Cadbury an Ethical Company Struggles to Insure the Integrity of Its Supply Chain

9818 Words40 Pages
yale case 07-039 november 27, 2007 (revised august 24, 2008)

An Ethical Company Struggles to Insure the Integrity of Its Supply Chain
Sumana Chatterjee1 Jaan Elias 2

Chocolate had always been considered an affordable little luxury, associated with romance and celebrations. Therefore in 2000 and 2001, revelations that the production of cocoa in the Côte d’Ivoire involved child slave labor set chocolate companies, consumers, and governments reeling. In the United States, the House of Representatives passed legislation mandating that the FDA create standards to permit companies who could prove that their chocolate was produced without forced labor to label their chocolate “slave-labor free.” To forestall such labeling, the
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(based in Minneapolis), and Nestle USA (in Glendale, CA, a subsidiary of the Swiss food giant). World prices for cocoa climbed during the 1970s, encouraging further plantings of cocoa trees. In addition, there was a flexible supply of migrant labor from adjacent countries and plentiful land not already under cultivation. During the 1980s, Côte d’Ivoire became the largest cocoa producer in the world; the country’s share of world production grew from 23 percent in 1980 to 40 percent by 1998. In the mid-1990s, cocoa contributed 35 to 40 percent of Côte d’Ivoire’s exports, 14 percent of its GDP, and more than 20 percent of the government’s income. The increasing volume of production occurred during a declining world market for cocoa. Prices began falling in the 1980s and yet the Côte d’Ivoire government continued to offer high price guarantees. Finally in 1990, the marketing board went bankrupt and appealed to international lending bodies for assistance. The government was forced to halve the producer price to better reflect world prices and help the government repay loans that it incurred while it was supporting the price of cocoa. This meant that Côte d’Ivoire’s farmers received a smaller percentage of the declining world price of cocoa than farmers in any 4 other country. In the 1990s, the political situation also deteriorated. Following the death of Félix Houphouët-Boigny, political tension

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