UK supermarkets ‘trapping suppliers in poverty’

posted by Francis Churchill
21 June 2018

Price squeezes by some of the UK’s biggest supermarkets, including Tesco, Sainsbury’s and Asda, are hurting workers and small-scale farmers in some of the poorest parts of the world, Oxfam has said.

In a report the charity said supermarkets’ increasing buying power and weakening protection for workers was causing economic exploitation at the bottom of the supply chain.

Workers were often paid below the living wage in their countries and food insecurity was common, despite working in the food supply chain, Oxfam said.

The squeeze was also increasing the risk of rights abuses, including child labour, excessive hours, sexual harassment and violence against women and forced labour.

The report criticised the supply chains of the six biggest UK supermarkets – Tesco, Sainsbury’s Morrisons, Asda, Alid and Lidl – as well as other supermarkets in the EU and US.

An analysis of these supermarkets’ publicly available policies also found “a striking gap” between the policies in place and “what needs to be in place” to protect workers’ rights.

The British Retail Consortium (BRC), which represents retailers in the UK, said its members were committed to improving the livelihoods of people working in their supply chains.

Matthew Spencer, director of policy for Oxfam GB, said: “It’s shocking that so many of the farmers and workers producing food for our supermarket shelves are going hungry themselves.

“Our biggest supermarkets are squeezing the price they pay their suppliers, resulting in huge, hidden suffering amongst the women and men who supply our food and trapping them in poverty.”

The report said on average farmers receive just 5.7% of what consumers pay for a food items at the till, a reduction of a quarter between 1996 and 2015. Over the same period, the portion of the value retained by supermarkets increased to 53%, up from 41%.

As the “last link” in the food supply chain, the report said supermarkets had become “gatekeepers of the global food trade” but their low-cost business models were dependent on “using their huge buying power” to pressure suppliers to cut costs and take on the risks of agricultural production.

The report said the rise of supermarket dominance has coincided with trade liberalisation and deregulation of agricultural and labour markets in many countries, which has led to a “radical weakening of the bargaining power of small-scale farmers and workers”. It said women in the supply chain, who are already more likely to be discriminated against, were being impacted most severely.

For the report Oxfam, alongside the Bureau for the Appraisal of Social Impacts for Citizen Information (BASIC), analysed the supply chains of 12 common products sourced by supermarkets, including rice, coffee, shrimp and tomatoes. It found the average wages of workers and small-scale farmers in all of these supply chains fell below the minimum required for a decent standard of living, with the situation worse for women.

It found the average wage for a tea worker in India was 38% of the living wage there, green bean farmers in Kenya were earning 41% of the living wage, and orange farmers from Brazil in the juice supply chain were earning 58% of the living wage. “Such income levels are especially hard to accept when compared with the returns at the other end of the supply chain,” Oxfam said.

The report also surveyed hundreds of small-scale farmers and workers in the supermarket supply chain across five countries and found “a clear majority” of respondents were either moderately or severely food insecure. It said:

  • More than 90% of women surveyed on South African grape farms reported not having enough to eat the previous month.
  • 72% of women on a small-scale banana farm in the Philippines said they had worried about feeding their family in the last month.
  • In Italy, three quarters of women working on fruit and vegetable farms said they or a family member had to cut back on food the previous month.
  • More than 90% of workers surveyed at seafood processing plants in Thailand said they did not have enough food the previous month. Of those, more than half of the women workers (54%) said they had no food at home on several occasions.

Spencer said: “Global businesses can help lift millions of people out of poverty, but the food industry currently rewards shareholder wealth over the work of millions of women and men with supermarkets ignoring the hidden suffering behind their food supply chains.

“When companies get serious about supporting decent work they can help transform lives in some of the poorest parts of the world.”

A spokesperson for BRC said: “Our members have made a number of commitments to improve the livelihoods of people working in our supply chains and to increase the transparency of those efforts.

“Indeed, as Oxfam's research shows, the UK retail industry is one of the most progressive in this area globally. The Oxfam investigation demonstrates how complex these challenges of respecting human rights in supply chains are and we welcome the recommendations set out in this report.”

A Lidl spokesperson said it welcomed the report and was “committed to continuing to work collaboratively with both Oxfam and the wider industry to drive further improvements through the supply chain”.

An Asda spokesperson said the firm was “absolutely committed to empowering workers and creating positive change” in its supply chain and would look carefully at the recommendations in the Oxfam report.

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