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

9832 words 40 pages
yale case 07-039 november 27, 2007 (revised august 24, 2008)

Cadbury∗
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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Owing to varied agricultural exports (which included coffee and palm oil in addition to cocoa), Côte d’Ivoire was the most prosperous region of French West Africa and supported an extensive community of French expatriates. As a result, Côte d’Ivoire became a magnet for migrant laborers from neighboring colonies in present-day Mali and Burkina Faso. Côte d’Ivoire gained independence from France in 1960. For the next few decades, the country enjoyed relative political stability under single-party rule. Félix Houphouët-Boigny became president of the country in 1960 and remained in this position until his death in 1993. During independence, cocoa became an increasingly important export crop for the country. For the most part, cocoa farms in Côte d’Ivoire were small family-run operations tucked into the bush. The country did not have an extensive system of property rights. The government proclaimed that the land belonged to whoever cultivated it. In order to stabilize prices and collect taxes, the government created a marketing board that set the farm prices each year for cocoa and licensed independent agents to purchase the beans 2 cadbury

from the farmers. The agents were guaranteed a portion of the price as profit and the government then 3 kept whatever was left over once the beans were sold to international cocoa processors. The most prominent U.S.

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