The Banana Game: 'hard discounters' jeopardizing producers’ livelihoods
by Alistair Smith, BananaLink
The role of the so-called 'hard discounters' in the current pricing issue in Europe's two biggest banana markets is questionable: the business model they have adopted is uncompromising, and the impacts of the strategy on people and environment are very serious indeed.
Unions representing plantation and pack-house workers, who have studied the buying practices of a company as notorious as Aldi in the banana world, believe that the hard discounters are using the fruit as a hook to get new customers through their doors at the expense of those who labour hard to produce it in the tropics.
In the United Kingdom (UK) the hard discount leaders, like Asda/Walmart, and retailers who only offer Fairtrade-labelled bananas, like J. Sainsbury, have been selling loose bananas at or below cost for several years, making up some or all of the 'sacrificed' margins on bagged fruit. Unlike in France or Germany, below-cost selling in the British market is not illegal. This allows the major retailers in the UK who, with the exception of The Co-operative Group, all sell loose bananas at or below cost to argue quite legitimately that they are not breaking any law and that it is their own sovereign decision to fund this near-permanent rock-bottom price.
Bananas are not the only Known Value Item (KVI) that suffer from inter-retailer price wars in the UK. Milk, oranges, bread and pork pies are victims too, with producers and those they employ at home and abroad the ones who have to pay the not-so-hidden costs. However, what is newer- and very worrying for the competitors of Aldi and Lidl – is that it seems bananas may be helping bring people through the doors of the hard discounters and change consumers' shopping habits.
Europe's biggest banana seller has decided to use a responsible sourcing strategy, which is still in its infancy. In 2014, two inter-related commitments set the stage for a transformation of the European banana market that should be welcome news for all. In February 2014, a public document called “Trading Responsibly” committed Tesco to covering the costs of sustainable production in all their banana supply chains; for the time being they are using the Fairtrade Minimum Price, set by Fairtrade International as their benchmark for a sustainable price to their suppliers. Where this price was not attained in 2014, the difference in price to suppliers has been set aside whilst a mechanism to transfer the money to workers and their families is being designed. In November, the company stated in a blog on their website that they will ensure that by 2017 living wages will be paid on all the banana plantations that grow and pack exclusively for Tesco.
The third global conference of the World Banana Forum in the Dominican Republic later this year aims to inspire collaboration between stakeholders that produces pragmatic outcomes for the betterment of the banana industry and to achieve an industry-wide consensus of best practices regarding workplace issues, gender equity, environmental impact, sustainable production and economic issues.
Banana Link is optimistic that their call to Aldi to join in discussions in the Forum's permanent working group on the distribution of value along the chain will be heard by the company.
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