On 22nd August, ALDI SOUTH Group published its sustainable banana sourcing strategy which brings together fair price purchasing and its corporate responsibility into a genuinely integrated sourcing approach. At the heart of this new approach is what the company calls a ‘joint open-book costing approach’, based on the Fairtrade labelling system’s costs of sustainable production methodology, applied to conventional and Fairtrade certified fruit alike. The annual tendering round by potential suppliers, which was widely seen to exacerbate the race to the bottom in banana prices across the EU markets and beyond, is to become a thing of the past. ALDI Nord is also expected to roll out the same renewed buying strategy and practices.
The core of the new approach, developed by the company’s buyers in recent months in collaboration with suppliers, and presented to BL in July, is to agree prices with suppliers across banana exporting regions based on transparency of all costs at both ends. In essence, ALDI is committing to pricing that covers the costs of sustainable production for producers and their employees and allows for investment in constant social, labour and environmental improvements. It of course remains to be seen how this translates into actual pricing once the ALDI contracts are signed for 2023 later this year.
The core of the new approach, developed by the company’s buyers in recent months in collaboration with suppliers, and presented to BL in July, is to agree prices with suppliers across banana exporting regions base on transparency of all costs at both ends. In essence, ALDI is committing to pricing that covers the costs of sustainable production for producers and their employees and allows for investment in constant social, labour and environmental improvements. It of course remains to be seen how this translates into actual pricing once the ALDI contracts are signed for 2023 later this year.
In 2021, in a demonstration of transparency at the retail end, ALDI SOUTH Group published its direct suppliers of bananas and pineapples. The company has also now gone public with the above map showing the origins of its banana offer.
UK-based retailers: also ready to go the ‘extra mile’?
The approach of using the Fairtrade Costs of Sustainable Production methodology as a proxy for fair purchasing pricing was pioneered by Tesco in 2014, with support from Banana Link. The original 2014 public commitment was also to ensure progress towards living wages in all Tesco’s banana chains in Latin America, Africa and the Caribbean. In October 2021, the retailer issued a renewed commitment on living wages in all its banana supply chains now that the tools exist to measure progress across the global industry. Along with other stakeholders, Tesco was also one of the architects of the World Banana Forum’s public commitment to achieve living wages and incomes for all workers and family farmers across the global industry.
However, some growers question whether Tesco is prepared to go the ‘extra mile’ and translate its serious corporate responsibility intentions into fairer prices for conventional and organic fruit. The original pioneering 2014 commitment by the company was to align with the equivalent of Fairtrade minimum prices (FTMP) across all banana origins, as a proxy for the costs of sustainable production, but the company has yet to demonstrate that FTMP is being achieved in 2022.
As long as no major multiple retailer raises consumer prices in the UK to more sustainable levels, the downward pressure on purchasing prices and therefore everybody’s margins back down the chain remains determinant. The reality is that outside the three 100% Fairtrade banana chains, Fairtrade minimum prices are not being paid for the majority of conventionally grown fruit. Accusations of ‘hypocrisy’ or ‘double-speak’ from the Latin American and Caribbean industry remain justified, in Banana Link’ view.
Long-term partnerships for shared responsibility
Under the rubric of ‘shared responsibility’, ALDI states: « Supply chain transparency is the foundation for all our sustainability measures […] As our strategic suppliers support us (through real performance on their own corporate responsibilities) in implementing new ways of buying, we commit to long-term partnership and to, as a minimum, keeping the banana volumes they supply to ALDI stable. This gives them financial security and allows them to commit to investments in sustainability. »
As one Ecuadorian grower selling to ALDI states: « This allows us to establish a fair price to cover the investments we need to make in order to meet everyone’s expectations ».
Banana Link would encourage ALDI to work on two additional fronts where big retail has been shown to be very weak or has even undermined efforts at socio-economic and environmental sustainability; both are part of a broader definition of ‘shared responsibility’ from the point of view of civil society organisations organised in the EUROBAN platform since 1994:
- Buying as directly as possible from small family farmer organisations, with stable contracts at remunerative prices above Fairtrade minimum prices;
- Buying and promoting bananas and pineapples that are grown in non-monoculture diversified agroecological systems which build soil fertility and conserve water and supporting investments in production system innovation at small-, medium- and large-scale.
Looking back to better look forward
In early December 2021, Banana Link gave a «cautious welcome» to the 9 euro cent per kilo price increase for ALDI’s 2022 global banana contract, one of the world’s biggest. Although it was uncertain that the increased price did much more than cover real rises in the purely financial costs of production that accrued for growers during 2021, it was the upward signal to the market that was so important after ten years of lower and lower contract prices.
As the ALDI banana price had been considered to be the European market de facto benchmark price, this created downward pressure across the whole market. The upward move was therefore perceived as significant, particularly as the 2022 price announcement came after a concerted and vocal campaign by a new alliance of seven Latin American and Caribbean producer country associations. In short, the industry perceived this as a first step in the right direction.
What is so encouraging about the introduction of new buying practices, aside from being very significant for the international trade in bananas and beyond, is that it comes at a time when a concerted multi-stakeholder effort to work towards living wages through social dialogue and collective bargaining is being led by the German government’s Ministry for Economic Cooperation BMZ, involving other leading retail companies like Lidl, Kaufland and the REWE Group. The pilot programme for this group of retailers is being implemented in Ecuador, where a potentially new and more constructive environment for social dialogue and bargaining in the banana industry is starting to emerge.
The challenge of improving workers’ livelihoods and working conditions remain huge
The challenges in Ecuador for the men and women working in the industry, even with well-intentioned customers increasingly focused on sustainability and fairness, should nonetheless not be underestimated. Banana Link, German NGO think-tank Südwind and our partners on the ground in plantations confirm, including in a July 2022 study of women workers, that actual take-home wages have been eroded for most men and women working in plantations and packhouses. It is also evident that a real gender pay gap exists between what women can earn and what their male counterparts earn, whilst sexual harassment remains rife.
It is clear for workers and their leaders that the move away from living wage levels has been facilitated by retrograde employment and labour legislation introduced by decree in 2018 then under Covid in 2020. To make matters worse, the current government wants to push through more laws that would further undermine the chances of achieving what the ILO frames as ‘Decent Work’. The days of a government that raised minimum wages across the board to close to living wage levels between 2008 and 2015 are well and truly over.
Now that an international food distributor the size of ALDI is not only mobilised to change its corporate policies, but is also seemingly recognising that this needs to be achieved through fairer pricing across the board, it is reasonable to hope that the synergies, emerging from organised workers at one end and through to tropical fruit consumers at the other, can change realities in the coming years.
The hefty historical legacy of the international banana trade could finally be left behind and a new story written.
 The Co-operative group, J Sainsbury, Waitrose
 ALDI SOUTH Group and ALDI Nord have been buying bananas together for over 20 consumer markets in Europe and North America since 2018. Between 2011 and 2017 the retailer had a quarterly price flexed according to supply, demand and cost considerations. Prior to that, the ALDI bought on the weekly ‘spot’ market and published their prices every Thursday morning. Other European buyers signed contracts that often referenced the ‘ALDI price + x’.