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EU supermarkets abuse their huge purchasing power. Workers in developing countries suffer as a result. New legislation on unfair trading practices in the food supply chain proposed by the European Commission is a good start, but must go further to protect people in poverty.
The big squeeze: supermarkets abusing their power
Food retail in Europe is increasingly concentrated in the hands of a small group of very powerful actors. On average, the top five supermarket chains control over 50% of the grocery market in every European country. This means European retailers effectively control access to consumers and wield huge buying power.
Supermarkets abuse this power to ‘squeeze’ their suppliers – transferring the business risks and demanding ever lower prices. The many ways in which they do this has been widely documented: delayed payments, last minute cancellation of orders, fees for unsold or stolen products, ‘marketing fees’...
The European Commission has finally decided to act against these unfair trading practices, proposing new legislation which aims to protect small and medium-sized suppliers in the food supply chain from the worst forms of abuse by large buyers. This could be good news for small food producers around the world that suffer most from the supermarket squeeze.
Workers peeling and sorting cashews in a cashew processing factory in India. From: Traidcraft Exchange
Workers kept in dire conditions for the sake of your snacks
An investigation by Traidcraft into the cashew sector in India showed that unfair trading practices against cashew suppliers have dire consequences for their workers. They found that supermarkets’ poor practices lead to insecurity among the cashew suppliers, which directly impacted the most vulnerable people in the value chain. This insecurity translates into low wages, irregular work, harsh working conditions and a lack of social protection; the price that workers, especially women, are paying for the supermarket ‘squeeze’.
One day’s work peeling 10kg of cashew nuts would provide a worker with just enough money to buy basic food for his family. They spend the day squatting on hard floors with insufficient access to toilets and other hygiene facilities.
This is not a stand-alone case. The people who grow, process, and package our food are suffering all around the world. They are suffering from hunger because they do not earn enough money to feed themselves and their families. They are suffering from appalling working conditions: long hours of intense manual labour with little rest.
Worker peeling a cashew nut. From: Traidcraft Exchange
Will the Commission’s proposal on unfair trading practices deliver for workers around the world making our food?
The good news for farmers and workers around the world is that the Commission’s proposed legislation gives equal protection to producers involved in the supply chain of European supermarkets irrespective of where they are based. Both Italian tomato growers and Costa Rican banana workers and their organisations will have access to national enforcement authorities in Europe if they suffer because of banned trading practices.
However, there is plenty of room for improvement if the new law is to make a real difference to the lives of women and men who suffer the most from retailers’ behaviour.
The list of banned unfair trading practices is incomplete; all actors in the food supply chain should be covered by the ban, not only the largest buyers. National authorities must be required to take proactive steps to ensure access to redress for the most vulnerable actors, and criteria must be defined to ensure sanctions against offenders effectively halt unfair trading practices.
The Commission’s current proposal lacks ambition and teeth. With European elections in sight, European decision-makers in the Parliament and the Council should be keen to show they will not tolerate the continued suffering of women and men who produce and process the food we buy, no matter where they are.
This blog was authored by Marc-Olivier Herman, EU Economic Justice Policy Lead, and Lucy Anns, EU Policy Assistant, Oxfam EU, on 12 April 2018. All photos: Tradecraft Exchange.