Europe, the world's biggest consumer of chocolate, and West Africa, the leading grower of the cocoa beans used to make it, share a common goal to make the sector sustainable.

But they have opposing views on how to put an end to the social, economic and environmental harms caused by satisfying Europe’s sweet tooth, heralding a showdown over who will bear the costs of complying: Big Chocolate or cocoa farmers.

The EU is finalizing regulations that seek to ensure that chocolate entering the market is free from deforestation and child labor.

At the same time, Ghana and Ivory Coast, the world’s biggest cocoa producers, are demanding higher prices. That's vital, they say, to make sustainable chocolate a possibility — and not a pipe dream.

The stakes are high: For the EU, cocoa is a test case for how companies and producers react when the bloc tries to impose higher standards.

For producers, the push to set up a cartel could drive up prices in the short term — but also risks stimulating oversupply and ultimately causing a price crash that would deepen the poverty already suffered by most cocoa farmers.

Chocolate makers, facing rising costs and greater scrutiny, may reroute supply chains to other cocoa-producing countries seen as less risky.

Doing nothing is not an option, said Alex Assanvo, who heads the joint West African initiative to support cocoa prices.

"We are not asking to pay them more, we are asking to pay them a fair price," Assanvo said in an interview. "If we believe that this is going to create oversupply, well then I don't know, maybe we should stop eating chocolate."

Bittersweet taste:

Chocolate may be sweet but the industry that makes it is not.

Most of the beans used to produce the world’s supply are grown by impoverished West African farmers; all too often from trees planted on deforested land and harvested by children.

One problem drives the others.

Poverty pushes farmers to chop down forests to produce more beans and profits and to put children to work as they cannot afford to pay wages to adult laborers.

To address this, Ghana and Ivory Coast, which produce 60 percent of the world’s cocoa, formed an export cartel in 2019 modeled on the Organization of the Petroleum Exporting Countries (OPEC).

They introduced a $400 per ton Living Income Differential, which aims to bring the floor price up enough to cover the cost of production.

In public, big chocolate and traders, including Barry Callebaut, Cargill, Ferrero, Hersey, Lindt, Mars, Mondelez and Nestlé, welcomed the initiative.

Yet behind the scenes many of the firms — which between them account for about 90% of the industry's $130 billion in annual profits — have done everything possible to avoid paying the premium and to drive prices back down, according to the Ivorian Coffee-Cocoa Council (CCC), the Ghana Cocoa Board (Cocobod) and their joint Initiative Cacao Ivory Coast-Ghana (ICCIG).

The companies that responded to requests for comment said that they have paid the Living Income Differential (LID) since its introduction.

The Ghanian and Ivorian trade boards and the ICCIG claim, however, that they have negated the LID's value by forcing down a different premium, the origin differential.

Fed up, these countries boycotted the World Cocoa Foundation Partnership Meeting at the end of October in Brussels.

They then gave the companies a deadline: commit to the premiums by November 20 or the countries would ban their buyers from visiting fields to carry out harvest forecasts and suspend their Corporate Social Responsibility programs – which sell well with ethically-minded consumers.

More harm than good?

Another proposed remedy comes from Brussels. Cocoa is one of the products to which the new EU legislation on due diligence — Brussels speak for supply-chain oversight and compliance — would apply.

Under this, large firms operating in the bloc will be forced to evaluate their global supply chains for human rights and environmental abuses, and compensate injured parties. In theory, this should reduce deforestation and child labor and improve the lot of farmers.

Yet, as European ambassadors thrash out the terms — and big players like France push for them to be watered down — concerns are growing that the legislation could turn out at best to be ineffective in practice, and at worst do more harm than good.

Cocoa farmers, and the NGOs that support them, have reason to be skeptical:

Back in 2000, a BBC documentary exposed the widespread use of child labor on cocoa plantations in Ivory Coast and Ghana.

The resulting media pressure led to a proposal for legislation in the United States forcing companies to certify chocolate bars free of child labor.

Companies pushed back hard, Antonie Fountain, managing director of cocoa NGO coalition The Voice Network said.

The proposal was dropped and companies committed instead to a voluntary plan to solve child labor, he explained: “And that turned into a two-decade failure of policy."

The resulting patchwork of pilot projects failed to transform the sector.

Despite an initial decline, nearly 20 years after the framework was introduced 790,000 children in Ivory Coast and 770,000 in Ghana are still working in cocoa, with 95% of them exposed to the worst forms of child labor, according to a 2020 report.

Deforestation has meanwhile accelerated.

Ivory Coast has lost up to 90% of its forest in the last half century.

Between 2000 and 2019 alone 2.4 million hectares of forest was cleared for cocoa farms, representing 45% of the total deforestation and forest degradation in the country, according to Trase, a data-driven transparency initiative.

Can Brussels sort it out?

To what extent the new due diligence directive will make a difference depends on the final text that was put to a meeting of EU trade ministers on Friday.

When the European Commission first came up with the draft it was seen as a game changer, but subsequent wrangling over the regulation's scope has raised doubts.

Last week, ambassadors from France, Spain, Italy and some smaller countries voted down the text in the European Council, seeing the value chain and civil liability provisions as too wide and too ambitious.