- From mid-2024, ICE CoT expects to permit entities, such as shippers, to be able to submit farm geolocation data, including polygons or GPS points, into ICE CoT. ICE CoT would then undertake validation checks to either confirm that these plots are not within areas of deforestation or within protected forests and are reasonable and consistent (according to the ICE CoT tests), or else reject them as having failed the validation.
- Users will have time to remedy any issues before physical-flow and processing data for parcels is expected to be eligible to be submitted into ICE CoT for validation in late-2024.
ICE Commodity Traceability (ICE CoT) Service
Supporting trade in EU Deforestation Regulation (EUDR) compliant cocoa and coffee
ICE Benchmark Administration Limited (IBA), one of the world’s most experienced administrators of regulated benchmarks and data services, is launching ICE CoT; a platform designed to help traders and operators comply with the EUDR and to support trade in compliant coffee and cocoa within the EU.
ICE CoT: Keeping EUDR-compliant cocoa and coffee tradeable
The coffee and cocoa industries and countries of origin have made significant investments in supply chain sustainability processes and technology over many years. ICE CoT aims to build on this infrastructure by allowing market participants in the supply chain to upload farm-geolocation, farmer physical-flow (movement, merging and splitting of parcels), and processing (roasting, grinding, converting beans to butter and powder, etc.) data in respect of a product “parcel” into ICE CoT.
ICE CoT is designed to run a series of validation checks on the farm-geolocation and farmer, and the physical-flow and processing data that is submitted, conducted in accordance with published methodologies, in order to establish that the relevant products in the parcel were not made from commodities produced in areas of deforestation, or in protected forest areas, and that the data is reasonable and plausible.
Provided the validation checks in respect of a product are passed, ICE CoT would accept the parcel and store all associated traceability data alongside it.
As a result, ICE CoT could be used to help suppliers satisfy their due diligence obligations under the EUDR and evidence the compliance of their product to potential buyers before they trade, thereby supporting the tradability of compliant coffee and cocoa within the EU.
When a parcel passes from a seller to a buyer, the seller would record the transfer within ICE CoT and the associated traceability data would remain with that parcel. The buyer of the parcel would be able to view certain traceability data for the parcel, such as the list of plots from which the product was sourced. More sensitive traceability data, including the full chain of custody and physical movement of the product, would remain confidential, unless the seller chooses to make this information visible to the buyer.
If an NCA needs to conduct checks on a buyer under the EUDR, ICE CoT could make the full set of traceability data available to that NCA as required.
The European Union Deforestation Regulation, or EUDR, entered into force on 29 June 2023, and market participants (subject to a few exceptions) have until 30 December 2024 to comply.
It aims to tackle deforestation and forest degradation by requiring supply chain due diligence to prove covered commodities, including coffee, cocoa, and related products imported into, supplied within, or exported from, the EU, are deforestation-free and lawfully produced.
The EUDR will affect all entities in these coffee and cocoa supply chains, but specifically places obligations on “operators” importing or processing materials into covered products in the EU (or exporting them) and on large “traders” supplying covered products within the EU, with significant penalties for non-compliance.
How do I comply?
The EUDR will require these operators and traders to undertake due diligence demonstrating that covered products being imported into, supplied within, or exported from, the EU market:
- do not come from land that was deforested after 31 December 2020;
- are produced in accordance with the relevant legislation of the country of production; and
- are covered by a “due diligence statement” (DDS).
Due diligence will require the collection of certain prescribed information, including geolocation of the plots of land where the relevant commodities were produced. For commodities produced in countries or parts thereof not classified as low risk by the European Commission (EC), operators will also need to perform additional risk assessments and, as applicable, undertake risk mitigation activities to ensure there is no or only a negligible risk of non-compliance with the EUDR.
Other requirements relating to due diligence processes and systems, record keeping, and data transparency, also apply.
National Competent Authorities (NCAs) of Member states are required to carry out checks within their territories to establish whether operators and traders are complying with the EUDR.
Penalties
Penalties for non-compliance include fines of up to 4% of total company turnover within the EU, confiscation of relevant products, and temporary prohibitions on importing relevant products into, supplying relevant products within, and exporting relevant products from, the EU.
ICE CoT is designed to support the physical trading of all coffee and cocoa products listed under Annex I of the EUDR. This includes but is not limited to cocoa and coffee beans delivered under ICE Futures contracts.
ICE CoT is designed to automate the process of submitting, validating and storing the necessary farm-geolocation, farmer physical-flow and processing data associated with products, and making this available as necessary along the supply chain.
ICE CoT's accessible interface, standard data formats and automated checks should enable sellers to upload and validate their data easily and allow buyers to confirm efficiently that this validation has taken place. Buyers avoid the need to re-collect, re-format and re-check traceability data related to a parcel they trade, which may otherwise vary from supplier to supplier. Sellers can easily share the compliance status of products and other required data with buyers in ICE CoT, without disclosing sensitive supply chain information.
In order to validate the submitted traceability data within ICE CoT, IBA is collaborating with Meridia Land B.V (Meridia), an agricultural technology company specialising in the verification of farm origin and supply chain data.
ICE CoT will benefit from a set of validation tests based on Meridia’s unique data verification engine, known as Meridia Verify™. These tests, published as part of the ICE CoT validation methodology, are designed to assess traceability data to identify product that is not deforestation-free, that is produced in areas of protected forest or is otherwise implausible or unreasonable according to the test parameters.
These independent checks and validations should provide both sellers and buyers with greater confidence in the quality of their data and compliance status of the underlying product, and reduce the risk of non-compliance with the requirements of EUDR.
Due diligence will always require the collection and maintenance of certain prescribed information, including geolocation of the plots of land where the relevant commodities were produced.
For commodities produced in countries and regions other than those identified as being at low risk of deforestation by the EC, operators will also need to perform additional risk assessments and, as applicable, undertake risk mitigation activities to ensure there is no or only a negligable risk of non-compliance with the EUDR.
- Collect and store required information demonstrating EUDR compliance, including farm-geolocation and farmer, and physical-flow and processing data and associated evidence. Data needs to be conclusive and verifiable.
- Verify and analyse the information and related documentation to assess and identify risks of non-compliance with the EUDR (where the origin countries or parts thereof are not classified as low-risk under the EUDR).
- Mitigate any non-negligible risks of non-compliance.
1. What traceability data needs to be collected?
Product description, country of production, supplier information details and purchaser information details will also need to be provided.
ICE CoT is designed to support the upload and storage of the required traceability data and would undertake validation checks designed to establish that the products were not made from commodities produced in areas of deforestation, or in protected forest areas, and that the data is plausible and reasonable based on the test parameters. ICE CoT will publish the methodologies used to perform these validation tests.
A number of companies are providing solutions to help everyone in the supply chain, including farmers, get ready for the EUDR.
The EUDR also requires the collection of other data regarding the product, including adequately conclusive and verifiable information that the relevant commodities were produced in accordance with the relevant legislation of the country of production.
2. Verify and analyse the data to identify risks
ICE CoT will undertake validation checks on traceability data as indicated.
Operators are required to verify and analyse all information and related documentation required under the EUDR to assess and identify risks of non-compliance in relation to products where the origin countries are not classified as low-risk under the EUDR, and are not permitted to supply the product in the EU market unless there is no or only a negligible risk of non-compliance.
3. Mitigate risks
Where a risk assessment reveals a non-negligible risk of non-compliance, operators must adopt risk mitigation procedures and measures adequate to achieve no or only a negligible risk in order to supply the products in the EU market.
The completeness and quality of the data and the implementation of appropriate processes and procedures is critical to ensure evidence of EUDR compliance is available.
You will need to analyse the data before it is logged on to ICE CoT to ensure the required quality is being achieved. Any discrepancies identified by ICE CoT will be rejected.
All farm plots need to be entered into the database in advance of the 2024 crop in preparation for the necessary due diligence actions to be implemented prior to approval for shipment.
- Identify the most suitable data collection software which is simple and easy to use
- Ensure that the required hardware (Laptops and android phones) is made available
- Hold supplier engagement workshops and individual meetings
- Suppliers need to be made aware of the EUDR requirements and need to ensure the compliance, traceability and transparency of their supply to you
- They need to commit to collect and maintain the required traceability and other data and implement necessary processes and procedures in order that the information collection and any required risk assessment and risk mitigation can be carried out prior to any approval for shipment
ICE CoT expected timeline
Governance
IBA is responsible for ensuring that there is appropriate governance over ICE CoT and has established the ICE CoT Advisory and Oversight Committee to provide ongoing direction and oversight of the service.
The Committee is comprised of an independent Chairperson and a broad range of experts and representatives from across the cocoa and coffee industries.
The Committee’s terms of reference include:
- Providing guidance on the design principles and implementation of ICE CoT in the context of the needs of market participants for compliance with the EUDR, including due diligence, data collection and verification, risk assessment and mitigation, and in supporting the transfer of products along the supply-chain;
- Overseeing, reviewing and commenting on the design and implementation of ICE CoT, and in particular the methodologies for the validation checks for farm-origin data and for physical-flow traceability data in respect of cocoa and coffee and processed cocoa and coffee products;
- Providing an important and authoritative voice in respect of ICE CoT, to include assisting IBA in the formulation of feedback to regulatory and governmental organisations in the EU and globally regarding deforestation legislation, and to support ICE CoT in any discussions with industry associations and NGOs; and
- Overseeing the work of the ICE CoT Technical Working Group and any other working group or sub-committee appointed by the Committee.
ICE CoT Advisory and Oversight Committee Terms of Reference
Further details on IBA’s general governance structure, including IBA’s independent Board of Directors, whistleblowing policy and other policies are available on IBA’s Governance page.
Oversight Committee Meeting Minutes
Publications & Press releases
More information
EU Deforestation Regulation (EUDR)
Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023
EU FAQs
FAQs drafted by the Commission services intending to provide information to national authorities
Why IBA?
IBA is one of the world’s most experienced administrators of regulated benchmarks and data administration services, offering the highest standards of data management, governance and oversight to give market participants confidence in the information they depend upon.
IBA is a wholly-owned subsidiary of Intercontinental Exchange, Inc. (ICE), a leading provider of financial technology and data services and operator of a number of exchanges and clearing houses globally. ICE’s benchmark Cocoa, London Cocoa, Coffee C® and Robusta Coffee futures and options contracts are the largest markets in the world to trade cocoa and coffee. Last year the equivalent of over 500 million tons traded on ICE’s cocoa and coffee markets.
IBA is authorised and regulated by the UK’s Financial Conduct Authority for the regulated activity of administering a benchmark. Administering ICE CoT is not a regulated activity.
Independence
Part of the ICE group of companies, IBA operates as an independent entity that has a majority independent Board of directors. IBA is not affiliated with any companies in the cocoa and coffee industry, meaning it can provide a service that has integrity and can be trusted by market participants.
Security & Confidentiality
IBA provides the highest standards of security in connection with its data collection and validation activities and is trusted to ensure the confidentiality of sensitive information on a day-to-day basis.
Governance
IBA has established a comprehensive and robust governance and oversight framework which enhances trust in its services and gives market participants confidence in the information they rely on. IBA has established the ICE CoT Advisory and Oversight Committee to provide ongoing direction and oversight of the ICE CoT service. The composition of the committee includes a broad range of experts and representatives from across the cocoa and coffee markets, to ensure that ICE CoT is designed and operated to address the needs of market participants in evidencing compliance with the EUDR.