The Impact of EU Pesticide Regulations on West Africa's Cocoa Exports

Cocoa is of vital importance to the economies of Cameroon, Cote d'Ivoire, Ghana and Nigeria, and it constitutes the largest part of the agricultural sector for these countries. The EU is a major importer of cocoa from West Africa, and therefore regulations on chemical residues in cocoa beans will have significant economic impact on the producing countries in West Africa. The study quantified the impact of the EU pesticide regulations on exports of cocoa beans from West Africa using data spanning 2001 to 2016. Specifically, it determined the impact of EU pesticide regulations on West Africa's exports of cocoa beans, and also examined the differential impact of the EU regulations among the four major cocoa-exporting countries in West Africa. Data were collected on the values and quantities of cocoa exports, real exchange rate and importers' gross domestic product from various secondary sources. Difference-in-difference methodology was employed in analysing the data. The results revealed that the regulations impacted negatively and significantly on West Africa's cocoa exports to the EU. The exports of West Africa's cocoa beans to the EU (and Switzerland) declined by 41% as a result of the policy reform. The effect, however, varied among the exporting countries in the sub-region. The effect of the regulations is negative and statistically significant for Cote d'Ivoire and Ghana, but insignificant for Nigeria and Cameroon. The regulations have caused exports of Cote d'Ivoire and Ghana to fall, relative to non-EU importing countries, by 34% and 47%, respectively. The results also revealed that the decline in exports of Cote d'Ivoire could be attributed to a 56% decline in unit prices of cocoa beans and a decrease in patronage by the EU, while that of Ghana could be attributed to a 36% decrease in quantity of exports to the EU and a decrease in patronage by the EU member states. These results imply inadequate conformity with the pesticide legislations. In order to solve the problem of inadequate conformity and thereby inaccessibility of West Africa's cocoa exports to the EU markets, the national governments of the exporting countries should strengthen efforts aimed at assisting farmers and exporters to comply with international standards required by the EU. The national governments should actively participate in international standard-setting so that such standards do not become barriers to future exports of cocoa beans. This will also provide early warning to exporters in those countries and enable them to prepare and adjust to new standards. The study also suggests that adequate inspection facilities be provided at exit points in order to facilitate cocoa exports. The results further imply that Ghana Cocoa Board should sustain and possibly scale up the quality of cocoa beans in order to continue to enjoy premium prices on cocoa exports; Cote d'Ivoire should strengthen measures aimed at raising cocoa quality standards and reinforced quality control particularly at the level of the farmers, if premium prices similar to those achieved in Ghana are to be obtained. Cameroon should intensify efforts to improve the quality of its cocoa bean exports. Nigeria should establish a cocoa board, like Ghana did, to specifically handle the marketing of cocoa beans and enhancing quality control.