The Republic of Haiti is a Caribbean country located in the Atlantic Ocean, southeast of Cuba (only about 45 nautical miles away at the closest point). When a 7.0-magnitude earthquake struck Port-au-Prince on January 12, 2010, the problem reached alarming new levels. The earthquake caused thousands of deaths and widespread destruction. The number of malnourished children in Haiti is terribly high: 10 percent of children under five years old are acutely malnourished (i.e., reversible) and another 20 percent are chronically malnourished (i.e., stunted, which is irreversible). International food aid was the only recourse for more than a million Haitian families. Shada is one such Shantytown; this is where Madame Magalie and others work tirelessly to save malnourished children in a free health clinic she runs. In a typical week, the clinic helps feed 150-250 starving children. Until recently, most of the children who came to her clinic died of malnutrition. Now, however, Madame Magalie has a powerful new option. She provides the children with a kind of enriched peanut butter called "Medika Mamba,"which means "peanut butter medicine"in Haitian Creole, one of Haiti's two official languages (the other is French). Medika Mamba Medika Mamba is no ordinary peanut butter. It is a ready-to-use therapeutic food (RUTF) madefrom roasted peanuts (about 76 percent of total product weight), powdered milk, cooking oil, sugar, vitamins, and minerals. Known as Plumpy'Nut in many parts of the world, it has revolutionized how malnourished children are treated.Within six weeks of starting treatment, 85 percent of children on Medika Mamba recover, far better than the 25 percent survival rate with older milk-based treatments. The Plumpy'Nut price of a full Medika Mamba treatment is about $69. Medika Mamba has proven to be an effective tool in fighting malnutrition. But a big issue has emerged: where to buy the peanuts. Sourcing Decisions The issue that humanitarian aid groups face is where to get the peanuts. Ideally, they would like to buy Medika Mamba made with local peanuts, which not only helps feed malnourished children, but also generates much needed jobs for Haitian workers and creates a market for Haitian peanut farmers. The downside is that food produced in impoverished countries is often more expensive than food imported from countries that have more advanced economies. In Haiti, peanuts grown by local farmers cost much more than those available from foreign suppliers due to crop diseases, having little or no machinery, and small-scale production capacity that limits economies of scale. Almost all the work must be done by hand. Nutriset is the leading manufacturer of peanut butter medicine in the world. Nutriset is a for-profit company based in Normandy, France, and is dedicated to making nutritional products available for preventing and treating moderate and severe malnutrition in developing countries.Its Plumpy'Nut brand is a high-quality RUTF, with an average price that is18 percent lower than Medika Mamba due to economies of scale. It is made with peanuts from big foreign companies that havealarge capacity and can produce and ship hundreds of thousands of kilograms of higher quality peanuts at amuch lower price.This presents a dilemma to humanitarian aid groups like UNICEFthat try to help feed malnourished children. How much extra should they be willing to pay for the peanut butter medicine made with Haitian-grown peanuts? It would be ideal to buy medicine made with local peanuts to help farmers be able to feed their own children and reduce the total number of malnourished children. But purchasing medicine made with higher-quality peanuts from foreign suppliers at a lower price allows them to feed more severely malnourished children, which means that more lives can be saved. To help farmers improve the quality and price of Haitian peanuts, there is a small but growing NGO located in Haiti called Helping Haitian Children. Helping Haitian Children (HHC) Over the years, many aid programs have come to Haiti to try to ease the plight of this struggling country. In 2003, a pediatrician from Sacramento, California (U.S.) named Susan Jackson arrived and hoped to help make a difference in the lives of malnourished Haitian children. After a short time, she committed herself to relieving the children's suffering and started a nonprofit organization named Helping Haitian Children (HHC). HHC is a social enterprise whose mission is to ''save Haiti's malnourished children from starvation and stunted development.'' A big part of that mission is providing RUTF to Haiti, especially the peanut butter-based medicine they call Medika Mamba. In the early days, HHC workers cooked peanuts purchased from foreign suppliers. Originally, HHC's objective was rescuesaving children's lives. But after a while, Dr. Jackson wondered ifsaving children was really enough. She observed that some rescue only led to more rescue. The root cause of malnourished kids is that their parents are unemployed and therefore have no money to buy food for their family. She and her staff decided to broaden their objectives. If HHC produced Medika Mamba in much greater volumes in their own Haitian factory, then they could help feed even more children plus provide much-needed jobs to their parents. They converted a rented house into a small factory and soonbecame a major supplier to UNICEF for the peanut butter medicine to be distributed in Haiti. Further, they began buying their peanuts from local farmers. In 2012, HHC opened a new 18,000-square-foot factory that included modern production equipment just a few miles from the slums of Cap-Haitien. To finance the new $3.2 million factory, it raised $2.8 million from donors and used a bridge loan for the balance. This factory production has the capacity tofeed 80,000 children per year (the old factory produced only enough to feed 8,000 children per year). The Medika Mamba packages that it produces are purchased by UNICEF or the World Food Program and then delivered to hospitals and clinics throughout Haiti. HHC has 22 employees plus three others working in its agricultural assistance programs. Currently, HHC buys all of the peanuts needed from 300 local farmers and hopes to increase that number to somewhere between 400 and 500 in the next year. Using peanuts grown by Haitian farmers to make Medika Mamba has both advantages and disadvantages. One advantage is the northern plains of Haiti are among the most fertileagricultural areas in the world. The soil fertility is excellent and water is plentiful. Just about any crop would grow well there. The area has great potential for agricultural success with effective management and investment. On the other hand, one of the biggest challenges is that peanuts grown in Haiti are often contaminated with aflatoxins, one of the most serious cancer-causing substances known, especially a cause of liver cancer. Most farmers cannot afford to buy the needed fertilizer. To ensure their product does not contain these toxins, HHC must test every batch by hand. Further, the yields in Haiti are much lower than those in the United States. For instance, peanut farmers in Georgia (U.S.) can produce four times the amount of peanuts per acre than Haitian farmers can produce. The main reasons for the lower yield per acre are lack of equipment and high cost of fertilizer. HHC's emphasis on local production has greatly benefitted many Haitian farmers. But most farms in Haiti struggle mightily to make any kind of profit. An example of a typical farmer is Samuel Hilaire. He rents approximately two acres of land and grows peanuts; his rent is $100 per month for 10 months out of the year. Unlike big peanut farms in other countries, he does not have modern equipment or fertilizer. He pays a few people to help tend the farm and they all work long, hard days during the growing season. When asked how it is going, Samuel replied, "It is hard, man. Last year, we produced 64 sacks but got only 48 sacks of good peanuts that passed inspection. The price was $0.74 per kg and we barely broke even. This year, with some help from HHC, we hope to harvest 70 sacks and yield at least 60 sacks (3000kg) of good peanuts. But even if we do, the price at the market is only about $0.61 per kg now."But his optimism is starting to wane. It is hard to competewith foreign peanut companies that can produce and ship hundreds of thousands of kilograms of higher quality peanuts at a much lower price. A few farmers are starting to have some success, however. On one such farm, there are many piles of recently pulled peanut plants. Men and women are picking the peanuts from the plants and putting them into buckets. As they do so, they are singing and young men are playing wooden flutes. The party atmosphere at harvest time is a tradition, but it is even more so here because the yield is good and the peanuts will be sold to HHC. HHC has also helped the farm increase its yield by providing a small tractor to help clear the fields and helping them to buy a pesticide that helps prevent fungal diseases that cause aflatoxincontamination. In fact, the farm is yielding almost twice as many peanuts as it did just a few years ago. Pushing a wheelbarrow full of peanuts, farmer Ben Garcon smiles and says, ''In my whole life, I've never seen peanuts look so good as this.'' He is on his way to a co-op sponsored by HHC that is a couple miles away. Can ManagerialAccounting Help? To buy peanut butter medicine from peanuts grown in Haiti, UNICEF has been willing to pay up to 20% more for some of its RUTF than it would pay for Nutriset's Plumpy'Nut that is made with peanuts grown in other countries. ButUNICEF is still price sensitive as it strives to achieve its goals. Among its specific goals, UNICEF hopes to help feed 20,000 Haitian children under five years old who suffer from severe acute malnutrition (SAM). Thus, the number of SAM children fed is akey performance measure for UNICEF. UNICEF is also brand-sensitive. Its strong brand recognition helps it raise money and do the work it does all around the world. Thus, it seeks to be the major provider of humanitarian aid to Haiti and feed as many SAM children as possible. This provides an incentive to buy the lowest-cost RUTF it can find. Memo, think about the following questions.

Exhibit 1 HHC 9/30/2013 9/30/2014

AssetsCurrent Assets:

Cash & Equivalents $801,248 $1,340,227

Accounts Receivable $347,594 $162,279

Grants Receivable $218,636 $70,832

Other Receivables $276,066 $208,537

Inventories $457,288 $445,828

Prepaid Expenses $50,380 $44,310

Total Current Assets $2,151,212 $2,272,013

Property & Equipment (net) $3,025,315 $2,797,317

Total Assets $5,176,527 $5,069,330

Liabilities & Net Assets

Current Liabilities:

Accounts Payable $170,674 $133,096

Interest Payable $45,696 $33,215

Other Liabilities $38,988 $48,464

Unearned Revenues $238,506 $180,668

Total Current Liabilities $493,864 $395,443

Non-Current Liabilities

Notes Payable $772,632 $792,288

Total Liabilities $1,266,496 $1,187,731

Net AssetsUnrestricted $3,843,503 $3,850,727

Temporarily Restricted $66,528 $30,872

Total Net Assets $3,910,031 $3,881,599

Total Liabilities & Net Assets $5,176,527 $5,069,330

Exhibit 2 HHC

9/30/2013 9/30/2014

AssetsSupport & Fundraising:

Contributions $525,145 $482,299

Grants $224,689 $111,890

Mamba sales $2,038,990 $2,119,567

Interest income $2,343 $4,432

Other income $18,321 $13,689

Non-cash contributions $49,500 $35,324

Total support & revenue $2,858,988 $2,767,201

Cost of Goods Sold:Peanuts $189,296 $201,379

Other ingredients $68,599 $64,408

Direct labor $767,543 $860,545

Overhead $1,140,984 $1,188,372

Cost of Goods Sold $2,166,422 $2,314,704

Other program expenses $32,802 $36,588

Total program expenses $2,199,224 $2,351,292

Support Expenses

General & administrative $165,229 $203,128

Fundraising $155,556 $241,213

Total support expenses $320,785 $444,341

Total expenses $2,520,009 $2,795,633

Change in net assets $338,979 -$28,432

Net assets, beginning of period $3,571,052 $3,910,031

Net assets, end of period $3,910,031 $3,881,599

QUESTION:

What performance measures could HHC provide to UNICEF to help it achieve its goals and increase its purchases of RUTF made with local peanuts? Consider issues such as its mission, performance goals, food quality, and short-term versus long-term costs