Large-scale retail (GDO) continues to play on the ‘price drug’ to attract consumers, at the expense of farmers in low- and middle-income countries. As well as of the Italian ones, further plagued by a business committee maneuvering ‘union’.
The social impact of food consumption from unfair supply chains remains severe, as confirmed by Oxfam’s(Oxford Committee for Famine Relief) latest report on the subject. (1) Unfair Trade Practices and Social Injustice.
Oxfam, value chain and farmers in chains
Oxfam analyzed the value chain on 12 of the most popular foods in European supermarkets, among those whose raw materials were grown by farmers in Low-Middle Income Countries (LMICs). Brazilian coffee, bananas from Ecuador, fish and shrimp rice from Thailand, Indian tea, wine from South-Africa, etc.
Large supermarkets collect an average of close to 50 percent on the final price of products, while farmers in their home countries receive less than 8 percent. This business model incentivizes the exploitation of fishermen and laborers in conditions that reach slavery. From forced labor on fishing boats in Southeast Asia to starvation wages, on Indian tea plantations as in South African vineyards.
Italy, unfair trade practices and farmers in chains
Caporalato in every part of Italy-even in Milan, as seen, and Tuscany (2)-is one of the most shameful and manifest symptoms of abuses of power in the agribusiness supply chain. Where agricultural confederations in systematic conflict of interest enter into double-dip agreements, with the food processing industry and the large-scale retail trade.
Coldiretti – the first agricultural confederation in the EU in terms of membership, which exceeds twice the total number of active farmers in Italy as surveyed by Istat – in turn speculates everywhere behind the backs of farmers, as we have seen. And much to the chagrin of its own ‘Agromafie Observatory,’ it does nothing concrete to combat caporalato nor its causes.
Pandemic and inequality
The pandemic has enabled large-scale retailers to increase profits and turnover globally, Oxfam notes in another of its recent analyses. (3) While agribusiness commodity suppliers and their essential workers around the world have seen their incomes stagnate or even decline. Following are some of the data extracted from Oxfam’s Supermarket Scorecard .
International retail turnover, 2020:
– sales of food and FMCG products (Fast Moving Consumer Goods, excluding fuel), by listed retail chains, averaged +11.1 percent growth between the second and fourth quarters of 2020 (compared with +1.6 percent in the same period of 2019),
– unlisted large-scale retail groups (e.g., Aldi North, Aldi South, Lidl) recorded an overall average sales increase of +8.5 percent in 2020. With peaks of +11% (Jumbo) and +14% (PLUS Holding).
Capital and dividends, 2020
The Oxfam report goes on to show how the capitalization of listed food distributors increased by $101 billion between March and December 2020 (up from $75 billion in 2019). Between 2019 and 2020, total dividends distributed to shareholders increased by +123%, from about $10 billion to $22.3 billion.
Owners of unlisted supermarkets, such as the Albrechts (owners of Aldi North and Aldi South) and Dieter Schwarz, owner of the Schwarz Group (consisting of Lidl and Kaufland), have in turn seen their wealth increase by 37 percent and 30 percent, respectively, in less than a year.
Farmers and workers, 2020 incomes
The opportunity was not enough for international retail giants to invest at least part of the lavish earnings its long-term supply chains. Nor to redistribute even a token share of profits to small producers, the farmers and their workers. Instead, who at the same time and still are experiencing extreme conditions of economic hardship and destitution precisely because of the pandemic.
Data collected by Oxfam between November 2020 and February 2021 show how most of the farmers supplying the international GDO-and so their workers-have not received a decent income or wage. And their working conditions have further deteriorated from already unspeakable scenarios, as mentioned above. Not to mention the exploitation and child slavery that still plague several supply chains such as hazelnuts in Turkey, cocoa in West Africa, andpalm oil in Indonesia.
Violations of women’s rights
Covid-19 has also exacerbated gender inequality, making the situation of working women even worse. Whom remain the hardest hit, both in family businesses and among workers. In fact, the lack of recognition of land rights and fewer opportunities for union representation exacerbate wage discrimination and income opportunities. (4)
Women’s work in agribusiness supply chains often remains in the shadows, in the South as well as the North. And the voice of women-who also often take on the burden of home and family care during breaks from work-is the least heard at negotiating tables. With the greater shame, documented by ILO(International Labor Organization), of the risks of harassment and sexual violence as ‘conditions’ of employment and/or promotion. (5)
Supermarkets at the crossroads
Large supermarket chains , according to Oxfam, should change course. Bringing balance back to the market and granting greater bargaining power to upstream players in the supply chain. A utopia one would say, until the ‘price drug’ is overcome by sustainable supply strategies.
The poor application of the technical specification ISO 20400:2017 – developed for the specific purpose of fostering a paradigm shift in procurement policies, from the drug of price to the relationship of trust in a logical win-win oriented on the long term-shows instead the urgency of establishing cogent rules, in the wake of the loi Égalim 2 French.
Oxfam, recommendations to mass retailers
In any case, Oxfam recommends a number of actions for retailers:
1) Review corporate policies, taking into account the impact the pandemic has had on the vulnerable, and their incomes. Enact management plans that reflect the specific needs of female workers in supply chains,
(2) Immediately address actual and potential human rights violations and ensure respect for workers’ rights. To the point of committing to the dignity of workers’ wages in upstream supply chains,
(3) Urgently adopt a comprehensive gender policy and action plan to ensure that women’s rights are effectively respected,
(4) Redirect investment to long-term supply chain projects with the specific aim of ensuring fair and decent working conditions for workers, farmers and women in supply chains.
Interim conclusions
The ‘invisible hand’ of the market is only able to take resources away from the weakest to replenish the profits of an ever shrinking elite, not even able to remember Henry Ford’s teaching (that workers had to be paid enough or no one would buy his cars).
The legal responsibility of all operators on effective respect for basic human rights and the environment must be affirmed with absolute rigor. The European institutions are now working on an outline of due diligence regulations that should leave no room for any greenwashing.
The effectiveness of due diligence must come through incorruptible record-keeping tools, such as public blockchain systems, Only then can a global social crisis that is otherwise destined to affect other supply chains and industries be stemmed.
Dario Dongo and Elena Bosani
Notes
(1) Not in this together: how supermarkets became the pandemic’s winners while women workers are losing out | Oxfam International
(2) Three euros an hour: a slave is not worth more. In Maremma the hell of agricultural caporalism. The Nation. 8.7.21, https://www.lanazione.it/grosseto/cronaca/caporalato-maremma-1.6566165?fbclid=IwAR1YLC5SbOUb080jRd6MNSEh3IgQvOKpuLkIgF4JJyaU6B0tOFasG1uT5fw
(3) Supermarket shareholders cash in during Covid-19 pandemic while supply chain workers suffer | Oxfam International
(4) D. Chopra. (2014). Towards Gender Equality with Caresensitive Social Protection. http://www.ids.ac.uk/publication/ toward-gender-equality-with-caresensitive-socialprotection
(5) ILO(International Labor Organization) has noted how it is often taken for granted that female workers provide sexual services or tolerate harassment in order to get a job or promotion. V. ILO. (2017). Ending Violence and Harassment against Women and Men in the World of Work. http://www. ilo.org/wcmsp5/groups/public/—ed_norm/—relconf/ documents/meetingdocument/wcms_553577.pdf;
(6) Mature-for-change_EN_21-June-2018_web.pdf (oxfamitalia.org)
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Lawyer in Milan and Frankfurt am Main. An expert in family, juvenile and criminal law, she is now enrolled in a university master's programme in food law
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