The rich and sweet taste of bananas, pineapples and other exotic fruit can quickly transport us to distant countries, but having the opportunity to purchase tropical fruit from supermarkets can often be taken for granted. The consumer choices we make can have a direct impact on how people are employed and paid, and how their environments are treated.
Who has the power in fruit supply chains?
The fresh fruit and vegetable sector is one of the most profitable categories from European supermarkets, who also happen to be the most powerful actors along tropical fruit supply chains. The main European market for bananas is the UK, France, Italy and Spain. Their subsequent buyer power means that in the UK and other countries, bananas are amongst the most valuable products they sell.
Supermarkets can achieve substantial profits by squeezing suppliers and paying unsustainably low prices for bananas and pineapples. For example, the consumer price for bananas is on average 25% lower compared to apples. Supermarkets are waging price wars with bananas, and more recently with pineapples. They continue to push prices ever lower, encouraging low wages, poor working conditions, labour right abuses, inadequate health and safety standards and weak environmental protection.
In Britain, just a handful of supermarkets dominate the market and sell 80% of bananas we eat, led by Tesco with over 30% of the sector, and closely followed by Asda/Wal Mart and Sainsbury’s (16% each) and Morrisons (12%). Supermarkets can use their subsequent buyer power not only to impose low prices but to demand retrospective discounts, delay payments and threaten to delist (stop buying from) suppliers. As grocery market shares become concentrated in the hands of fewer retailers, suppliers have little option but to accept such conditions. Research carried out by Banana Link has found that whilst consumer prices have stagnated since 2001, whole sale price has dropped by 25% over the same period, yet retailers have gained substantial margins at a pan-European level over the past 10 years.
Who should monitor supermarket behaviour?
A UK Supermarket Code of Practice was introduced in March 2002 to address the imbalance between the big supermarkets and their suppliers, including farmers. However, it was strongly criticised for being too weak. Finally, in February 2010 - as a result of years of campaigning by a wide of range of stakeholders including members of the ‘Tescopoly Alliance’ - a new, stronger Grocery Supply Code of Practice (GSCOP) came into force.
In August 2010 the Government also announced the creation of a Groceries Code Adjudicator (GCA) in a bid to end the unfair treatment of farmers, suppliers and shoppers. The GCA sits within the Office of Fair Trading (OFT), though independent, and has the power investigate complaints from UK and overseas suppliers about the way they are treated by supermarkets. The GCA has launched a quarterly newsletter that you can subscribe to.
Existing competition policy at national, and particularly at EU level, is however still insufficient to control abuses of supermarket buying power and their impact on non-EU suppliers in exporting regions throughout the developing world.
Corporate Social Responsibility - what does it achieve?
Many supermarkets have developed corporate social responsibility policies to address social and environmental standards along their supply chains and are signed up to a range of voluntary initiatives. However, workers and their unions have reported little or no change at all as a result of these policies.
Campaigns to change legislation
At a European level, Banana Link belongs to the Agribusiness Accountability Initiatives European Working Group on Retailers and was active in helping develop the European Parliament Written Declaration 88/2007 on investigating and remedying the abuse of power by large supermarkets operating in the European Union. Signed by more than 50% of MEPs, this resulted in a number of different initiatives being pursued across the EU and opened up the debate on 'fair' trading practices.
In 2014 the EC decided neither to legislate nor to put in place a robust enforcement mechanism against Unfair Trading Practices, instead, calling on industry and EU Member States to take action. Read more.
Visit Make Fruit Fair's resource section on supermarkets.
Checked out: Are European supermarkets living up to their responsibilities for labour conditions in the developing world? A report which investigates the policies on labour conditions in developing countries and trading relationships in supply chains of leading supermarkets in the eight countries involved. Consumers International, March 2010.
Last Stop - Supermarket: The Scoop on Tropical Fruit. A study into retailer buying power and the conditions under which pineapples and bananas sold in Germany are produced. Oxfam Germany, 2008.
Read the full results of the research conducted in Costa Rica in 2006 featured in the ActionAid report, Who Pays? How British Supermarkets are Keeping Women Workers in Poverty.
Shopped: The shocking power of British Supermarkets, by Joanna Blythman. An introduction to the rapid growth in the power of British supermarkets and the impact of this corporate concentration on our high street, diets, farms, environments and shopworkers. Published by Harper Collins.
The Traidcraft Briefing Paper, Are International Supply Chains Increasing Poverty? provides a very useful guide to how the international supply chains work and how the increasing buyer power of supermarkets effects pricing and working conditions in producer countries.
The relationship between supermarkets and suppliers: What are the implications for consumers? A report by Consumers International analysing supermarket buyer power and the implications for both consumers and workers of the abuse of buyer power.
Photo: Fairtrade Banana Event, 2004