The European Union’s highly anticipated Deforestation-Free Regulation (EUDR), a proactive step toward transforming global agriculture into a more sustainable enterprise, has seen a shift in its timeline. Initially slated for implementation in December 2024, this regulation will now take effect in January 2026, giving stakeholders more time to prepare for its far-reaching impact.
The European Union passed the regulation on May 31, 2023. The EUDR aims to eliminate deforestation and forest degradation from the supply chains of products entering the EU market. The regulation prohibits placement or exportation of commodities and products to the EU unless they are deforestation-free, are produced in accordance with the relevant legislation of the country of production and are covered by a due diligence statement. It requires companies to demonstrate that their goods are deforestation-free by tracing and verifying the origins of key raw materials such as cocoa, palm oil, coffee, rubber, wood and cattle to ensure they were not sourced from recently deforested land.
According to the regulation, “deforestation-free” refers to land that has not experienced forest degradation since 31 December 2020. This means that products and their raw materials are considered compliant if they are produced or sourced from land where no deforestation has occurred after that date.
The EUDR also aligns with the EU’s broader commitments to climate action, biodiversity conservation, and sustainable development. By imposing these regulations on product sourcing, the EU is leveraging its market influence to encourage businesses worldwide to adopt more sustainable practices, making environmental responsibility a prerequisite for global trade.
Deforestation (conversion of forest to agricultural use, whether human-induced or not) is a major global challenge, with consequences that extend beyond tree loss; it significantly contributes to climate change. According to Global Forest Watch, the global primary forest loss reached 76.3 million hectares (Mha) between 2002 and 2023, accounting for 16% of total tree cover loss during this period. The world’s primary forests declined by 7.4% over these two decades, reflecting persistent deforestation pressures.
Source: Global Forest Watch
A study by Pendrill et al., 2022 across 135 countries identified the eight commodities affected by the EUDR as the highest contributors to deforestation- oil palm (34%), soya (32.8%), wood (8.6%), coffee (7%), cattle (5%) and rubber (3.4%). This attribution confirms EU’s decision to target these commodities and their relevant products.
| Relevant commodity | HS code | Relevant products |
| Cocoa | 1801 | Cocoa beans, whole or broken, raw or roasted |
| 1802 | Cocoa shells, husks, skins and other cocoa waste | |
| 1803 | Cocoa paste, whether or not defatted | |
| 1804 | Cocoa butter, fat and oil | |
| 1805 | Cocoa powder, not containing added sugar or other sweetening matter | |
| 1806 | Chocolate and other food preparations containing cocoa |
Forests act as essential carbon sinks, absorbing approximately 2.6 billion tons of carbon dioxide (CO2) annually and housing 80% of the world’s terrestrial biodiversity. It plays a vital role in regulating global climate patterns, maintaining water cycles, preventing soil erosion, and supporting the livelihoods of over 1.6 billion people worldwide.
Ghana’s tree cover suffered a loss of 1.6 million hectares from 2001 to 2023, equivalent to a 24% decrease in tree cover since 2000 and 8.9% of the loss was in primary forests according to Global Forest Watch data.
Although the EUDR covers cocoa, coffee, oil palm, rubber, wood and cattle, like Cote D’Ivoire, Cocoa is the focused commodity for Ghana. Cocoa received the highest response as it is the biggest contributor to deforestation in Ghana as well as a major produce exported to the EU.
Selected Countries impacted by EUDR
Source: S&P Global Market Intelligence
Ghana is estimated to have exported 64% of the cocoa and cocoa preparations to the EU in 2024 which contributed significantly to the economy. According to the 2025 budget statement, the cocoa sector is projected to grow by 5.6% and contribute around GHS 2.55 billion to Ghana’s GDP. In 2024 alone, cocoa beans and cocoa paste generated GH₵21.55 billion, making up 8.4% of total export revenue.
As the EUDR sets new sustainability standards for global trade, Ghana’s cocoa producers face increasing pressure to ensure their supply chains are environmentally responsible. Non-compliance with the EUDR’s requirements will affect Ghana’s trade with the EU.
According to Issifu Issaka of the Ghana Cooperative Cocoa Farmers Association, a critical challenge is the restriction on land expansion. “Cocoa farmers cannot expand further into forests, so the solution lies in technological support to maximize yield on existing land. But there’s little in the regulation that addresses this need for smallholders,” he explained during a webinar hosted by Innovation Forum.
To navigate these new requirements, many cocoa cooperatives and exporters are investing in mapping polygons, farmer training, and agroforestry techniques to improve yields without resorting to deforestation. Additionally, industry stakeholders are advocating for policies that provide technical and financial assistance to help smallholder farmers meet compliance standards while sustaining their livelihoods.
Ghana’s Export of Cocoa and Cocoa Preparations (‘000 MT)
Source: ITC
According to the 2024 European Forest Institute’s Preparedness Check of Ghana for EUDR, COCOBOD has proactively developed the Ghana Cocoa Traceability System (GCTS) under the Cocoa Management System (CMS) to ensure full digital traceability from farm to export. The system, which has been piloted in Assin Fosu, Bereku, and New Edubiase, integrates farmer registration, GPS farm mapping, QR code tagging, and due diligence reporting. As part of the effort to strengthen compliance with EUDR, Cocobod has also implemented a Deforestation Risk Assessment Module (DRM) to classify cocoa based on land-use history and ensure alignment with sustainability standards.
Additionally, efforts such as farmer sensitization, training programs, and child labor monitoring integration have been put in place to enhance Ghana’s cocoa sector’s credibility and market access to position Ghana’s cocoa industry for sustainable and responsible trade.
Like the cocoa sector, rubber has been steadily growing, contributing to both the agricultural and industrial economies. With favorable climatic conditions and increasing investment.
Ghana has also become a key player in natural rubber production, primarily for export. Smallholder farmers dominate the sector, supplying raw latex to processing companies that prepare it for international markets, including the European Union. However, with the introduction of the EUDR, the industry faces new challenges in ensuring traceability, sustainability, and compliance to maintain market access while promoting environmentally responsible practices.
Mr. Emmanuel Owusu, Managing Director of Narubiz Ltd, a rubber plantation and processing company in Daboase in the Western Region works with a many out-growers. Mr. Owusu shared insights into the rubber sector’s preparations, particularly Narubiz’s processes, towards EUDR implementation.
He stated that for traceability, Narubiz Ltd maintains a comprehensive supplier database for raw rubber, capturing details like farm owner information, precise location, farm size, caretaker details, and unique identification numbers and the company is still developing geolocation data mapping.
Mr. Owusu also explained that to address potential non-compliance risks, Narubiz is collaborating with LiveEO (UK-based), Proforest, and other certified organizations to conduct risk assessments, undertake due diligence on their suppliers, implement a traceability system, provide training, and establish a non-compliance response plan to ensure full alignment with EUDR requirements.
He highlighted that one of the major challenges Narubiz Ltd faces in this preparation is securing the necessary financing and technical expertise to implement a GIS-based mapping system. Additionally, data collection and digitalization require significant investment, and as a growing company, accessing the resources needed to develop a comprehensive traceability framework remains a hurdle.
As Ghana’s agricultural sector navigates the evolving landscape of sustainability regulations, the EUDR sets new benchmarks for global trade. While large-scale operators must comply by December 2025, micro- and small enterprises have until June 30, 2026, to fully implement the necessary measures.
Impact on Financial Institutions
Although the EUDR primarily focus on agriculture and the regulation has not in its current state made explicit provision for financial institutions, the regulation presents both challenges and opportunities for financial institutions in Ghana. This regulation is important to financial institutions because they support businesses and investors involved in the production of the affected commodities.
Non-compliance by the producers will lead to market exclusion, reducing agribusiness revenues and increasing loan default risks for banks. At the same time, the regulation creates new opportunities for sustainability-linked financing, as agribusinesses require investment in traceability systems, GIS mapping, and sustainable farming practices to meet compliance standards.
Financial institutions will need to adapt by developing tailored loan products, integrating sustainability assessments into lending criteria, and collaborating with bodies like COCOBOD and other industry stakeholders to support EUDR-aligned agricultural practices.
Additionally, due diligence and regulatory requirements will extend to financing agreements, making proof of compliance a prerequisite for financial access. Beyond the banking sector, the EUDR also has broader implications for Ghana’s foreign exchange (FX) earnings. With cocoa being a major source of foreign exchange inflows, any disruption in exports due to non-compliance could lead to reduced foreign exchange reserves, increased currency volatility, and depreciation of the Ghanaian cedi.
By proactively supporting businesses in meeting these standards, financial institutions can safeguard their portfolios while ensuring Ghana remains competitive in global trade and maintains a steady flow of foreign exchange earnings.
Compliance with EUDR is not just about maintaining market access it’s an opportunity to build more resilient, sustainable supply chains that can enhance Ghana’s position in global trade for years to come.