A report just published by the Ethical Trading Initiative – Banana supply chain: How purchasing practices influence outcomes for producers, exporters, and workers – explains how the buying practices of European supermarkets puts pressure on producers that is passed onto workers in their value chains, and sets out a number of recommendations to address problem.
A key conclusion of the report is that irresponsible purchasing practices have consequences throughout the whole system. They are not isolated business decisions. For example, some suppliers report responding through measures such as cost cutting, intensified production, and greater reliance on flexible labour arrangements. Workers then experience the resulting impacts through longer hours, increased work intensity, unstable earnings, and reduced job security.
The report identified six key impacts of supermarket buying practices:
- Power dynamics and commercial pressure
Commercial decisions made by retailers strongly shape supply chain and worker conditions. It is rarely feasible for suppliers to refuse low prices or unfavourable terms given the need to secure sufficient business, even when they create cash flow challenges or increase financial risk. - Prices not covering the real cost of production
Low prices undermine stable margins and force difficult trade offs, while European market requirements increasingly exceed local legal standards without any corresponding price adjustments. - Certification and audit fatigue
Suppliers are subjected to pressure from a growing accumulation of overlapping standards, expanding audit scopes, and increasing audit days. - Divergent technical specifications across markets
Technical specifications vary significantly across markets, increasing production costs, generating additional waste, and complicating logistics for suppliers serving multiple destinations. Plus, smaller producers and worker organisations are often not consulted in creating these requirements. - Pressures from low retail prices and claims management practices
Suppliers expressed that meaningful improvements across the supply chain (including wage increases) ultimately require higher retail prices. There is a persistent tension between the low price strategies of retailers and the rising costs of labour, inputs, and compliance - Living wage commitments
While living wage commitments are welcomed in principle, suppliers reported significant implementation challenges. Although retailers often commit to covering the living wage gap, suppliers noted that in practice they sometimes end up absorbing part of the cost themselves. Suppliers and retailers highlighted that living wage benchmarks can increasingly influence sourcing decisions, with some suggesting there had been a shift towards countries with smaller or no wage gaps.
The report makes a large number of detailed recommendations to address the impacts, which include among them: more effective supplier feedback mechanisms; fairer and more transparent contract terms and risk distribution; pricing that reflects the full cost of responsible production; using recognised benchmarks to calculate the wage gaps; and encouraging suppliers to involve legitimate worker representatives in discussions on wages, working conditions, and living‑wage implementation.
The report forms part of the wider efforts on living wages in the banana sector. This includes the German Retailers Working Group on Living Income and Living Wages coordinated by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)’s Sustainable Agricultural Supply Chains Initiative (SASI), and the national Banana Retail Commitment on Living Wages for banana supply chains in Belgium, the Netherlands, and the UK, coordinated by IDH.
The assessment itself was completed in partnership with ETI and delivered through a collective process involving twelve retailers participating in the German, Belgian, Dutch and British retail banana commitments.
Banana Link Coordinator for Latin America and the Caribbean, Holly Woodward Davey, said:
“The report reflects what Banana Link has seen with its own eyes when visiting workers and plantations and what our trade union partners tell us. Retailer purchasing practices have a direct and systemic influence on workers’ wages and working conditions, primarily through price setting and compliance costs. Low prices consistently constrain wage growth and can lead to increased precarious working conditions, unpaid overtime, poverty wages, pressure to work for long hours at an intense pace in tropical conditions, exposure to occupational health and safety risks and to the persecution of trade unions who try to defend workers from these conditions. As the report says, irresponsible purchasing practices have a disproportionate impact on women.
Where mature industrial relations exist and independent trade unions are able to negotiate for improvements to workers’ wages and working conditions, we see better outcomes for workers in terms of work intensity, hours of work, wages, OHS, dignified treatment by managers, access to healthcare and social provisions such as maternity leave, sick leave and pensions”.
