APICS is the premier professional association for supply chain management.

The Real Price of Chocolate

by APICS CEO Abe Eshkenazi, CSCP, CPA, CAE |   2014 | 0 | 0

Last week, CNN.com took a deep dive into the cocoa supply chain for its article “From Bean to Bar,” and what it uncovered was far from ideal. The Ivory Coast is one of the smaller countries in Africa, yet it produces more than one-third of the world’s cocoa.

“Across the Ivory Coast, cocoa is grown on family plantations, each typically only a few hectares,” writes Matt Percival. “The small parcels of land are handed down through the generations, each son struggling to make ends meet, just like his father before him.”  

In fact, cocoa directly supports 3.5 million people in the Ivory Coast, where the annual wage is only about $1,000. Farmers and their helpers, who often are children working for less pay than adults demand, use machetes to open the cocoa pods to get the beans. Further along in the supply chain, traders, processors, exporters, and manufacturers take their share of the profit, which leaves the farmer getting “the bare minimum for his bag of beans.”

Traders who work for the processers and exporters buy the beans, and they get exported raw or made into cocoa liquor, butter, and powder, which is then sold to chocolate manufacturers. There are so many players in this supply chain; yet, the cocoa farmers are left to struggle with low fixed prices and old or sick trees.

“Stopping child labor and increasing access to education is seen as the best long-term approach to bring prosperity to these villages,” Percival writes. Companies, such as Nestlé, are starting to recognize and act to improve the living conditions of the cocoa-producing communities. Plus, as its industry has grown and continues to grow, Nestlé executives are seeking sustainable supply chains.

Even big-business critics are noting Nestlé’s actions, which include funding 23 schools in the region. The article quotes Voice Network’s Antonie Fountain. “The impression I have is that the current steps being taken are actually more significant than what we have seen in the past.”

Taking a broader view

This in-depth view of the cocoa supply chain illustrates challenges that other supply chains can confront as well. The story also exemplifies how building sustainable supply chains without the use of child labor requires a broad, long-term perspective. How do you work effectively and successfully in a global marketplace, especially when your resources come from less-developed countries?

Consider the following definition that appears in the APICS Operations Management Body of Knowledge Framework: “In operations and supply chain management, sustainability is the idea that business can help ensure that markets, commerce, technology, and finance advance in ways that benefit economies, societies, ecosystems, and stakeholders in general—or at a minimum, do no harm—and contribute to a more maintainable and inclusive global economy.”

We at APICS understand that constructing supply chains entails much more than the movement of goods; it involves myriad considerations and ideals. As the CNN.com article illustrates, there are no easy answers. Through APICS education, events, and other resources, we can give you the knowledge you need to build truly sustainable supply chains now and in the future. Visit apics.org today to get started.

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