Ferrero Expands Supply Chain Traceability Across Cocoa, Palm Oil and Coffee

Ferrero has reported further progress in tracing key agricultural ingredients back to farms and plantations, as food manufacturers face growing pressure to demonstrate that their products are sourced responsibly and are not linked to deforestation or labour abuses.

According to the company’s latest Sustainability Report, covering the 2024/25 financial year, Ferrero has achieved 98% traceability for cocoa to farm polygon level, 98.6% traceability for palm oil to plantation level and 100% traceability for coffee beans to plantation polygons. The group has also analysed approximately 230,000 supply chain polygons through a monitoring process designed to align with the European Union Deforestation Regulation, or EUDR.

Polygon mapping uses the geographical boundaries of farms and plantations rather than relying solely on supplier names, certificates or regional sourcing information. By comparing these locations with satellite imagery and forest-cover data, companies can identify whether agricultural production may be associated with recent deforestation.

For Ferrero, which uses large volumes of cocoa, palm oil, hazelnuts, coffee, sugar and dairy ingredients, greater visibility is becoming both an environmental priority and a supply security requirement.

Agricultural commodity markets have been affected by extreme weather, crop disease, geopolitical disruption and price volatility. Cocoa prices, in particular, have experienced severe turbulence following weak harvests in West Africa, while coffee and hazelnut production remain exposed to changing rainfall patterns and rising temperatures.

More detailed information about suppliers and production areas can help manufacturers identify vulnerable regions, respond to shortages and work directly with farmers on agricultural practices. However, traceability alone does not prove that a supply chain is sustainable. Its value depends on the quality of the underlying data, the frequency of monitoring and whether companies act when environmental or social risks are discovered.

Ferrero Farming Values Framework

Ferrero organises its responsible sourcing work through its Ferrero Farming Values framework. The model is based on five areas: supplier due diligence, supply chain traceability and visibility, certification and standards, support for farming practices and communities, and collaboration intended to transform commodity sectors.

The company describes its approach using the Italian phrase “sacco conosciuto”, meaning “knowing what is in the bag”. In practical terms, this means understanding where ingredients were produced, how they moved through the supply chain and which organisations handled them before they reached Ferrero’s factories.

Chief Executive Lapo Civiletti said the framework was intended to strengthen supplier accountability while allowing the company to respond to the different conditions found in each commodity supply chain.

This distinction is important because cocoa, palm oil, hazelnuts and dairy products have very different production systems. Cocoa is frequently produced by smallholders in West Africa, while palm oil can pass through plantations, mills, traders and refineries before reaching food manufacturers. Hazelnut production is concentrated in countries including Turkey and Italy, with region-specific labour and climate risks.

A single traceability system is therefore unlikely to address every commodity effectively. Companies must combine common corporate standards with data collection and supplier engagement adapted to local conditions.

Preparing for EU Deforestation Rules

Ferrero’s investment in plantation and farm mapping also reflects the changing regulatory environment.

The EUDR requires businesses placing covered commodities and products on the EU market to demonstrate that they are not linked to recent deforestation or forest degradation. Cocoa, coffee, palm oil, cattle, soy, rubber and wood are among the commodities covered, along with products made from them, including chocolate.

Following amendments introduced by the EU, the regulation is scheduled to apply to large and medium-sized operators from 30 December 2026. Micro and small operators will generally have until 30 June 2027.

For large food groups, compliance involves more than obtaining sustainability certificates. Companies may need geolocation information for production plots, documented risk assessments and evidence showing that identified risks have been mitigated.

Ferrero’s monitoring of approximately 230,000 polygons indicates the scale of data management required. Yet businesses must also consider the effects on smaller suppliers and farmers, who may lack digital tools, reliable land records or the technical capacity to produce geospatial data.

Supporting producers with mapping, training and data collection will be essential if traceability requirements are to improve environmental performance without excluding smallholders from major export markets.

Community and Human Rights Programmes

Ferrero is also expanding its partnership with Save the Children in Côte d’Ivoire, one of the world’s most important cocoa-producing countries. The programme is expected to reach 235 cocoa-growing communities by 2030.

Supply chain programmes in cocoa-producing regions commonly address access to education, child protection, household income and community infrastructure. These initiatives are intended to tackle some of the underlying economic and social conditions associated with child labour.

However, community projects should operate alongside effective purchasing practices, supplier monitoring and access to grievance mechanisms. Persistent poverty among cocoa farmers remains a structural challenge that cannot be resolved through traceability systems alone.

Packaging Progress

The latest report also includes progress on packaging. Ferrero says 92.9% of its packaging portfolio is now designed to be recyclable, reusable or compostable. The company has reduced its plastic-to-product ratio by 14.7% compared with its 2019/20 baseline.

Designing packaging for recycling does not guarantee that it will be recycled in practice. Actual outcomes depend on material combinations, local collection systems, sorting infrastructure and demand for recycled materials.

Nevertheless, reducing the quantity of packaging used per unit of product can deliver more immediate benefits by lowering demand for virgin materials and potentially reducing transport emissions.

Ferrero’s results illustrate how traceability is moving from a voluntary sustainability initiative toward a core supply chain capability. For manufacturers, reliable farm-level data can support regulatory compliance, deforestation monitoring, human rights due diligence and resilience planning.

The next test will be whether the company can maintain high traceability rates while demonstrating measurable improvements in forest protection, farmer livelihoods and emissions across the commodities it sources.

Source: supplychaindigital.com