Hershey's President and CEO - truthful or a lier?

Today John P. Bilbrey spoke at K-State; he is the President of Hershey's, the largest chocolate manufacturer of chocolate in the US. The focus of the presentation was to awe us over the fact that he has gained $billions in revenue for the company since he became president in 2003 (31% dividends to shareholders in last years bad economy, not bad).

After the presentation, students had an opportunity to ask him questions. One of the questions was, "what are you doing to end child labor" and "what are you doing to help the African people." The second question was asked by an African about an issue obviously close to his heart.

Let's examine what Mr. Bilbrey really said:

The first part of his answer was "it's complex." Is this a valid argument? Yes, most definitely, not all child labor is slave labor. Unfortunately, he was using it as an excuse for the company to sit on their hands and act as though children enslaved on cocoa farms do not harvest cocoa for Hershey's - they do.

Secondly, "all the FairTrade cocoa that is available, we'll use it" is simply not true. Firms are notorious for rejecting FairTrade cocoa because it doesn't measure up to their high standards. Once again, FairTrade needs to work with companies more closely in this regard (Starbucks coffee is a great example).

Third, he said that they are "very, very dedicated" to end child labor. Which explains why they spent $125 million on a high school in Pennsyvania last year, and will spend $2 million, or 0.08%
of total profits, to end child slavery. By the way - he did use the word "very" twice. At least it is a step in the right direction. They spent $0 the last 11 decades.

Fourth, he claimed to be a "man of faith" and while he was implying faith in God, I'm glad he didn't qualify it. What does God have to say about all this, anyways? "Whoever oppresses the poor shows contempt for their Maker, but whoever is kind to the needy honors God." (Proverbs 14:31).

This all begs the question, can our generation step up to the plate with a strong stance on moral issues like this one? Can we tell the next generation that child labor is a thing of the past because we had a perspective that went past profit? I certainly hope so.

Cocoa - the global picture

While today was mostly dedicated to my thesis, I took a lunchtime break to explore cocoa a little. Where is it from? Where does it go? I hope you enjoy my findings (courtesy: FAOSTAT).

Production (2010):

Ivory Coast - 29%
Indonesia - 19%
Ghana - 15%
Nigeria - 10%

These 4 countries alone produce 73% of the worlds cocoa, wow! The entire Americas produces 12% of the entire cocoa production in the world, 9% from Brazil and Ecuador.

Imports of cocoa beans (2010):

Netherlands - 24%
United States - 14%
Germany - 11%
Malaysia - 9% (from Indonesia?)
France - 5%
Belgium - 5%
UK - 5%

These 7 countries buy almost 70% of total imports, which is 50% of all cocoa beans produced in the world. (73% of cocoa beans are exported unprocessed).

What does this conclude: the worldwide cocoa market is very concentrated in "pockets" of production and processing. Is this an open door for countries like Nicaragua that are placed strategically close to the US, a huge cocoa market? Or does it suggest that economies of scale (large quantity) is a "must" in the cocoa industry?

My job is to do the research, I'll let you decide!

Why FairTrade? Many small farmers in LICs get cheated - either they get paid an unreasonably low price, or they never get paid at all. Here, a cocoa producer in Nicaragua gets his fair share of the profit.