Who bears the cost of cheap food?

Traidcraft promotes international trade being undertaken in a way which reduces poverty in developing countries. Ideally workers and farmers contributing to international supply chains develop skills and earn an income that contributes to their family’s household income to pay for shelter, food, water, health, education as well as money for other household needs and emergencies. However in the worst cases, workers’ lives, limbs, and health are put at risk, as highlighted by recent Dispatches programme 'Supermarkets: Real Price of Cheap Food', which covered UK working conditions within supply chains serving the UK market.  

Tension between sourcing and ethical trade activities

The impact study commissioned by ETI to assess its work over its first 10 years indicated that purchasing practices are a key barrier to improving conditions in supply chains. To help improve the impact that UK companies have when they purchase products from developing countries, Traidcraft produced a set of responsible purchasing guides in collaboration with relevant sectoral and professional organisations. When surveying suppliers, we learned that ethical trade requests are marginal and that suppliers prioritise the dominant voice from the same brand/retailer which sets delivery date, unit price and when payment was due. Experience and learning indicates that some companies are not able to voluntarily improve their purchasing practices, due to sector-specific dynamics or other factors. Yet these sourcing practices need to improve and be consistent with ethical trade messages to enable improved working conditions for workers and farmers.

Commercial practices shape suppliers’ business context

Some retailers’ and brands’ purchasing practices are abusive, passing on “excessive risks and unexpected costs” onto suppliers who in turn pass on risks onto their weaker suppliers, and their workforces. A change in the culture and practice of purchasing is needed. Improved purchasing practices alone will not automatically lead to improved working conditions, but it will remove a significant barrier to their improvement, as well as build trust amongst suppliers that retailers/brands’ stated commitment to ethical trade is supported, rather than undermined, by their commercial choices.

UK Grocery Code Adjudicator and the fair purchasing code

Traidcraft, along with other organisations, advocated for the establishment of a dedicated and independent adjudicator to help improve purchasing practices of UK food retailers. A few retailers, including The Co-operative and Aldi in 2008, indicated their support for the Groceries Code Adjudicator (GCA), citing the need for a level playing field and acknowledging that the role of government is to develop and implement laws. The GCA has been operational since 2013 and their role is to monitor, investigate and enforce supermarkets purchasing fairly from their direct suppliers.

Specifically the legal code which the GCA enforces sets out that retailers “must at all times deal with [their] Suppliers fairly and lawfully. Fair and lawful dealing will be understood as requiring the Retailer to conduct its trading relationships with Suppliers in good faith, without distinction between formal or informal arrangements, without duress and in recognition of the Suppliers’ need for certainty as regards the risks and costs of trading, particularly in relation to production, delivery and payment issues.”  Retailers which are found not to be compliant with this fair purchasing code can be subject to a significant fine, and will be required to disclose their breach in the press.

Working with GLA and GCA can contribute to improving workers’ rights

ETI members collaborated to set up the Gangmaster Licensing Authority (GLA) and have found that it has performed a useful function. Likewise, I would encourage colleagues who become aware of food retailers’ practices which breach the purchasing code enforced by the GCA to alert the GCA of this breach, which they can do confidentially. GCA’s actions to bring about fair purchasing practices will create an environment in which suppliers are enabled, rather than disabled from bringing about labour rights improvements in the form of regular employment, no forced overtime, as well as other base code provisions.