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.