Reducing barriers to market access: Equipping Ecuador’s small cocoa farmers to navigate new international rules

When the European Union's Deforestation Regulation (EUDR) is fully enforced, it will fundamentally change how agricultural commodities enter one of the world's largest markets. For Ecuador's 397,000 cocoa farmers—70% of whom are smallholders working plots smaller than five hectares—new trade regulations like the EUDR represent both an existential challenge and an opportunity to transform their livelihoods.

The country is the world's third-largest cocoa producer, with the sector serving as the country's fourth most important national economic pillar. For over 150,000 families, cocoa represents their primary income source. Yet currently, only 15% of these producers have sustainability systems in place, a key indicator of the challenge they face in complying with stricter international regulations.
 

Equipping smallholders with tools to navigate regulatory requirements

Recognising this critical gap, GIZ Ecuador partnered with Preferred by Nature to implement a comprehensive risk assessment and capacity-building initiative between 2023 and 2025. The project focused on equipping smallholder farmers and their organisations with information and practical tools to understand and comply with the EUDR's requirements — as well as other trade regulations that can arise in the future.

“Market shifts like those driven by the EUDR call for shared responsibility. International cooperation plays a critical role in strengthening local capacities, supporting on-the-ground efforts, and empowering producers to understand and meet legal requirements, thereby creating the conditions for their products can access markets like the EU,” Pedro Ramírez, Technical Advisor, GIZ Ecuador.

The initiative combined technical training, including the development and strengthening of Due Diligence Systems (DDS) adapted to the realities of small producers, with their practical application through pilots implemented with producers and exporters. These pilots made it possible to put acquired knowledge into practice and to launch the DDS, with the goal of preparing upstream actors in the value chain. The process resulted in tangible growth for the organizations, which strengthened their processes and positioned themselves with the tools to face the challenges of the international market.

The approach avoided top-down solutions; instead, the project emphasized collaborative methods that recognize the interconnected nature of cocoa production with family farming.

"To produce higher-quality cacao, men and women in the family must participate, learning and teaching our children as well. By working united, we can overcome economic hardships," emphasised Lupita Grefa, a producer and partner of the Kichwa* Aboriginal Community Association, Kallari.

Gathering stakeholders for collaborative action

The project's culminating event in Quito on 21 July 2025, brought together stakeholders across the cocoa value chain — from government institutions to smallholder organisations, exporters, and international partners. The gathering highlighted a key insight: successful EUDR alignment requires more than technical solutions — it demands political support, cross-sector collaboration, and territorially-focused approaches.

Key project outputs include:

• National Risk Assessment covering deforestation, legality, and traceability risks throughout Ecuador's cocoa supply chain
• Guide for Due Diligence (DD) tested in real-world conditions for identifying and mitigating non-compliance risks
• EUDR-aligned pilot exercises including mock purchasing scenarios
• Comprehensive Toolbox featuring eight technical resources for risk assessment, mitigation, and traceability
   

Notably, while designed considering the specific characteristics of the cocoa production and trade chains, this Toolbox serves as a replicable model for other agricultural commodities across Ecuador and beyond, extending its potential impact to other strategic commodities, such as coffee, well beyond the initial scope. 

"We chose to work with Preferred by Nature because of their strong track record with the EUTR and their extensive experience in sustainability across agricultural supply chains," said Ute Sonntag, Coordinator of the Sustainable Agriculture for Forest Ecosystems, SAFE Programme.

Positioning for future challenges

The initiative demonstrates how international cooperation can effectively help to bridge the gap between complex regulations and on-the-ground realities. As Abel Lapo from the Ecuadorian Cacao Producers Association, APROCEL noted: "This project has played a key role in helping us understand emerging regulations, and we've taken proactive steps to anticipate and comply with these new demands."

For Preferred by Nature, the project represented a strategic expansion of their technical capabilities. "This was a seed project that allowed us to understand the real challenges faced by small producers, helping us align our mission with on-the-ground realities and shape a strategic approach to drive high-impact change," explained Freddy Peña, Regional Manager for Latin America at Preferred by Nature. "We aim to support smallholder organizations not only in adapting to the requirements of the EUDR, but also to other emerging market regulations, such as the EU Corporate Sustainability Due Diligence Directive (CSDDD) and Germany's Supply Chain Due Diligence Act."

The Ecuador cocoa initiative illustrates that with targeted capacity building and collaborative approaches smallholder farmers can successfully navigate complex regulatory landscapes while strengthening their market position and environmental stewardship. As global supply chain regulations continue evolving, such partnerships and cooperations offer a proven model for supporting agricultural production models that are more inclusive and sustainable.

_{^{* Native peoples from the Andean and Amazonian regions who share cultural and linguistic roots. They are part of the broader Quechua family of peoples, but possess distinct characteristics, especially in their use of the language and territorial organisation.}}