Picture credit: Eric Miller/ Panos/ ActionAid UK

Who is paying the real cost of supermarket price wars?
Thanks to rapid growth in recent years, Tesco, Asda, Sainsbury’s and Morrisons now control over 70% of the UK groceries market. Increasingly, if producers overseas want to get into the UK market, they have to deal with supermarkets. Supermarkets are using the enormous buying power that comes with their dominant position to force farms and factories in poor countries to lower their prices, deliver goods ever faster and at shorter notice. The pressure on suppliers to deliver more for less is passed on to workers in the form of low wages, job insecurity and poor working conditions.

Bananas
Worldwide Tesco buys and sells around 20 million boxes of bananas a year from Latin America, the Caribbean and West Africa. Most of these are from plantations where workers do not earn a living wage and where workers have inadequate protection from the toxic chemical hazards that are endemic to industrial-scale production.

Research by ActionAid found workers in Costa Rica producing bananas for export to all major UK supermarkets earning 33p an hour - a wage so low that they cannot afford to take an hour off when dangerous pesticides are being sprayed on the crops.  Click here to see who gets what in a conventional banana supply chain (image from Banana Link).

In countries like Costa Rica, Tesco's most important source of bananas, the company has started to work on tackling some of the issues affecting workers on the plantations from which it sources. Tesco has sought, for example, to get the Costa Rican industry to resolve problems of systematic violations of the right for workers to join trade unions. These efforts need to be strengthened and extended beyond bananas.

Until recently, of all the tens of thousands of products they sell, bananas have been the biggest single contributor to profits for British supermarkets. However, retail price wars, often led by Tesco's main UK competitor Asda/WalMart have brought down consumer prices by up to 50% in the last few years. When  Tesco follows down with its own banana prices, it squeezes the price it pays its suppliers. Inevitably, this has had an impact at the beginning of the supply chain. Workers have been the first to suffer from prices which have been cut by over a third as banana suppliers squeeze whatever costs they can to keep such a big customer.

Wine
Cheap wine comes at a cost. Whilst supermarkets make profits selling wine in the UK, wine workers in countries like South Africa are left to pay the price.

The South African wine industry exports over 300 million litres of wine a year and now ranks as the world's ninth largest wine-producing country. The UK is by far the largest importer of South African wine, accounting for over 30% of wine exports by volume. Yet despite the commercial success of South African wine, War on Want’s report ‘Sour Grapes’ found that workers producing the wine suffer from deteriorating conditions.
Many wine workers come from the poorest sections of society and suffer from low wages, harassment and lack of housing. Due to the volatile nature of the wine market and the immense power wielded by major supermarkets, South African wine workers must also contend with irregular employment and face the constant threat of sudden dismissal. Women and migrant workers are particularly at risk as they are more likely to be on seasonal contracts, as well as suffering from discrimination in terms of pay.

Download the full "Sour Grapes" report and find out how we can press the UK government to improve conditions for overseas workers supplying UK supermarkets.

Fruit
Since 2005 ActionAid has worked alongside their South African partner organisation Women on Farms to improve the working conditions of women fruit pickers in South Africa supplying Tesco ("Rotten Fruit:Tesco profits as women workers pay a high price"). Their exploitation is largely caused by low prices and tougher standards being forced on local fruit farmers by international buyers such as Tesco. In 2007, ActionAid UK in partnership with Women on Farms, enabled a South African farm worker, Gertruida Baartman to attend the Tesco AGM. She asked Tesco Chairman, David Reid and shareholders about her poor working conditions, including exposure to harmful pesticides and wages of just 38p per hour. Since then, Tesco has agreed to introduce a more participatory system of auditing for its farms, which ActionAid and Women on Farms will continue to monitor to ensure it forces Tesco to take action.

Research by Oxfam from 2004 amongst South African fruit and wine producers supplying Tesco revealed how the supermarket loaded many of the costs and risks of fresh-produce business onto farmers, who passed them onto workers - especially women - in the form of precarious employment. For more information, read Oxfam's report  "Trading away our rights: women working in global supply chains." 

Meat
The UK union, Unite (formally the TGWU) is working with International Union of Food workers (IUF) to launch a campaign for better wages, conditions and health and safety for workers in the meat supply chain. Meat workers from all over the world met in the UK in August 2008 to discuss a global strategy - please see an article from the Landworker.

Tea
In June 2009, researchers from the International Union of Food workers (IUF) investigated living and working conditions on the large Talup plantation in Assam, India which IUF understands to supply tea for Tesco's Finest blends. The plantation management clearly failed to apply even the minimum requirements of the Indian Plantation Labour Act of 1951. Download Tesco's finest tea - produced in far from finest conditions? and read more here.

Take action to support workers overseas  and learn more about ActionAid’s Who Pays? campaign