Productionella

During the Triangular Trade, African slaves were transported to the Americas.  The slave labor produced raw goods which were then sold to Europe  In Europe, the raw goods were turned into manufactured goods such as guns, alcohol, clothing, and toys.  These were sold back to Africa and the Americas for a great amount of profit for Europe and a small amount of profit for the Americas.  As a new triangular trade, companies import commodities and resources from former colonies, produce finished goods and manufactured products due to cheap labor, and export them out to consumers all over the world for massive profit.  Nutella consists primarily of sugar, palm oil, skim milk, and hazelnut.  These ingredients are extracted from a number of countries, primarily imported from the global south.  The company boasts its’ use of  “over 50 hazelnuts per 13 oz. jar” and each jar “contains no artificial colors. . . [or] preservatives.”

Ferrero International SA, the company behind Nutella is headquartered in Luxembourg.  Today, the department in charge of producing Nutella consists of ten factories.  Half of the factories are in Europe.  Russia, Turkey, Australia, Canada, and Brazil each have one factory.  Most of the hazelnuts are imported from Turkey, even though Italy produces hazelnut as well.  Malaysia, Papua New Guinea, and Brazil are responsible for palm oil.  Cocoa comes from Ivory Coast, Ghana, Nigeria, and Ecuador.  Europe and the United States send over their vanilla flavoring and Europe supplies most of the sugar.  Once these key ingredients blend together, the product is sent to over 100 countries.

A case study by Backer and Miroudot found that “food products are globally produced in value chains where both developing and developed countries are involved. . . As exemplified with the Nutella supply chain, being close to final consumers and to specific inputs supplies matters for the agri-food industry and the same activities can be located in developed and emerging markets” (Baker and Miroudot, 17).  Ferrero produces Nutella close to where it is sold.  This image reveals the main countries and locations in which Nutella retrieves the ingredients to make the spread.  Europe, North America, South America, and Australia has its own factory.  Brantford, Canada, Pocos de Caldas, Brazil, Los Cardales, Argentina, Villers-Ecalles, France, Stadtallendorf, Germany, Belsk, Poland, Vladimir, Russia, and Lithgow, Australia contain a Nutella producing factory.  There are no factories in Asia because Asian consumers tend to have less of a demand for the product.  The Ferrero Group headquarters is located in Alba, Italy.  This map is credible as it uses information directly from the Ferrero website.

According to the Nutella producer’s American website, Ferrero is a member of the Roundtable on Sustainable Palm Oil (RSPO) and exclusively imported palm oil extracted from controlled plantations in Malaysia (Nutella Frequently Asked Questions).  RSPO’s mission as stated on their website includes:

“to advance the production, procurement, finance and use of sustainable palm oil products; to develop, implement, verify, assure and periodically review credible global standards for the entire supply chain of sustainable palm oil; to monitor and evaluate the economic, environmental and social impacts of the uptake of sustainable palm oil in the market; [and] to engage and commit all stakeholders throughout the supply chain, including governments and consumers” (Vision).  

Their website further states that palm oil from the core of the plant is used in order to maintain the perfect amount of viscosity while lowering the amount of saturated fat in the end product (Nutella Frequently Asked Questions).  Ferrero holds strict regulation on how the palm oil used in Nutella is processed, which expresses their concern for the environment and the health of their consumers.

Additionally, the company agreed to the Ferrero Palm Oil Corporate Charter, which explicitly declares their commitment to benefit the environment and the surrounding communities which produce palm oil.  Ferrero claims to work with the global supplies of palm oil and “are on track to achieving 100% traceable segregated, RSPO-certified palm oil by the end of 2014” which is one full year ahead of the original plan (News - Palm Oil).  Nations like Malaysia experience deforestation, therefore the Ferrero Palm Oil Charter decided to work with  The Forest Trust (TFT) in order to ensure that the suppliers comply with the progress of conserving the environment.  Ferrero states that they are:

“committed to making sure that [their] palm oil suppliers are providing fully traceable oil, while including smallholders, not clearing High Carbon Stock forests, not using fire to clear land, not planting on peat soils, protecting orang-utans and other endangered species by maintaining High Conservation Value areas, reporting on the greenhouse gas emissions of their production, respecting human rights, including the right to Free, Prior, and Informed Consent of indigenous and local communities, recognizing respect and strengthening the rights of workers, not using Paraquat, and actively fighting corruption.”

This illustrates the level of supervision Ferrero wishes to uphold.  The company claims to report transparently and publically on the issue every six months.  Ferrero obtains 150,000 tonnes of palm oil a year from Malaysia, showing their reliance and dependence on quality, raw materials.

However, workers for the palm oil industry have been subjected to abuse.  The workers who are chosen to work on the palm oil plantations are not from the local communities.  Instead, they are from distant communities and tend to owe money to labor brokers who often lie to the laborers.  The laborers are told that they would be working under safe working conditions, but would be forced to pay for transportation, lodging, food, and safety equipment at an increased price.  The housing lacked electricity and water and “when workers attempted to flee, they were beaten with sticks and machete handles” (Hill).  Though child labor is uncommon in palm oil plantations, the production quota is unachieveable, so workers bring their children to work for fear of being scolded which indirectly contributes to the child labor issue.  The Round Table on Sustainable Palm Oil attempts to regulate the work conditions for the laborers, but is unsatisfactory in their efforts.  Since “twelve of the sixteen seats on the executive board are held by growers, processors, manufacturers, retailers or investors”, the laborers essentially lack a voice at the table (Hill).  

The Association for Women’s Rights in Development published an article stating how the World Bank is structured to put women at a disadvantage.  The article reveals that:

“Women’s unpaid labour increases with the removal of subsidies on social services.  When subsidized daycare is cut, for example, women provide free childcare for their families and neighbors.  When medical services are cut, women care for those who would otherwise have been hospitalized.  Inherent in structural adjustment programs and the dominant economic agenda is an assumption of the unlimited availability of women’s time and unpaid labour (World Bank)..

This shows that women are viewed as method of free labour due to the cutting of social services, which, in turn, helps the market at the expense of women.  However, Ferrero is not in line with these values.  

Ferrero published a “code of ethics” which also detail the conditions of their workers.  The company strives to be known for having a positive setting in the work environment, allowing their employees to grow and develop skills for their job.  They implemented numerous services in support of their employees and their families.  In Italy and Germany, Ferrero uses services such as “Social Assistance” to support families when they need it the most with “medical visits [and] financial support.”  Employees receive pensions, holiday breaks, and Christmas parties for the employees’ children.  In France and Italy, certain programs assist in balancing the workers’ social and work life.  Those with children have access to “company day care, mini clubs, support services. . . [and] groups for listening to associates” in order to promote “part time” work during special leave.  Ferrero states that they “support the protection of human dignity, . . .the abolition of the exploitation of child labour and of forced and coercive labor within [their] sphere of influence and along the entire production chain. . . [and] work to avoid any form of discrimination.”  These statements are ideal of any company, especially with the globalized market which exist today.

Neoliberalism is an economic theory which focuses on free trade, deregulating the economy, privatizing the public sector and cutting spending to the public sector such as education and healthcare.  The International Monetary Fund and the World Bank have implemented conditionalities which borrowing countries must meet.  Export Processing Zones (EPZ) were created to promote exports but are not subject to the countries’ laws and taxes.  In 1971, The Free Trade Zone Act affected Malaysia.  It attempted to create jobs and to invite foreign corporations into the country.  In order to motivate investors, export processing zones were created near capitals, large highways or sea ports.  Normal trade regulations did not apply to these zones, allowing firms to be exempt from taxes on exports (Sivalingam, 4-5).  Since Malaysia’s labor force spoke English, cheap, and generally educated, investors were attracted to the country’s EPZs.  According to Sivalingam,  “INTEL and National Semiconductor were among the first to relocate to Malaysia (Sivalingam, 5).  This illustrates that American electronic companies took advantage of Malaysia’s labor, causing a divide between rich countries of the global north and poor countries of the south.  Furthermore, the country would follow neoliberal beliefs, which favored the investors who received tax cuts while indirectly promoting poor working conditions as workers were not allowed to unionize or go on strike.

Malaysian manufacturers of palm oil do not receive governmental assistance since the cost to cultivate palm oil is cheaper than other countries.  However, Malaysia’s government created the Palm Oil Credit Payment Arrangement (POCPA) which is responsible for securing trade of palm oil with countries like India, China, and Pakistan, which allows completely refined palm oil to be free of export tax (Othman, Mohd, and Mohammad, 178).  Under the GATT Uruguay Round agreement, “all import quotas and variable levies are to be replaced by fixed tariffs, which will be reduced by 36 percent over a period of six years from 1995 to 2001” (Othman, Mohd, and Mohammad, 179-180).  This shows that the World Trade Organization’s policy of trade liberalization has worked for Malaysia and the tariffs are insignificant compared to the amount of profit the country gains.  At the end of the agreement, Malaysia’s palm oil would become more and more competitive in the world market.