April 18, 2006

Cocoa Suppliers Won’t Be Named

By Tom Dochat, The Patriot-News, Harrisburg, Pa.

Apr. 19--The Hershey Co. won't have to disclose its cocoa suppliers, shareholders overwhelmingly voted Tuesday.

Global Exchange, a nonprofit human rights organization based in San Francisco, wanted Hershey to disclose the suppliers to determine if the company might be exposed to some risk because it purchased cocoa from companies that have been named in a federal lawsuit over child slavery conditions on West African cocoa farms.

Shareholders rejected the Global Exchange proposal, with 13.4 million shares voting in favor of the resolution and 709.6 million shares against.

Since the proposal failed to get a 3 percent affirmative vote, Hershey won't have to resubmit the issue to shareholders next year, said Hershey's general counsel, Burton H. Snyder, citing Securities and Exchange Commission regulations.

Bama Athreya, a Global Exchange board member, said defeat of the resolution was expected, but she said she was glad that the group had a "chance to make the statement" and impress upon shareholders and Hershey the need to be aware of child labor conditions on West African cocoa farms.

Richard H. Lenny, Hershey's chairman, president and CEO, said the company believes in the "broad-based, holistic approach" it is taking on the child labor issues. Hershey and the chocolate industry are involved in multiple efforts to increase the awareness of labor practices in West Africa.

Lenny called the Global Exchange proposal "unnecessary" and "impractical."

Athreya said the proposal would provide "greater transparency" in regard to Hershey's cocoa suppliers. She noted that three companies -- Nestle, Cargill and Archer Daniels Midland -- have been named in a lawsuit filed last year on behalf of some teenagers who contend they were forced to work on Ivory Coast cocoa farms without compensation and the ability to leave.

Athreya said Hershey would benefit from a "thorough review" of its suppliers to determine whether it might be a "downstream user" of cocoa products from companies that are linked to disputed child labor practices.

Lenny noted that Hershey is part of an ongoing protocol agreement to make sure cocoa is grown and harvested responsibly. He said the three companies named in the lawsuit are all participants in the industry's efforts to improve labor conditions in West Africa. He added that allegations in the lawsuit stem from incidents in the late 1990s.

According to Lenny, Hershey receives cocoa and derivative products from more than 100 suppliers. A report to shareholders on its suppliers would be "outdated as soon as it is finished," he said.

The industry has said it plans to have a monitoring system in place by July 2008 to cover at least 50 percent of the cocoa farms in Ivory Coast and Ghana. Global Exchange supporters have argued that the industry already is late with its monitoring system, since one was supposed to be enacted last July.


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