It has been a bitter holiday season for the maker of foil-wrapped Hershey's Kisses. For nearly a month, a battle has been raging between the Hershey chocolate company and the West African farmers who harvest many of its cocoa beans. And it appears that the long-disenfranchised farmers may have scored a rare win, NBC News reports.
The dispute began in November, when cocoa industry traders noticed that an unnamed source had purchased so many cocoa beans in the futures market that prices rose by more than 30 percent.
The close-knit cocoa industry quickly suspected that the buyer was Hershey. But the Coffee and Cocoa Council and the Ghana Cocoa Board were more direct with their accusations when they wrote a letter Nov. 30 to Hershey titled "Abuse of the derivatives market to impoverish the West African farmer." The groups wrote that they "have observed with great concern the actions taken by your company on the New York terminal" and accused Hershey of using "the exchange to take delivery of physical cocoa."
"This is a clear squeeze on the ICE US Exchange and a clear indication of your intent to avoid the payment of the Living Income Differential — LID," they said. The newly introduced LID requires chocolate companies to pay an extra $400 per ton of cocoa beans to address the grave poverty farmers face in West Africa, according to the letter.
The two groups, which are the source of roughly 70 percent of the world's supply of cocoa beans, pushed back against Hershey for having made what they said was an improper purchase. Ivorian and Ghanaian cocoa regulators accused it in the letter of being "highly unethical and in conflict with the concept of sustainability," referring to the company's sustainability programs, which address problems in the industry like child labor abuses.
Asked for comment Dec. 1, Hershey spokesperson Jeff Beckman called the letter "misleading" and said it "jeopardizes" the sustainability programs Hershey is working on in Ivory Coast to combat child labor and agricultural exploitation. Beckman said Hershey recently bought some cocoa from farmers there and paid the LID.
Asked about allegations that Hershey had bought beans on the futures exchange, Beckman would not confirm or deny where Hershey's recent cocoa purchases came from or whether they had come from the exchange.
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