College : SNJB’s COE, Chandwad.

Class : MBA 1st year.

Guidance By : Hon. Prof. Mr. U. S. Kasar Sir.

Industry : Chocolate Industry.

Presenters : Gaziyani Md. Hasnain

Rahul O. Bhandari

Khushbu Mutha

Bhagyashree Mankar

Abu Swaleh

Chapter - 3

External

Environment

•The International Cocoa Organization (ICCO) is a global organization, composed of

both cocoa producing and cocoa consuming countries with a membership. Located

in London, ICCO was established in 1973 to put into effect the first International Cocoa

Agreement which was negotiated in Geneva at a United Nations International Cocoa

Conference. There have since been seven Agreements. The Seventh International

Cocoa Agreement was negotiated in Geneva in 2010 and came into force provisionally

on 1 October 2012.

•On 2 November 2005, the total percentage of exporting countries which had acceded to

the Agreement surpassed 80%. Thus, the International Cocoa Agreement, 2001 entered

into force definitively for the first time in the 30 year history of the International Cocoa

Agreements. ICCO Member countries represent almost 85% of world cocoa production

and more than 60% of world cocoa consumption. All Members are represented in the

International Cocoa Council, the highest governing body of the ICCO.

•The two most important breakthroughs of the present International Cocoa Agreement

were the establishment of an explicit mandate on a Sustainable World Cocoa Economy

and the founding of the Consultative Board on the World Cocoa Economy.

Regulatory Bodies

1- ICCO

•The Consultative Board consists of fourteen international experts in the cocoa sector, all

from the private sector (seven from cocoa producing Member countries and seven from

cocoa consuming Member countries).

•However, the Board, whose mandate is as extensive as that of the International Cocoa

Council and comprises all aspects of the world cocoa economy, only functions in an

advisory capacity, as all final decisions are taken by the International Cocoa Council.

•The Consultative Board was established in recognition of the importance of the private

sector in the world cocoa economy and of the increasingly important role that trade and

industry have been playing in ICCO.

Regulatory Bodies

2- NCA1. Founded in 1884 in Chicago by representatives of 69 confectionery manufacturing

firms, the National Confectioners Association is one of the oldest trade

associations in the world.

2. It is currently based in Washington, DC. In 2008 it merged with the Chocolate

Manufacturers Association of the USA (now called the Chocolate Council).

3. The association has 700 members, which include domestic and international

confectionery manufacturers and suppliers to the industry.

4. It aims to meet challenges and problems in the confection industry.

5. The NCA offers education and leadership in manufacturing, technical research,

public relations, retailing practices, government relations, and statistical analyses.

6. The NCA sponsors a yearly exposition of candies, gums and other snack foods at

the McCormick Place convention center in Chicago, Illinois, United States. Up to the

year 2009 the event was called the All Candy Expo, but starting in 2010 it will be

called the Sweets & Snacks EXPO. The trade show has hundreds of booths staffed

by representatives of dozens of companies debuting their latest creations.

Regulatory Bodies

3- FSSAI

1. The Food Safety and Standards Authority of India (FSSAI) is an agency of

the Ministry of Health & Family Welfare, Government of India.[ The FSSAI is

responsible for protecting and promoting public health through the regulation and

supervision of food safety.

2. The FSSAI has been established under the Food Safety and Standards Act, 2006

which is a consolidating statute related to food safety and regulation in India.

3. The FSSAI is led by a non-executive Chairperson, appointed by the Central

Government from amongst the persons of eminence in the field of food science or

from amongst the persons from the administration who have been associated with

the subject and is either holding or has held the position of not below the rank of

Secretary to the Government of India.Mr. K.Chandramouli is the current Chairperson.

4. The executive head of FSSAI is the Chief Executive Officer .

5. The FDA has itsheadquarters at New Delhi.The agency also has 5 regional offices

located in Delhi, Guwahati, Mumbai, Kolkata and Chennai, 4 referral laboratories and

72 local laboratories located throughout India.

ACTIONS By NCA

China to Establish National Standard for Food Grade Paraffin Wax

1. On November 19, the Standardization Administration of China (SAC) announced the

establishment of a national standard

2. with mandatory technical requirements and test methods for food grade paraffin wax.

3. The projected date of entry into force is August 19, 2010. The SAC will be accepting

public comments on the proposed

4. standard until January 19, 2010. The standard’s text, which is currently only available

in Chinese, can be found in China’s

India to Impose Trans Fats Limits for Packaged Foods

• According to recent media sources, the Food Safety and Standards Authority of India

(FSSAI) intends to limit the amount of trans fats that may appear in packaged foods.

A draft regulation to this effect is expected to come out some time following a

November 26 meeting.

• An FSSAI spokesperson indicated that the agency would seek to limit trans fats to

two to five percent of total fat in an average diet, in line with international standards.

• FSSAI is increasing its regulation and oversight of the processed foods sector, due to

its belief that increasing incomes have boosted Indian consumption of processed

foods.

India Releases Draft Changes to Labeling Requirements • India’s Ministry of Health and Family Welfare (MHFW) recently published a draft

amendment outlining new labeling requirements and additive limits for various food

products. The draft rule establishes a labeling requirement for every food product that

contains a mixture of acesulfame potassium and sucralose.

• The label must state that the food product contains acesulfame potassium and

sucralose and that it is not recommended for children. The label must also state that no

sugar has been added to the product, or if sugar has been added, the label must list the

quantity (in grams per 100 grams) of sugar added. Other provisos to the amendment

include:

Any food containing polyols must bear a label stating: “Polyols may have a laxative

effect.”

• Modified food starches (derivative starches) may be used in snacks up to a maximum

concentration of 5% by weight.

•Maximum levels are established for hydroxypropyl methyl celluose in snacks and other

products at 1% of total volume by weight.

•Maximum levels were also set for synthetic amorphous silicon dioxide in powder

flavorings at 2.0%.

•Good manufacturing practice (GMP) levels will be required of maltitol and maltitol syrup

in baked goods and other products.

Sugarless Gum Included on Brazil’s Proposed Retaliatory Tariffs List

1. Brazil has published a list of U.S. goods on which it is proposing to impose retaliatory

tariffs. This list includes sugarless gum (HS code 2106.90.50), and although specific

retaliation levels are not listed, the regulation indicates that tariffs could be up to

100%.

2. Brazil was given the right to retaliate earlier this year by the World Trade

Organization due to reported unfair U.S. subsidies for cotton, but has not indicated if

and when they will proceed with imposing such retaliatory tariffs. The government of

Brazil has made it clear that they would prefer to resolve this dispute within the

context of the Doha round.

3. Brazil is accepting comments until November 30.

South Korea Proposes Zero Tolerance for Salmonella in Cocoa Products

and Chocolate

• The Korea Food and Drug Administration has notified the World Trade Organization of

a proposed amendment to the country’s Standards and Specifications for food that

would impose a zero tolerance level for salmonella in cocoa products and chocolates

Issues Affecting Chocolate Industry

Child Labor1. Slave traders are trafficking boys

ranging from the age of 12 to 16 from

their home countries and are selling

them to cocoa farmers in Cote

d'Ivoire.

2. They work on small farms across the

country, harvesting the cocoa

beans day and night, under

inhumane conditions.

3. Most of the boys come from

neighboring Mali, where agents hang

around bus stations looking for

children that are alone or are begging

for food.

4. They lure the kids to travel to Cote

d'Ivoire with them, and then the

traffickers sell the children to farmers

in need of cheap labor

5 . The horrendous conditions under which children must toil on the cocoa farms of the

Cote d'Ivoire are even more jarring when the facts are juxtaposed with the idea that

much of this cocoa will ultimately end upproducing something that most people

associate with happiness and pleasure: chocolate.

6 . The connection serves to illustrate that the existence of misery in one part of the

world and joy in another part are no longer divorced as nations are connected

together in a globalized web of trade.

7 . Thus, the pleasure that people from various nations around the world are deriving

from these chocolate confections could possibly be at the expense of child slaves in

Africa.

8 . The problem of child slavery then is not simply a faraway abstraction with no

immediate implications for anybody else except those who are directly affected, but

rather it is an issue that everybody around the world should be concerned about and

demand action to eradicate.

Environmental Issues

Deforestation

1. Cocoa farming also contributes to rainforest and old growth forest deforestation.By

clearing land in these forests, farmers decrease the biodiversity and interactions

between the organisms that naturally live in this area.

2. Many wildlife habitats are destroyed and the plant species diversity is drastically

reduced. Nutrients begin to leach out of the soil due to poor irrigation and inadequate

soil protection,which can increase the erosion of the soil.

3. The more intense the farming practices are, the more damaging they are to

the ecosystem. Cocoa farming becomes a destructive circle as farmers wear out the

soils and cut further into the forest to obtain fresh land. All of these processes stress

the Cacao trees and result in lower yields, giving the opposite effect to what the

farmers expect from these practices.

4. Some of the forests in Ghana and other Cocoa producing countries have been

declared protected by the government after observing the Tropical Rainforest

destruction. However, with a shortage of fresh land to plant Cacao trees, some

farmers are beginning to illegally cut down parts of these protected forests. It has

been estimated that approximately 50% of these protected forests have been cut

down.

Environmental IssuesFull sun cocoa

1. Cocoa farms are generally small, family owned and operated businesses. There are

approximately 4.5 million cocoa farms around the world. The majority of cocoa farms

are located in Côte d'Ivoire and Ghana. In Ghana, Cocoa contributes 64% of all

exports. Traditional cocoa farms are planted in the shade among other crops and

trees. They are especially found in the Tropical rainforest areas. Farming cocoa

beans is a long process with many factors that can affect the farm's yearly output.

2. Farms' cocoa crop outputs struggle to match the increasing demand for chocolate. It

is estimated that the demand for chocolate will increase twofold by the year 2050.

3. Farmers have shifted towards unsustainable, less environmentally conscious

practices to meet these demands.

4. Some farmers have shifted their crops out of the shade and into direct sunlight. This

practice yields a greater quantity in a short period and at lower quality. Cacao trees

with no shade tend to accumulate more weeds as well as be more susceptible

to diseases such as Witches Broom and Frosty Pod Rot. If the crops begin to

accumulate pests, farmers use large amounts of herbicides to rid the crops of these

pests.The herbicides used damage the land and the health of the sprayers applying

the herbicide. Excessive spraying of pesticides can also cause the weeds and

insects to build up a resistance which will eventually create more harm to the crops.

Solutions By Governments

Education

1. Through groups and programs such as the World Cocoa Foundation, Rainforest

Alliance, Roundtable for a Sustainable Cocoa Economy, and activities of regional

NGOs like Conservation Alliance, IITA and Solid aridad cocoa farming can return to

its sustainable roots through education programs and help in finding ecologically and

economically sound resources to further their farming.

2. As a last resort, some programs will help farmers to access pest control products

such as biocides as an alternative to the harmful pesticides being used. Other

programs promote proper irrigation, composting, suitable soil management, and

intercropping, meaning planting other trees and fruit crops in the surrounding land of

the Cacao trees.

3. Some farmers will burn old, fermented pods and place them back on the soil as a

form of composting and fertilizer.[To stop the process of deforestation, it is suggested

that farmers replant on their current land while using the practices.

Solutions By Governments

Shade cacao

1. It has been suggested that Cocoa farmers go back to the original and natural ways of

farming, by planting within the natural tree-cover and without cutting down existing

trees. When an area has already been clear cut another possibility exists. Planting

trees, especially fruit trees around and within the plantation, helps with growth of

Cacao plants.

2. These trees can provide shade to the Cacao plants and be a source of

oxygen replenishment to the environment. If the shade trees are fruit-bearing, this

can also provide additional income to the farmer.

3. Shade trees return organic matter to the soil through falling leaf litter and decaying

branches. The shade provided by these trees also helps to keep soil moist in dry

seasons which results in less damaging irrigation practices. Shade trees will raise the

amount of infiltration and slow erosion of the soil.

4. Since shade inhibits the growth of weeds, farmers are able to use less or perhaps no

pesticides which can decrease the occurrences of Witches Broom in these crops.

Cacao plants that grow in the shade provide the environment with more biodiversity,

allowing natural populations and habitats to flourish. Finally, shade can be extremely

helpful in keeping and lengthening the productivity of old growth Cacao plants.