Power in Supply Chains

BACKGROUND

Present day supply chains are characterised by massive concentrations of (buying) power on the level of retailers and large traders. This leads to the diminishment of bargaining power for the small suppliers and subsequently to the ability of supermarkets and large traders to effectively dictate the terms of business. Producers and other suppliers are often left with a painful choice – to sell on poor and unpredictable terms, or not to sell at all. Although they may not be able to make a profit or may face long hours working in unsafe conditions, there are few alternative ways to earn a living for communities with no safety net to fall back on in hard times. Those marginalised and powerless at the end of the supply chain hence suffer most from unequal power in supply chains – and this is why the Fair Trade movement takes action.

WHAT ARE THE FTAO’S VIEWS?

The power in supply chains needs to be re-balanced in order to give small producers and workers a fair share of the benefits of trade.

We welcome the recent adoption of the EU’s Directive on Unfair Trading Practices in the agricultural and food supply chain. The Directive will prohibit 16 unfair trading practices such as unilateral contract changes by the buyer and late payments. A more detailed explanation of the Directive is available in the further reading section below.

Competition law should be used more effectively to tackle power concentration and the imbalances of power in supply chains. Simultaneously, it should not be an obstacle to more sustainability in supply chains.

FURTHER READING

Reports

Who’s got the power? Tackling imbalances in agricultural supply chains full report & abstract are available in multiple languages here.

Who’s got the power? – Tackling imbalances in agricultural supply chains (FTAO)
Ripe for change – Ending Human Suffering in Supermarket Supply Chains (Oxfam)
Food Waste in Kenya – Uncovering Food Waste in the Horticultural Export Supply Chain (Feedback)
Summary – Effects of Buyer Power on Consumers (Consumers International)

Case Studies

Cashew Case Study (Traidcraft)
Mango Case Study (Oxfam Deutschland)
The story behind the pineapples sold on our supermarket shelves: A case study of Costa Rica, 2010 (Consumers International and Banana Link)
Green Beans Case Study (SOMO)
Orange Case Study (CIR)
Banana Value Chains in Europe and the Consequences of Unfair Trading Practices (Le Basic)

Other

Blog Post – ‘What is the EU’s new Unfair Trading Practices Directive?’ (Tom Wills, Traidcraft Exchange)
Legal Research –‘How to set up a coordinated effective ‘enforce mechanism to stop UTPs in EU’ (British Institute of International and Comparative Law)
Blog Post – Tackling Obesity in Supply Chains (Harriet Lamb in Huffington Post)
Campaign –Power in Supply Chains Campaign (Fair Trade Movement)
Campaign – Supermarket Campaign (Traidcraft)
Video – Short Film about Orange Juice (Association of Conscious Consumers (ACC))
Video – Kenyan case study on green beans produced for the European market

You can find out how this work links to our work on EU policies here.