While testing its supply chain, Hershey is trying to improve the quality of its products as it expands business into China, India and Brazil, which are rapidly developing a middle class consumer base. “We can deliver chocolate to many people around the world that haven’t had it before and create the demand for the cocoa farmers. But the only way those cocoa farmers are going to be able to meet that demand is they’ve got to become better,” says Hershey’s VP of global commodities.
Hershey has been procuring cocoa beans from West Africa for over 50 years and 70% of the world’s cocoa currently comes from West and Central Africa. (There are 800,000 cocoa farmers across the Ivory Coast). In recent years, there has been a noticeable shift toward more environmentally- and socially-conscious sourcing. Mobile technology usage in West Africa has greatly increased in the last 2-3 years, which is a great tool for farmers to access proper farming practices and also connects farmers with vital information about child labor and safety. The International Cocoa Institute is further creating community-based programming in 550 West African communities. Hershey projects over the next two years it will enroll 100,000 of those farmers to help develop a sustainable supply of cocoa for the world.
“We know it’s very feasible to increase farmer productivity by 50 percent,” says Hershey, “as long as farmers: (1) have access to fertilizers and pesticides; (2) are educated on how to apply them safely; (3) modernize their harvesting methodologies; and (4) have access to modern information on farming practices.”
Discussion questions:
1. Why is it difficult to create sustainable cocoa operations?
2. Discuss the OM issues involved.