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PHL factory output continues losing streak in February

THE COUNTRY’S FACTORY output extended its streak of decline to 12 months in February, as well as posting the steepest fall in five months, the government reported this morning.

Preliminary results of the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for February showed factory output, as measured by the Volume of Production Index, fell by 43.6% year on year in February. This was faster than the revised 12% drop in January, but a reversal of the 0.4% growth a year earlier.

The February decline marked the steepest in five months, or since the 56.7% year-on-year drop recorded in September 2020.

The index has been on a decline since March last year, around the time when strict lockdown restrictions were implemented to contain the spread of the coronavirus outbreak.

The PSA noted annual decreases in 19 out of 22 industry divisions in February. Of these, 14 posted double-digit annual declines led by the manufacture of coke and refined petroleum products (-85.4%); machinery and equipment, except electrical (-48.5%); textiles (-32.6%); and furniture (-30.3%).

Capacity utilization — the extent to which industry resources are used in producing goods — averaged 53.8% in February, down from 56.7% in January. Of the 22 sectors, 15 averaged a capacity utilization rate of at least 50%. — Jobo E. Hernandez

‘Hindi ako nagsisisi, magpalit na po kayo ng SIM’: Baler local praises Globe 4G LTE SIM benefits

Globe customers in Baler, Aurora are now experiencing significant improvements in their call, SMS and data browsing services after upgrading to 5G-ready 4G LTE SIM cards from the old 3G SIMs.

By using the 5G ready 4G LTE SIM cards, customers are now taking advantage of Globe’s network migration to 4G LTE – the new standard of mobile data, in  the capital town of Aurora province.

“Mabagal po internet noong nakaraan, pero ngayon mas malakas na po yung signal. Hindi ako nagsisisi. Magpalit na po kayo ng SIM para ma-experience nilang lahat  ang malaking diperensya,” said Novelith Erjas, a Globe customer in Baler as she urged kababayans to make the switch now.

Erjas, who is also a student, added the improved  internet connectivity gave her opportunities to accomplish more compared to her 3G SIM card use.  She also admitted that it took her sometime to make the upgrade which she regretted.

“Noong una ayoko pang magpalit ng SIM. Pero nung nalaman ko na mas maganda  yung 4G, na-appreciate ko na. Mas na-e-enjoy na ngayon ang pag i-internet at hindi na hassle sa signal. Dati ang akala ko mahina ang signal ng Globe. Yun pala kailangan ko pa lang magpalit, from 3G to 4G LTE,” she said.

Globe has made 13 site upgrades in four towns of Aurora province namely Baler, Dipaculao, Maria Aurora and San Luis in the past few months and is looking to modernize its entire network in the province.

“We are happy to inform our customers in Baler, Aurora that they now have access to clearer calls, real time sending and receipt of SMS and lower latency in browsing their favorite sites by simply upgrading their SIM cards and ensuring that the devices they are using are 4G LTE capable ones,” said Joel Agustin, Globe Senior Vice President for Program Delivery, Network Technical Group.

In order to help customers in Baler migrate faster and with ease, Globe has designated the following establishments to help them upgrade their SIM cards for FREE:

Maricel Store in Barangay Buhangin

Grace Store in Barangay Suclayin

Flora Store in Barangay Sabang

Customers will still keep their old numbers when they switch to 4G LTE SIM cards. If quarantine protocols in their respective areas will allow, customers can also go to the nearest Globe Store to change their SIM cards.   For more information, please go to  https://www.globe.com.ph/help/mobile-internet/lte/faqs.html#gref.

Customers who wish to upgrade their mobile devices who are outside Baler can also check any Globe store to see the affordable and available 5G-ready 4G/LTE capable mobile devices.

Globe’s aggressive and sustained network builds and upgrades are showing enhanced overall customer data experience as the telco emerged as the most improved in mobile average download speed across all technologies to 16.44 Mbps in Q4 2020 from 13.50 Mbps in Q4 2019, a 22% improvement according to Ookla data.

Globe supports the United Nations Sustainable Development Goals (UN SDG), specifically UN SDG No. 9 which emphasizes the roles of infrastructure and innovation as crucial drivers of economic growth and development. Globe is committed to upholding the 10 United Nations Global Compact principles and 10 UN SDGs.

Trade gap widens as imports increase for first time in 22 months

THE COUNTRY’S trade-in-goods deficit widened in February as imports grew for the first time in 22 months and exports contracted albeit at a slower pace that same month.

Merchandise imports grew by 2.7% to $7.60 billion in February following a 12.1% annual decline in January, preliminary data by the Philippine Statistics Authority showed.

The import tally for February was bigger than $8.4 billion and $7.4 billion in January 2021 and February 2020, respectively. However, the value of imports that month was the lowest since June 2020’s $7 billion.

Nevertheless, February marked the first expansion in imports in 22 months or since April 2019 when it posted an annual growth of 2.9%.

Meanwhile, merchandise exports declined by 2.3% to $5.31 billion, lower than the 4.8% contracted recorded in January.

This brought the trade deficit to $2.29 billion for February, bigger than the $1.97-billion gap in the same month last year, but smaller than the $2.9-billion gap posted in the previous month.

Year to date, imports of goods amounted to $16 billion, down by 5.6% compared with the $16.96 billion in 2020’s comparable months.

Likewise, exports were down 3.6% to $10.83 billion on a cumulative basis compared with $11.23 billion the previous year.

These figures were below the Development Budget Coordination Committee’s growth targets of 5% and 8% for exports and imports this year.

That brought the year-to-date trade balance to a $5.17-billion deficit, smaller than the $5.72-billion shortfall in the same two months last year.

The country’s total — the sum of export and import goods — was $12.91 billion in February, up 0.6% year on year. For the first two months of the year, total trade amounted to $26.83 billion, down 4.8% from $28.19 billion a year ago. — L. O. Pilar

First Metro Investment Corporation announces schedule of virtual stockholders’ meeting

NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS

 

TO: ALL STOCKHOLDERS:

Notice is hereby given that the Annual Stockholders’ Meeting of FIRST METRO INVESTMENT CORPORATION (First Metro) will be conducted virtually on Friday, April 30, 2021 at 2:00p.m. via Zoom.  Due to the COVID-19 situation, there will be no physical venue for the Meeting.  The following items will be taken up:

AGENDA

1. Call to Order

2. Certification of Notice and Quorum

3. Approval of the Minutes of the previous Annual Stockholders’ Meeting held on June 1, 2020

4. Confirmation of the Minutes of report on the result of the Stockholders approval through Written Assent on February 22, 2021

5. Annual Report to the Stockholders

6. Ratification of Corporate Acts including Related Party Transactions

7. Amendment to the Articles of Incorporation to amend the following:

i. Amendment of Article VII to (1) increase the par value from PHP10 to PHP500 per share, and (2) decrease the number of authorized common shares from 800,000,000 to 16,000,000 common shares.

Amendment of the Primary Purpose in the Articles of Incorporation to delete the provisions pertaining to quasi-banking and trust activities in view of the recent approval of the BSP of the surrender of the quasi-bank license. 

8. Election of the Members of the Board of Directors

9. Appointment of External Auditor

10. Other Matters

11. Adjournment

Record Date.  Stockholders of record as of March 15, 2021 shall be entitled to attend the Meeting.

Pre-Registration. Stockholders intending to participate by remote communication should pre-register by sending an email to asmregistration@firstmetro.com.ph on or before Tuesday, April 20, 2021. The requirements for the registration can be found on www.firstmetro.com.ph/asm-2021. 

Successful registrants will receive an electronic invitation via email with a complete guide on how to join the Meeting and how to cast votes. For any registration concerns, please get in touch with asmregistration@firstmetro.com.ph.

Proxy.  If you will not be able to join the virtual Meeting, you may send an authorized representative on your behalf. Download, fill out and sign the sample proxy form found on www.firstmetro.com.ph/asm-2021, and send a scanned copy to asmregistration@firstmetro.com.ph.on or before Tuesday, April 20, 2021.

Questions About the Meeting and the Company.  You may send your questions regarding the conduct of the Meeting and the Company to corpcom@firstmetro.com.ph.

Electronic Copies of Relevant Documents.  Pursuant to SEC Notice dated April 20, 2020, copies of the Notice of Meeting, Definitive Information Statement and other related documents in connection with the Meeting may be accessed through the Company’s website (www.firstmetro.com.ph).

There will be audio and virtual recording of the Meeting. All votes cast shall be subject to the validation of Metrobank-Trust Banking Group.

City of Makati, Metro Manila, April 7, 2021.

 

                                                          ALESANDRA T. TY

Corporate Secretary

Semirara Mining and Power Corporation announces schedule of annual stockholders’ meeting

Filinvest Development Corporation announces schedule for virtual stockholders’ meeting

Duterte signs EO lowering tariffs on pork imports for one year

Philippine President Rodrigo R. Duterte on Wednesday signed an executive order (EO) temporarily lowering tariffs on imported pork meat for one year, in order to address the current supply shortage due to the African swine fever (ASF) outbreak.

“There is an urgent need to temporarily reduce the Most Favored Nation tariff rates on fresh, chilled or frozen meat of swine to address the existing pork supply shortage, stabilize prices of pork meat, and minimize inflation rates,” Mr. Duterte said in EO No. 128, which was signed on April 7.

This, after the President asked Congress last month to increase the minimum access volume (MAV) for pork imports this year by 350,000 metric tons (MT) on top of the 54,210 MT under the current limit.

The EO temporarily lowered the import duties on fresh, chilled or frozen pork to 5% from 30% under the MAV quota for three months after order takes effect. The rate will be increased to 10% for the succeeding nine months.

The tariff rate for imported meat outside the existing quota, on the other hand, is reduced to 15% from 40% for the first three months. It will then be raised to 20% for the next nine months.

The order will take effect for one year as soon as it is published in the Official Gazette or a newspaper.

The prices of pure pork rose to 20.9% in March, according to the statistics authority.

Pork prices in the country’s capital region averaged P329 per kilo in March from P323 per kilo a month earlier, it said.

The 60-day price ceiling on selected pork and chicken products in Metro Manila is set to end on April 8.

Price ceiling on pork to be lifted

THE Department of Agriculture will implement suggested retail prices (SRP) for imported pork products on April 9. — PHILIPPINE STAR/ MICHAEL VARCAS

By Revin Mikhael D. Ochave, Reporter

PRICE CAPS for selected pork and chicken products will not be extended, the Agriculture department said.

“April 8 will be the last day for the existing price cap and there will be no extension,” Agriculture Secretary William D. Dar said at a virtual briefing on Wednesday, referring to the 60-day price ceiling mandated by Executive Order (EO) No. 124.

Instead, Mr. Dar said the Department of Agriculture (DA) will implement suggested retail prices (SRP) for imported pork products as part of the ongoing effort to augment supply and stabilize market prices. There will be no new issued SRP for local pork products.

Starting April 9, the SRP for imported pork shoulder (kasim) will be set at P270 per kilogram, while imported pork belly (liempo) will be at P350 per kilogram, he said.

“The DA and the Department of Trade and Industry (DTI) will implement the SRP for imported pork and have agreed on the compliance for existing guidelines on hygienic handling of imported pork as prescribed by government guidelines such as proper packaging and labeling, and creation of a compliance monitoring team,” Mr. Dar said.

“We will also bring the help of the Department of the Interior and Local Government (DILG), the Philippine National Police (PNP), and other stakeholders,” he added.

Under EO 124, the price of pork kasim was capped at P270 per kilogram, pork liempo at P300 per kilogram, and whole chicken at P160 per kilogram.

Together with the new SRP for imported pork, the DA will require importers to package pork kasim and pork liempo into saleable packages of 500 grams and one kilogram.

Meanwhile, Mr. Dar encouraged local hog raisers to deliver surplus hogs from areas free from African Swine Fever (ASF) to Metro Manila, adding that transport assistance will still be given even beyond Thursday.

“This will be pursued until the higher minimum access volume (MAV) allocation for pork and lower pork tariffs are approved,” Mr. Dar said.

Mr. Dar said the imported pork will be distributed in groceries, supermarkets, and retailers in Metro Manila that have freezers and chillers.

He added that the DA and Metro Manila local government units will provide a grant for retailers that do not have the necessary equipment to store imported frozen pork.

Mr. Dar said the main issue remains the lack of local pork supply, which can only be addressed by the increase in MAV quota allocation, lower pork tariffs, and delivery of hogs from provinces with surplus supply.

On March 26, President Rodrigo R. Duterte sent a letter to Congress that endorsed to increase the MAV allocation by 350,000 metric tons (MT) in order to augment the DA’s projected supply deficit of 400,000 MT for the year due to ASF. Both the Senate and the House of Representatives are in recess and will resume session on May 17.

The allocation for MAV pork imports is currently at 54,000 MT.

Mr. Dar said that if there is no action taken by the two chambers of Congress, the next step would be for Mr. Duterte to issue an executive order to increase MAV allocation.

MAV is applicable to farm commodities that can be imported at lower tariffs under the World Trade Organization (WTO) system.

Currently, pork imports within MAV quota are charged with 30% tariff while those outside the quota pay 40%.

To recall, the DA also has a pending proposal to lower pork tariffs for in-quota imports at 5%-10%, and out-quota imports to 15%-20%.

Sought for industry comment, Meat Importers and Traders Association (MITA) President Jesus C. Cham said in a mobile phone message that it is not good for the DA to set an SRP for imported pork products.

“Capping imported pork price only makes local pork less competitive and consumers will go to imported pork. Without a reduction in tariff, imported pork supply will not be able to affect the market meaningfully,” Mr. Cham said.

Rosendo O. So, Samahang Industriya ng Agrikultura (SINAG) chairman, said in a mobile phone message that the DA’s decision to set an SRP for imported pork products poses food safety risk and public health concerns for consumers amid the coronavirus disease 2019 (COVID-19) pandemic.

“This action will not make pork more affordable for our countrymen, and it further cripples a hog industry that is already suffering from the DA’s mismanagement of the ASF outbreak,” Mr. So said.

“The pork shortfall can be imported at the current tariff level and MAV allocation without any additional burden to importers, as the current tariff rates already provide profits of P200 to P250 per kilogram for importers,” he added.

PEZA warns of investor exodus after key CREATE provision vetoed

REGISTERED INVESTORS’ inability to apply for new incentives could lead to their departure from the country, the Philippine Economic Zone Authority (PEZA) said on Wednesday.

While it welcomed the signing of Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, PEZA noted one of the items vetoed by President Rodrigo R.Duterte may have a “big effect” on the existing foreign direct investors in the country.

The vetoed provision under CREATE would have allowed existing registered businesses to apply for extended incentives for the same activity, which Mr. Duterte called “fiscally irresponsible” and unfair to taxpayers and enterprises with no incentives.

Noting that only new activities should get fresh incentives, Mr. Duterte vetoed the section that would provide a 10-year extension, on top of the additional 14 to 17 years enjoyed by companies, even if they engage in the same activity. Exporters and domestic enterprises identified by the National Economic and Development Authority would be able to enjoy income tax holidays for 4-7 years, then special corporate income tax for 10 years for a 14- to 17-year total.

In a statement, PEZA said that the registered businesses would have “no choice but to make do” with the 10-year sunset period after their income tax holiday lapses, and then graduate to the regular 25% corporate income tax rate.

“This scenario could be a make or break for the Philippines as the affected ecozone locators, for example, might decide to retain their facilities and invest in new projects to be entitled to a longer ITH (income tax holiday) and SCIT (special corporate income tax) period,” PEZA Deputy Director General for Policy and Planning Tereso Panga said.

“Or worse, they might just pack up and transfer to a more willing host country that can offer better incentives for their investments as their availment of more advantageous incentives for sunk projects with the IPAs (investment promotion agencies) prior to CREATE were cut short by the mandatory sunset period for RBEs (registered business enterprises).”

But PEZA Director General Charito B. Plaza said that the agency recognizes a need to gradually reform the national tax system.

“Although CREATE may offer ‘win some, lose some’ opportunities for the different industries, we are glad that CREATE sustained our argument and has placed a high premium on export-oriented enterprises with their availment of superior fiscal incentives particularly for new projects,” she said.

“We believe that effective governance will be pivotal in our resolve to retain, expand and attract investments into the ecozones under the CREATE regime and in due time, our existing locators will be able to adjust to CREATE and continue to secure their investments in the Philippines.”

The Department of Trade and Industry had supported the signing of the law, which Trade Secretary Ramon M. Lopez said “modernized and improved the investment incentive regime to one that is performance-based, focused and innovation-oriented.”

FIRB MEETING
Meanwhile, Finance Secretary Carlos G. Dominguez III wants the Fiscal Incentives Review Board (FIRB) to have its first meeting as early as next week to discuss its expanded role under CREATE. Mr. Dominguez co-chairs the FIRB along with Mr. Lopez. 

Since CREATE will only take effect on Monday (April 12), the meeting could be held as early as next week, according to Finance Assistant Secretary Juvy C. Danofrata

CREATE expanded the power of FIRB as the oversight committee in granting tax incentives to government-owned and -controlled corporations (GOCCs) and those approved by investment promotion agencies.

The FIRB is tasked to set the target performance metrics that businesses have to reach to avail of tax incentives and make sure these are being met, as well as monitor and assess the economic impact of investments that are enjoying perks.

For projects with capital of less than P1 billion, FIRB delegated the power to grant tax incentives to investment promotion agencies but the oversight committee still has the power to raise the threshold of minimum capital requirement.

CREATE’s implementing rules and regulations (IRR) is currently being finalized by the Department of Finance and National Tax Research Center (NTRC). — Jenina P. Ibañez and Beatrice M. Laforga

Most billionaires got richer amid pandemic — Forbes

MANY BILLIONAIRES around the world, including the Philippines, became richer even as many economies suffered due to the coronavirus pandemic, according to Forbes.

Forbes on Wednesday released its annual world’s billionaires list which had a record 2,755 billionaires, with 493 newcomers. Their combined wealth stood at $13.1 trillion, more than 60% higher than the $8 trillion a year ago.

“It was also the first time that the combined net worth of the world’s billions crossed into double-digit trillions. The pace at which huge fortunes have been created is astonishing,” Kerry A. Dolan, Forbes assistant managing editor-wealth, said in a statement.

Forbes, which takes a snapshot of the billionaires’ wealth using stock prices and exchange rates from March 5, 2021, said 86% of those on the list are richer than last year.

The Forbes list includes 17 billionaires from the Philippines, led by property tycoon and former Senate president Manuel B. Villar, Jr.

Mr. Villar, the Philippines’ richest man, ranked 352nd on this year’s Forbes list. Forbes pegged his net worth at $7.2 billion, 29% up from $5.6 billion in April 2020. He is the chairman of listed companies Vista Land and Lifescapes, Vistamalls, Inc., and Golden MV Holdings.

Enrique K. Razon, Jr., chairman of port operator International Container Terminal Services, Inc. (ICTSI), ranked 561st on the Forbes list with a net worth of $5 billion, 47% higher than the $3.4 billion net worth a year ago.

LT Group, Inc. Chairman and founder Lucio C. Tan is in 925th place on the Forbes list with a net worth of $3.3 billion, nearly double from last year’s $1.7 billion. LT Group is involved in banking, airline, property development, and tobacco.

SM Prime Holdings, Inc. directors Hans T. Sy and Herbert T. Sy are both in 1,008th place, with a net worth of $3 billion each, up from $2 billion in 2020. The Sys are the children of SM Group founder Henry Sy, Sr., who passed away in 2019.

Alliance Global Group, Inc. Chairman Andrew L. Tan is also in 1,008th place with $3 billion, higher than the $1.9 billion seen in 2020.

SM Investments Corp. (SMIC) Executive Director Harley T. Sy, SMIC Vice-Chairman and SM Prime Chairman Henry T. Sy, Jr and BDO Unibank, Inc. Chairperson Teresita T. Sy-Coson are ranked 1,174th — each with a net worth of $2.7 billion. In the 2020 list, the Sy brothers’ net worth stood at $1.9 billion, while Ms. Sy-Coson had a net worth of $1.8 billion.

SMIC adviser Elizabeth Sy shared 1,299th spot with Jollibee Foods Corp. founder Tony Tan Caktiong and family — with a net worth of $2.4 billion each. Mr. Tan Caktiong’s net worth stood at $1.7 billion in last year’s list.

Ramon S. Ang, president, chief operating officer, and vice-chairman at diversified conglomerate San Miguel Corp. (SMC), was at 1,444th place on the Forbes list with $2.2 billion, rising 57% from last year’s $1.4 billion.

Meanwhile, the net worth of SMC Director Iñigo Zobel (2,141st place with $1.4 billion) and JG Summit President and Chief Executive Officer (CEO) Lance Y. Gokongwei (2,378th place with $1.2 billion) were unchanged from last year’s list.

Alphaland Corp. Chairman Roberto V. Ongpin was in 2,378th place with a net worth of $1.2 billion, 30% lower than last year’s $1.7 billion.

Two billionaires returned to the Forbes list this year — Century Pacific Food, Inc. Chairman Emeritus Ricardo S. Po, Sr. and family and DoubleDragon Properties Corp. Chairman and CEO Edgar J. Sia II. They were in the 2,524th spot with $1.1 billion net worth each.

Amazon founder Jeff Bezos topped the world’s billionaires list for the fourth consecutive year with $177 billion, followed by Tesla CEO Elon Musk with $151 billion.

The rest of the top five includes LVMH Moët Hennessy – Louis Vuitton Chairman and CEO Bernard Arnault ($150 billion), Microsoft co-founder Bill Gates ($124 billion) and Facebook CEO Mark Zuckerberg ($97 billion).

The Asia-Pacific region has the most billionaires with 1,149, followed by the United States with 724 and Europe with 628. — K.C.G.Valmonte

Tea can be fun. Really.

IN THESE troubling times, one reaches for a cup of tea almost as a reflex, the calming drink an effort to protect one from the dangers outside. Tea is often regarded as a serious drink, fit for reminiscing or for meditating. But an online talk from the Dilmah School of Tea last month showed us that tea can be fun.

First of all, pleasure from tea can be derived by dropping some of the niceties. Dilhan Fernando, son of Dilmah Tea founder Merril J. Fernando, and current CEO of Dilmah, picked up a glass, and said, “When you taste, you’ve got to slurp,” he said, gamely doing so. “It’s only when you slurp that you’re going to get the texture, the aromas; because you’re tasting with your brain, as well as your palate.

“We’re all very polite. We sip, and that’s lovely. You’re getting the four true [tastes], plus umami; the fifth,” he noted. “But then, you’re not really getting the resolution. It’s only when you’re a little bit rude,” and here he slurped again, “that’s how you get the rest of it.”

While Dilmah of course has an expertise in tea in the strictest sense — the drink brewed from camellia sinensis — the company also has a line of herbal teas (called tisanes or infusions in some circles). These are based on Sri Lankan Ayurvedic traditions, which is why they have herbal teas like cinnamon (according to Mr. Fernando, it works to protect against type-1 diabetes), moringa, peppermint, ginger, and chamomile.

“Tea is incredible. The antioxidants in tea protect us from pollution… and so many other things,” said Mr. Fernando.

Peter Kuruvita, an Australian chef and TV personality, was a guest on the webinar, where he demonstrated how to make a gazpacho using Dilmah’s Tangerine, Rose, and Grapefruit infusion — watermelons, cucumbers, and tomatoes went into a blender, followed by some of the tea.

Meanwhile, flair bartender Tomek Malek demonstrated how to make a Dilmah Melon Sour, a mocktail made with cantaloupe and green rooibos tea (which Mr. Fernando says has antiviral properties). An alternate version of the recipe flashed onscreen said that Dilmah’s Lemongrass and Spearmint infusion works just as well.

While this might sound a little less staid and more dryly health-conscious, tea can be fun too. Really.

Kicking off from questions about alcohol additions to the healthy mocktail (particularly one about Mr. Fernando’s fondness for the Old-fashioned), Mr. Malek said, “I was waiting for this question.” According to him, stronger black teas can be paired with barrel-aged spirits (your whiskeys and the like), while vodka and gin would go with lighter-spirited teas (think green, or white; or the aforementioned herbal infusions). It really depends on the effect you’re going for: the barrel-aged spirits would bring out the boldness of the tea; while the gin and the vodka (which can be used for the Dilmah Melon Sour) would bring out the more floral aspects of it.

“It’s difficult to have one rule,” he said.

The Dilmah Tea webinar series is ongoing, with one slated on Thursday about “Brews for Every Mood and Occasion.” One can catch this and all the other Dilmah School of Tea webinars at facebook.com/SchoolofTea/. One can also go to schooloftea.org for some tea basics (such as material on brewing the perfect cup of tea).

Dilmah Tea is available in the Philippines at most major supermarkets, but also at shopee.ph/dilmahteaonlineshop. — J.L. Garcia

Is that a good egg? How chocolate makers rate on social and environmental measures

SQUARESPACE.COM

EASTER is the biggest chocolate-buying time of the year. But who’s really paying for the cost of that chocolate?

The second annual report on the social and environmental performance of the world’s major chocolate makers show human exploitation and environmental degradation continue to be key ingredients in many chocolate products.

It is a collaboration between five advocacy groups — Be Slavery Free, German-based social justice organization INKOTA, and US environmental outfits Green America, Mighty Earth, and the National Wildlife Federation. (The Macquarie Business School has been working with Be Slavery Free on research into issues of modern slavery).

The report sorts 31 major chocolate makers into four bands — industry leaders, those showing improvement, those needing to do more, and the industry laggards — based on their written responses to questions about their polices in six key areas covering social, environmental, and governance practices.

Just four of the 31 received the highest “good egg” rating: US-based Alter Eco, Switzerland’s Chocolats Halba/Sunray, Netherlands-based Tony’s Chocolonely, and New Zealand’s Whittakers. These are all relatively small chocolate makers.

Thirteen makers ranked in the second category, includes most of the world’s 10 biggest confectionery companies — Mars Wrigley (US), Ferraro Group (Luxembourg/Italy), Mondelēz International (US, owner of the Cadbury, Toblerone and Milka brands), Hershey (US), Nestlé (Switzerland) and Lindt & Sprüngli (Switzerland).

Seven companies were in the third rank. Three were in the fourth — Meiji, Itochu, and Morinaga (all Japan-based).

Four companies failed to respond to the survey: Valrhona (France); Starbucks (US, a major seller of hot chocolate products); Unilever (UK); and August Storck (Germany, maker of Werther’s, Toffifay, and Merci chocolate brands).

The full list of rankings can be found here: Easter+Scorecard+2021.pdf (squarespace.com)

The principal ingredient for making chocolate is cocoa, the powder made from grinding the seeds of the cacao plant. About 70% of cacao is farmed in West Africa, with Côte d’Ivoire and Ghana being the big two producers.

Most cacao farmers make less than $1 a day (and women even less), well below the global poverty line of $1.90. An estimated 1.6 million children work in cocoa production in Côte d’Ivoire and Ghana alone.

Clearing land to farm cacao is estimated to be responsible for about one-third of the land cleared in Côte d’Ivoire and Ghana over the past 60 years. These countries have now lost more than 80% of rainforest cover. Such deforestation contributes to climate change.

The good news is that most companies and four producer governments (Côte d’Ivoire, Ghana, Colombia, and Cameroon) have committed to ending cocoa-driven deforestation through the Cocoa and Forest Initiative.

Some action is taking place through agroforestry, which involves farming a variety of crops while retaining natural vegetation. This has been shown to reduce the need for pesticides, increase carbon sequestration, and improve biodiversity. It is also better for farmers’ food and income security, as they can grow diverse crops rather than relying on just one.

Essential to addressing these social and environmental problems is achieving transparency in supply chains. If a company does not trace and track where products have come from, it cannot know if they have been produced through human exploitation or environmental destruction.

The report rates chocolate makers on two measures related to this — due diligence traceability and transparency. These are crucial as the foundation for all other reforms.

They are also key to Australia’s modern slavery act, which requires businesses with an annual turnover of A$100 million to publish a “modern slavery statement” reporting on the risks of modern slavery in their operations and supply chains, and on the actions they have taken to address these.

But such transparency alone will not be enough if consumers don’t act on that information, and put pressure on chocolate companies through their purchasing decisions.

So go with the good eggs, and avoid the bad.

 

John Dumay is a Professor in the Department of Accounting and Corporate Governance, Macquarie University. James Guthrie is a Distinguished Professor of Accounting, Macquarie University.

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