Bananas are the single biggest profit making item sold in British supermarkets and over the last few years supermarkets have become the most powerful actors along the international banana supply chain. Since 2002, the major British supermarkets, Tesco and Asda engaged in an on/off ‘banana price war’ matching each other’s price cuts within the hour to such an unsustainably low level that it is now impossible for many plantation workers to earn a living – or even a legal minimum - wage. As supermarkets slash the price of bananas they do not reduce their profit margins. Instead supermarkets reduce the price they pay to suppliers who pass the cuts back along the supply chain to the workers. At the same time, many supermarkets deny responsibility for the social and environmental impacts of their behaviour in producer countries.

In April Asda again slashed 20% off their already low banana price in a desperate bid to wean customers away from its rivals. Despite Asda/Walmart's reassurances that the price cut will come out of their margin this time, what happens next time they and their competitors who've been forced to slash their margins go to negotiate the price with their banana suppliers? Between 2002 and 2003, as a result of the first Asda-Walmart-led banana price war, Tesco - the main competitor and No.1 in the market by a long way - cut the price it paid suppliers by over 30%, exactly in line with the retail price cut. Banana Link research with plantation workers and their unions at the beginning of the UK's banana supply chain shows that the series of price cuts have coincided with reduced real wages, longer working days and more insecure employment. Even before these wars, workers had to put up with harsh conditions, non-living wages and heavy pressure not to join a union or have even their most basic rights respected. Since, things have got worse. The link is confirmed by one supplier plantation: "At least 40% of our financial troubles can be attributed directly to lower prices from our UK buyer"; another stated "we - our company and our workers - are the ones paying the cost of your price wars".

"We're outraged," said Mireya Rodriguez, a trade unionist who met with company buyers and technicians a month before the cuts to discuss measures to improve wages and working conditions for the plantation workers she represents in Costa Rica. "I really thought they'd understood the link between their price wars and our working lives, but it seems it went in one ear and straight out the other! Another big price cut like this is bound to affect us."
 
Who Pays? How British Supermarkets are Keeping Women Workers in Poverty

In April, Action Aid published a report on supermarket buying power which draws on examples of the banana, garment and cashew nut supply chains. It concludes that the huge power and purchasing practices of big multiple retailers in the UK needs to be regulated. Despite the constructive voluntary initiatives taken by some British retailers in response to consumer pressure, such as Sainsbury's shift to 100% Fairtrade bananas, it is clear that not all retailers are ready to make the changes necessary to ensure responsible practices along their thousands of supply chains. As the report highlights, it is the plantation or factory workers in producing countries who are the direct victims of irresponsible buying practices and unfair prices. Women workers tend to suffer disproportionately. In the case of the banana industry, employers are taking on less and less women on the grounds that they are more expensive to employ, because of the legal requirement to respect their maternity rights.
 
The renewed banana retail price wars of April 2007 demonstrate that there is a limit to voluntary action and that fairer competition can only be ensured through regulation. Asda/Walmart's 20% cut in the retail price of bananas means that the chances of making the urgently needed improvements in wage levels and working conditions at the beginning of the supply chain are very considerably reduced. The other problem is that all major retailers feel obliged to follow Asda/Walmart's lead. In so doing the progress of recent months towards Fairtrade certification - and therefore fair prices to producers - is threatened. In previous price wars led by Asda, the report shows how the supermarket's suppliers cut labour costs in their Costa Rican plantations. There is no guarantee whatsoever that the latest war will not lead sooner or later to the same situation for already overstretched and exploited workers.

To Read the Report click here.

To take action click here.

Further reading  

'COLLATORAL DAMAGE: How price wars between UK supermarkets helped to destroy livelihoods in the banana and pineapple supply chains.'   Dr. Iain Farquhar, Banana Link November 2006.

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'.

Click here to listen to Podcast from the public forum "Supersized Supermarkets" organized by Action Aid, Friends of the Earth, Tescopoly and War on Want in February 2007.

Visit the Asdawatch website and listen to the testimony of Gilberth Bermudez, General Secretary of Costa Rican banana workers union, SITRAP, and hear how Asda's 2006 reduction in banana prices is affecting thousands of workers living in poverty.

Read research conducted by Banana Link in Costa Rica in 2004, which supplies almost one in four bananas sold in the UK, showing the impact of supermarket buying power on wage levels.