown cocoa to reduce reliance on farming.
- Cocoa-free chocolate substitutes: Companies experimenting with sunflower seed-based alternatives.
- Circular cocoa economy: Utilizing more parts of the cocoa pod to reduce waste.
While these innovations are in early stages, they could disrupt traditional cocoa supply chains if sustainability and compliance costs continue to rise.
A Defining Moment for Cocoa
The cocoa industry is evolving fast, shaped by regulatory shifts, sustainability demands, and market pressures. The next few years will determine whether traceability strengthens the industry—or whether compliance costs create new inequalities.
At Farmforce, we believe that first-mile traceability solutions must work for all stakeholders—from multinational buyers to smallholder farmers. The insights from the Cocoaradar report reinforce the urgent need for efficient, scalable, and farmer-friendly traceability tools to navigate this changing landscape.
📖 Read the full Cocoaradar Spotlight Paper (March 2025) for deeper insights into cocoa supply chains, compliance, and sustainability trends.
