Ending Exploitation in Supermarket Supply Chains

Jim McMahon Excerpts

Thursday 18th October 2018 Commons Chamber

[Kerry McCarthy]

I thank my hon. Friend for his intervention. I chaired a joint event last night between the APPG on human trafficking and modern slavery and the APPG on agriculture and food for development. One point made powerfully was that while we want the Government and the supermarkets to act—I will come to that in a moment—we must also look at procurement. The Government could be incredibly powerful if their procurement policies made it clear that they would not source from companies that could not give absolute assurance that there was not slavery in their supply chain.

I mentioned the Thai fishing sector. The Foreign Office should be doing more to support human rights defenders such as Andy Hall, whom I have been in contact with for many years. He has exposed some of the worst practices in food producing there, starting with the pineapple sector, and I think he is now writing about the chicken sector. He has been threatened, harassed and pursued through the courts as a result, and I do not think the Foreign Office is doing enough to support him.

The examples that I have given are clearly abhorrent and illegal, but it is also unacceptable that small-scale farmers and workers producing Indian tea and Kenyan green beans—common items in our supermarkets—are earning less than half of what is needed to ensure a basic but decent standard of living. When women working on grape farms in South Africa were surveyed, 90% reported not having enough to eat in the previous month. These are things that we take for granted; a grape is, to an extent, a luxury item, yet the women producing them cannot feed themselves or their families. If buyers were prepared to pay just three cents more per melon to a producer in Honduras and less than two cents on a banana in Guatemala, that would give those workers a living wage.

A big part of the problem is the supermarket model itself. It provides us with unparalleled choice. We can buy products from all over the world, all year round, at low prices and at our convenience. Retailers are increasingly operating in challenging circumstances, under threat from the discounters and online competition, and this is leading to over-consolidation. Tesco and Carrefour have teamed up to buy products. The planned merger between Sainsbury’s and Asda would see them control more than 30% of the UK groceries retail market. They have promised that, if the merger goes ahead, they will cut shelf prices on key items by 10%, which will cause yet more downward pressure on prices for suppliers. Supermarkets now keep an increasing amount of the money their customers spend—as much as 50% in some cases.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I congratulate my hon. Friend on her leadership on this issue. On the Asda-Sainsbury’s merger, is she concerned that Sainsbury’s is withdrawing its Fairtrade brands in its supermarkets?

[Kerry McCarthy]

I was not actually aware of that point, so I thank my hon. Friend for bringing it to my attention. I am very concerned to hear that that is the case.

As I was saying, supermarkets now keep as much as 50% of the money their customers spend, while the share that reaches workers and food producers has fallen, sometimes to less than 5%. Oxfam’s research has found a direct correlation between drops in the prices paid by the supermarkets to suppliers and the risk of increasing human rights violations in supply chains. This is basically propelling a race to the bottom on wages and rights. Slavery and labour exploitation typically happen towards the bottom of supply chains, where things can get very murky and there is a lot less transparency. It is not just the cost savings that are not passed down; there is also a greater risk in that we are much more likely to see pesticide poisonings and other health and safety violations.

For example, the import price for pineapples from Costa Rica to Germany, primarily for supplying Aldi and Lidl, fell by about 45% between 2002 and 2014, despite increasing production costs. Oxfam has documented conditions on two pineapple farms in Costa Rica, which included poverty wages, subcontractors demanding monthly commissions, penalties or dismissal for workers who wanted to organise, and pesticides being sprayed while workers were in the fields.

There are other unfair practices that contravene the groceries supply code of practice’s principle of fair dealing. Fairtrade’s research into the banana sector found that banana farmers bear the cost if the retailers’ forecasts are wrong. In the worst instance, banana farmers reported receiving late changes to orders in 40 out of the 52 weeks in the year. Feedback Global has revealed the unrealistic specifications buyers use to reject produce from vegetable producers in Kenya, where on average 30% of production is discarded at farm level and another 20% prior to export—that is 50% of their produce—largely on cosmetic grounds. There is virtually no domestic market for these crops and alternative buyers cannot be found at short notice.

What can we do about this? For a start, we as consumers can do more. We can buy Fairtrade, which is the only initiative that requires a minimum price for producers and has a mandatory trader standard. We can use our consumer power to demand more of our supermarkets, using the Oxfam “Behind the barcodes” scorecard to track their progress. As the chief executive officer of Divine Chocolate has said:

“We live in times where, on the one hand, the turnover of the world’s biggest supermarket group is higher than the Gross National Income of Norway or Nigeria, and, on the other, where most of the world is dependent on smallholder producers for at least 80% of its food. Supermarkets have a responsibility to those producers, and we have more power than we think to call them to account.”

The food sector can certainly do more. In the EU, just 10 supermarket groups account for over half of all food sales. Just 50 food manufacturers account for half of all global food sales. If they act, that will make a huge difference.