The size of the supermarkets, their buying power, is a crucial factor in how far down they can force food supplier prices. As we saw in Chapter 1, in most developed counters, a few supermarkets impose considerable monopsonistic power. Moreover, the supermarkets are usually international in scope; the farmers and food processors who supply them are often small and national, with a few exceptions, such as the US fruit conglomerates. Fox and Vorley (2004: 8) illustrated that a retailer with 5% market share would be paying 100% average supplier price, and smaller retailers with around 1% market share were paying 101% to 105% average supplier price. However, retailers with 10% to 15% market share were paying 98% average supplier price, and the retailer with 25% market share (unnamed, but would likely be Tesco) was paying 96% average supplier price. Most developed countries have one or several supermarkets with 20% or more of the market share each. In 2004, Blythman (2004: 137) wrote of how British farmers lived in fear of upsetting the supermarkets, because “fall out with one [supermarket] and you get blacklisted (delisted) by the lot of them because they all talk to one another”. As another farmer put it back then, “As soon as you [complain] that’s a nail in your coffin”. The supermarket buyers, who moved in to actually negotiate contracts after the supermarket CEOs had idealistically expressed their wish to support and work with the farmers, were young and ruthless. There was some suggestion that these buyers were deliberately moved around sectors, kept inexperienced, to prevent any long-term personal supportive relationships being built up between buyer and producer. The buyers may be as hard pressed to get results as the farmers are to produce, monitored by supermarket head office on their profit generation, and not in the same post long enough to care about general food chain sustainability.
Both farmers and supermarkets operate in a business environment that can sometimes change radically, in a matter of hours. For the farmer, a pest infestation, adverse weather, floods or even sudden shifts in input prices, such as oil or fertilizer can suddenly reduce the size of the harvest, or its expected financial return. Yet farming is by nature a long-returns business; inputs take weeks or months, sometimes years, to mature into saleable goods. Ideally, therefore, a farmer would want a long-term contract from their customer whilst at the same time having the flexibility to vary what they deliver on that contract with no commercial repercussions. On the other side of the negotiations desk, supermarkets face the same issues. Demand for their goods can vary up or down within hours; a product scare, or a cookery TV programme calling for some ingredient, can send demand plummeting or soaring. In fact, celebrities such as TV chefs are supposed to notify supermarkets if they intend to broadcast a recipe which calls for some item that will rarely be available in bulk in the average supermarket. Occasionally, this system breaks down, as when Delia Smith, in 1990, described a recipe for truffle torte using liquid glucose. The supermarkets had not been warned in advance, and the shelves were soon cleared of liquid glucose across Britain. This results in both disgruntled customers and TV viewers complaining to the broadcaster (Bonner, 2011: 232). Supermarkets need dependable supplies, yet with the freedom to change order amounts at short notice, just as the farmers do, substituting ‘supply’ for ‘order’.
The issue of milk prices illustrates issues of supermarket prices to wholesalers.
Supermarkets, because they are very few in number compared to the multiplicity of food suppliers, are by far the most powerful players in the food chain and can effectively hold upstream suppliers, including farmers, to ransom over prices, retrospectively enforcing price cuts or delaying payment until long after the food has been delivered. Alternatively, the supermarkets can behave ethically and play a role in supporting an often beleaguered sector that enjoys much sympathy with the public. Consumers, perhaps cash-strapped themselves, may exhibit inconsistent purchasing habits, simultaneously seeking the lowest priced produce whilst blaming the supermarkets for impoverishing farmers. This double attitude applies both to UK and overseas producers; the same consumers who seek low grocery prices may then buy Fairtrade and feel good about this ethical purchase. Farmers facing cost pressures from downstream may then pass these cuts on to their employees in the form of reduced pay and conditions, and this can occur in the UK as well as overseas, leading to political issues, such as the employment of migrant labour on illegal sub-Minimum wages, undercutting indigenous farm labour.
The price of milk, how it gets from cow to consumer, and the collateral damage from the ‘milk price war’ that supermarkets have waged on suppliers presents a whole microcosm of the deleterious effects of supermarket commercial power on the farming industry and wider rural society. Milk is frequently priced artificially low, because it is a Known Value Item (KVI), meaning the consumer has a good idea of what milk usually costs in the shop. With thousands of product lines in the average supermarket, and numerous variations in brand, size, flavour and quality, most consumers have little or no idea of what most of these lines ‘should’ cost; they are price-takers for most of these items. UK supermarkets, competing on price with each other and, since the 1990s with the hard discounters Lidl and Aldi, are keen to offer KVIs at as low a price as possible, whilst maintaining wider profit margins on non-essential items. These non-essentials are bought less regularly, and consumers can be persuaded to put them in the trolley by a whole panoply of marketing techniques, even at higher prices, whilst milk may even be sold as a loss leader, a line sold at below cost to lure customers in. Milk is a relatively price-inelastic good, meaning that lower prices do not generally raise the quantity consumers demand. Supermarkets will appreciate this, because they don’t want to sell too much of a good that is low in price—rather, they want consumers to buy increased amounts of the more profitable lines, along with the milk purchase. However, this means that low milk prices cannot be credited with increasing consumption of beneficial nutrients, such as calcium, and the dairy farm industry sees no benefit of increased demand either. Nevertheless, this doesn’t stop Walmart from claiming ‘low prices on healthy food’ as a CSR tagline.
Unfortunately for dairy farmers, the supermarkets have determined that the ‘loss’ in loss leaders should be borne by the dairies and behind them the farmers, not the retailers. Table 5.1 illustrates the decline in the farm-gate price paid to farmers, even as the retail price rose between 1995 and 2005. The retail price of milk spiked in 2009 with the boom in commodity, oil and energy prices associated with the Credit Crunch, but some supermarkets also used the general price rise as an excuse to widen their profit margins in milk, getting a profit of up to 26p per litre. At this time, the farm-gate price was 25p to 30p, so just below the breakeven farm price of 30p. The farmer was getting zero (or even negative) profit for producing the milk; the dairy was getting a few pennies per litre for collecting, bottling and pasteurizing the milk, yet the supermarket was getting the lion’s share of the profit for simply driving the milk to supermarket branches, putting it on shelves and selling it (and the customer was doing most of the ‘selling’ work, if they bought at an automatic till). Retail milk prices fell back even further after 2010 due to keener competition from the expanding deep discount chains Aldi and Lidl, coupled with the general economic recession of the Credit Crunch. Again, this price squeeze was passed back to the farmer, with farm-gate prices falling as low as 24p per litre in 2015, when the farm breakeven price was still 30p. In 2014, Morrison, for example, was selling 4 pints (2.3 litres) of milk at 51.3p per litre in 2014, and in some supermarkets, the same 4 pints could be bought for as little as 38.7p per litre. Tesco in March 2014 cut the price of their 4-pint packs from £1.39 to just £1.00 (from 60p per litre down to 44p) and then even the upmarket and socially responsible Waitrose chain price-matched this for MyWaitrose cardholders, a price point already attained by Aldi, Asda and Lidl. By early 2016, the retail price of milk had drifted even lower still, with Waitrose selling 6 pints at 43.4p per litre, whilst the same quantity retailed at Aldi for 37.9p per litre. Waitrose Duchy organic milk, meanwhile, was priced at around 85p per litre. The local north-western UK chain of grocers, Booths, did guarantee a farm-gate price of 35.5p (2014) with its supplier, Wiseman. Chris Dee, CEO of Booths, commented, “a lot of our stores are in rural areas and dairy farmers are our customers” ( Doward, 2014). As are the people who depend on the rural dairy economy, from farm workers and mechanics to accountants and architects.
|
Year |
Farm gate* |
Breakeven farm price |
Retail (cheapest, non-organic)** |
|---|---|---|---|
|
1995 |
25p |
45p |
|
|
2005 |
20p |
55p |
|
|
2009 |
25p–30p |
30p |
65p |
|
2014 |
31.6p |
30p |
40p |
|
2015 |
24p |
31p |
38p |
|
2016 |
26–28p |
30p |
38p |
|
2018 |
26.5p |
43p |
* Price paid by dairies to farmers.
** This price was derived from a search of the websites of the UK cheapest grocery retailers, e.g., Aldi and Lidl, and was for larger packs of 4 or 6 pints.
In 2018, with the issue of farmers getting below-cost prices for their milk having faded somewhat from the public arena, dairies were again squeezing the farm-gate price back down below 27p per litre. Meanwhile, the supermarkets continued to retail this milk at between 43p and 60p a litre.
Events 2,000 miles to the east of the UK also depressed the milk price as President Putin of Russia, in revenge for Western sanctions imposed over the Ukraine, ordered a boycott of European food products in 2014, resulting in a milk surplus in Europe. British farm-gate milk prices have also been dragged down by cheaper prices prevailing in the rest of the EU, where land and labour may be cheaper. Long run, global warming may also be raising grass growth and milk yields, lowering the global milk price (as noted earlier, milk is price-inelastic; more supply will just mean a lower price). In 2015, the average EU price per litre was 22.7p, 1.3p below the UK level; European prices ranged from 41.3p in Cyprus down to 16p in Lithuania. However, the breakeven price for many UK dairy farms was 30–32p a litre in 2014, and for Cotswold farmers, the water the cows drank to produce the milk could be more profitably sold, as bottled spring water, for 80p a litre (Lawrence, 2008: 77). In Tesco (2017), milk was retailing for 45p per pint (79.2p per litre); at the same time, Highland Spring water was on sale for 50p for 500ml, or £1.00 per litre. Similarly, in Australia, in 2011, Coles was retailing milk at 1 AU$ (ca. 50p) a litre, again leaving little or no surplus for the farmer.
In Australia, Coles supermarket cut the price of milk to 1 AU$ per litre “to ease the cost of living pressure on Australian families, and was accused by its main rival Woolworths of dropping prices so quickly that farmers and processors had no time to adjust” (Wilson, 2011). The individual consumer, buying a couple of litres a week, may see little connection between their few pennies or cents price saving and hardship for the farmer, but one should remember that with an average dairy farm producing 1 million litres of milk a year, from 130 cows, a 1p fall in the price equates to a cut in farm income of £10,000.
In summary, UK consumers in 2014/5 were paying around 45p a litre for milk, with the price even lower in 2016, and the farmers were receiving 25p for this milk, even though the farm-gate breakeven price was at least 30p. It wasn’t the processors, the dairy giants like Arla, Dairy Crest and Wisemans, who were making the most profit out of this price differential; the processor gate price of milk was around 36.5p in 2014, and the processors had to collect the milk from the farms and package it. The milk processors have indeed squeezed the farmers, and suffered farmers protests against that, but the supermarkets have been the biggest winners in the milk price war.
The squeeze on the farm-gate milk price has forced farms to copy the supermarkets and merge to attain greater economies of scale. Smaller milk producers have been forced out of the market, with the number of herds of 1,000 of more cows in the UK almost doubling between 2012 and 2014, from 23 to 44 whilst over the same period more than 1,000 small dairy farms, with fewer than 100 cows each, closed. The number of dairy farms in the UK has fallen from 35,000 in 1995 to just 13,000 in 2014, whilst the number of UK dairy cows has risen by 100,000 since 2011 to 1.9 million. Whereas once a dairy farm had less than 10 cows, the average number per farm is now around 150. Such a huge herd requires considerable capital investment to operate efficiently, with farms installing computerized milking parlours that might cost £250,000, for example. This investment in capital which could neither be put to any other use nor re-sold raised significant exit barriers to dairy farmers and put them even more under the control of the supermarkets. Effectively, the normal supply price curve has been inverted. Instead of sloping up, meaning a reduced price elicits less quantity supplied, the lower price of milk has prompted farms to invest in technology that increases the milk produced, and the more milk is produced, the more the price is likely to fall. The milk supply price curve now effectively slopes downwards. There is also a ‘hog cycle’ effect with rising dairy farm investment in 2013, when the farm-gate price peaked, and then rapid disinvestment is not possible when the farm-gate price falls again. The heavy investment in technology and equipment by farmers effectively traps them into producing commodities (and not only milk) even when the farm profits sink into negative territory.
The milk processors have sought their own economies of scale, angering farmers in the process. Arla, Dairy Crest, Muller and Wiseman have bought out local dairies and created regional monopolies; farmers now have no choice over which dairy they send their milk to, leaving them even more vulnerable to price cuts, and lengthening food miles in the process. The processors also cut the price they paid farmers for milk from 35p per litre in May 2014 to just 27p per litre in November 2014, resulting in protests by Farmers for Action outside Wiseman Dairy in Shropshire in 2015. Small farmers were suffering the most because some dairies pay a ‘volume bonus’ of 2p extra per litre to farms producing at least 23,000 litres a day, which is only attainable if the herd is at least 1,100 strong. This is because it is cheaper for dairies to collect at fewer larger farms than to visit many smaller ones. Because of this regional monopoly, when Muller proposed to cut the price it paid for milk from 23.15p to 22.35p per litre in September 2015, farmers could not go and sell it elsewhere. Dairy farmers have also mounted protests against supermarkets, ranging from taking the milk to the checkout and leaving it there, to pouring it away on the supermarket floor, to buying all the milk in a supermarket and giving it away to charity, to taking cattle into the supermarket itself. This last incident occurred in Stafford, where a farmer uploaded footage on YouTube, saying, “A litre of milk should not be cheaper than a litre of water”; social media enabled the protest to reach a global audience. Farmers have also protested outside supermarket regional distribution centres, blocking the movement of lorries in and out.
Organizations such as the Free Range Dairy have attempted to revitalize and segment the milk market so that ‘premium’ can generate a better return for small dairy farmers. They would like to de-homogenize the milk market, saying that the pooling of milk by large dairies means milk has lost its ‘terroir’, or regional flavour, an interesting parallel with the French wine market here. The annual milk yield per cow in the UK rose steadily from 5,500 litres in the 1990s to 6,900 litres in 2005 and to 7,800 by 2015, raising issues of animal welfare as cows suffered mastitis and infections. In turn, the risk of infection compels the overuse of antibiotics, which spreads the risk of antibiotic resistant bacteria causing hard to treat human ailments. Concern over the large usage of antibiotics in farming led M&S, in 2017, to become the first UK supermarket to publish details of the use of antibiotics in its farm supply chain (Harvey, 2017). More antibiotics are now used in farming than on humans. There are concerns that, for example, the increasing prevalence of drug-resistant bacteria such as methicillin-resistant Staphylococcus aureus (more commonly known as MRSA) may make routine hip operations difficult or even impossible in the near future.
Cows are kept in sheds permanently and never graze outside because it is easier to milk them three times a day, although this is an energy-intensive process, so not good for the environment either. Holstein cows can produce 30 litres a day compared to just 23 litres from shorthorns, which raises an issue of potential breed loss amongst cows. Farmers would commit to outside grazing for their cows, reassuring to consumers who would like ‘cruelty-free’ milk; farmers can take their herds indoors during winter or in periods of exceptional weather such as summertime floods and storms. The Free Range Dairy points out that milk from outside grazed cows contains higher levels of Omega-3 and other dietary essentials. However, the problem is that such considerations will only be noted by a small section of wealthier consumers; for most people, milk is just “the same homogenous white stuff”, to be purchased as cheaply as possible.
Milk is not the only item that supermarkets sell cheaply to create a halo of ‘low price’ about the whole store. Bananas, like milk, are a KVI; they are also a popular fruit, sweet and easy to peel, children like them, and they are deemed to be healthy. As they are a KVI, once one supermarket lowers the price all others have to follow suit, and the price reduction is passed back up the chain to producers. Like milk, the actual workers who pick them, equivalent to the farmers who actually milk the cows, may get disproportionately little of the final retail price the UK consumer pays in the supermarket. The wholesale banana market is largely controlled by giants like Fyffes and Chiquita, who have merged and control 14% of the wholesale banana market, also Del Monte and Dole Foods. However, once again, it is the large supermarkets who have the real power, even over these food processing giants.
As with milk, supermarket competition has driven British banana prices down, from £1.00 per kilogram in 1994 to just 90p in 2010. In 2010, banana plantation workers got 4% of the UK retail price, the growers got 20%, the transporters who took the bananas from the plantations to the EU got 23%, an EU tariff accounted for a further 12% of the retail price, the companies who ripened and then distributed the bananas within the UK took 12%, and the supermarket retailer (who as with milk merely shelves and sells the fruit) took the largest share at 29% (Nicholson & Young, 2012: 18). In the UK, once Walmart took over Asda, it negotiated a lower banana price with Del Monte, reducing the wholesale price of the fruit from £1.08 per kilo to £0.85 in 2003 (Prieto-Carron, 2006: 101). By 2012, supermarket competition had driven the retail price of bananas down even further to 85p and then 79p a kilogram, plunging to 68p a kilogram in some shops. At 81p and below it was not economically possible for a Costa Rican plantation to pay its workers the legal minimum wage. British shoppers may be aware of farmers being squeezed, and they cherish the British countryside; they know very little of the plight of Costa Rican banana workers and may have no concept of the Costa Rican countryside or its social problems. Mostly, all the shopper sees is huge bright aisles full of ‘cheap’ food; to paraphrase China Mieville’s book, The City and the City, “when in Supermarket, see Supermarket”1 (Digital Spy, 2018). It is no accident that Tesco feels able to give free bananas away in its store aisles, a move aimed at children, but anyone can take them unmonitored, and the whole move comes across as a health-oriented CSR measure. Bananas are healthy, but the health of the UK consumer has been stolen from the well-being of the Costa Ricans. The economy of the Caribbean Islands itself is damaged, and the race to the bottom imperils the better wages of these workers compared to those in mainland South America, where hazardous work includes 10–12 hour days and exposure to harmful chemicals. Ultimately, the burden of the cost reduction for that bunch of bananas in UK shopping baskets will be borne by workers in all banana plantations.
A wide range of other food items are also sold in supermarkets at a price where the retailer takes most of the money and leaves very little for the farmers, processors, transporters and others. In 2010, the supermarket retail price of Costa Rican pineapples was split, 4% to the plantation workers (the same as for bananas retailed in the UK), 17% to the plantation owners, 38% to the international traders who brought the pineapple from Costa Rica to the supermarket and 41% to the supermarket retailer (Nicholson & Young, 2012: 9). The actual workers get paid so little that their wages could be raised by 50% with very low impact on the retail price in Britain. Meanwhile, prawns from Thailand and tomatoes from Florida are regularly produced by slave, or at best highly exploited labour. Concerning British beef and vegetables, the farmer often gets just a quarter of the price the consumer pays at the supermarket till, with many farmers earning below the statutory minimum wage, once the long hours they put in are taken into account (Oram et al, 2003). Meanwhile, Woolworths Australia makes a positive point out of the fact that according to its website (Woolworths, 2014: 10) a kilogram of bacon cost the Australian shopper 4% of their average weekly wage in the 1950s, but only 1% of the average weekly wage in the 2010s. Evidently, intended for customers not suppliers, this statistic implies that either pig farmers’ revenue has declined by 75% or that pig farming has become 400% more efficient—at what cost to animal welfare, rural employment and the environment?
A range of international organizations, including the International Chamber of Commerce (ICC), the United Nations (UN), the ILO and the Organisation for Economic Co-operation and Development (OECD) have issued guidelines for multinational companies’ CSR policies regarding ‘host nations’ (overseas countries where supplies are imported from). The big supermarkets appear to be, at least indirectly, breaching a number of these guidelines, listed in Table 5.2.
Some improvement was achieved in November 2015 when Asda became the first UK supermarket to commit to sourcing Rainforest Alliance certified bananas for 93% of its supply, with the other 7% from Fairtrade. In early 2016, Lidl followed suit with a promise to source 100% of its bananas sustainably by the end of the year (Smithers, 2016). This move comes against an economic background of Fairtrade sales falling in the UK, in 2015, for the first time since the scheme was founded 20 years ago, as British consumer spending tightened in the face of stagnant real wages that had persisted for several years since the 2007 Credit Crunch. Lidl, which entered the UK in 1994 as a deep discounter but which has more recently begun stocking more upmarket foods also, may see the move into Fairtrade bananas as a marketing strategy to capture more of the middle-class spend who are seeking lower grocery bills overall. However, as the earlier table shows, there is some considerable way to go yet before the supermarket food system can be deemed socially responsible, either within the UK or internationally.
Supermarkets do not just sell food, but have diversified into a wide range of other goods, including clothing. Here too, the garments are frequently made by low-paid workers in Bangladesh, on around £33 per month (2010). In Bangladesh at this time, the minimum wage in 2010 was £30 to £35 per month (graded by job function), but a living wage “for a [Bangladeshi] worker to feed, clothe and educate their family, would be around £100 per month” (ActionAid, 2011: 2). The economic implication is that cheap child labour is very likely to be utilized in Bangladesh, which will be damaging to education, reduce the qualifications of the next generation and perpetuate the very poverty that engenders low wages and families committing their offspring to child labour. Yet, as with some food items, labour costs are so low they comprise just 1% of the total retail cost of a garment so that raising wages to the ‘living’ level would add just 7.5p to the payment to the supplier for each article of clothing. Excessively long hours worked, often compulsorily, often because they need the extra income, by female employees may also damage the childhood of their offspring. Even the family diet may deteriorate, in similar fashion to the nutrient-poor junk food diet of many poor in Europe, because women avoid “buying and cooking vegetables as it takes too long on the shared stove. With the problems with blackouts and sharing a kitchen I want things which are quick to cook” (ActionAid, 2011: 5). Medicines, in a country that cannot afford a comprehensive free, at-point-of use healthcare system may also be unaffordable for these textiles workers, let alone school books and other learning aids.
Supermarkets such as Asda could also share their expertise on efficiency with the Bangladeshi clothing factories. One factor that keeps Bangladeshi textiles workers’ wages low is extreme inefficiency, where production is at “as little as 30% [of potential] productivity, suppliers and retailers face problems of low-quality product, high levels of waste and unreliable delivery times” (ActionAid, 2011: 7). As with child labour perpetuating poverty into each succeeding generation, so such inefficiency perpetuates low wages, which in turn keeps workers on long hours, tired and producing waste and more inefficiency. Global-North supermarket corporations are very lean efficient organizations, and whilst there is considerable emphasis in many of their CSR statements on ensuring their suppliers meet ‘minimum standards’ in various areas, there is much less evidence of sharing management techniques that might facilitate suppliers in meeting these standards.
In China, too, Walmart, who own Asda UK, have been accused of promoting a relentless squeeze on workers. Walmart demands, each year on the previous, either a cut in price or an improvement in quality, from its suppliers (GMB, 2005). Walmart squeezes its suppliers, often in remote and poor areas of Global-South countries, in regions where its customers would be very unlikely ever to visit; in turn, these suppliers relentlessly squeeze their workers. Chinese workers making goods for Walmart have been forced to work 130 hour weeks, sometimes staying at work well into the night until 4.30 am the next day, often without overtime payments. Anyone who dares even question factory conditions (let alone form a trades union, something Walmart deems impermissible even in the USA) is sacked immediately. Any factory inspection is only carried out with 20 days’ notice, giving plenty of time for clean ups and time-card falsifications. In Lesotho, workers making goods for Walmart were required to come in on Sundays, but were not allowed to clock in because this would provide evidence of violation of a Code of Conduct. No doubt this Code of Conduct can be found somewhere on Walmart’s CSR website, written of course in English, but not in Sesotho, Zulu, or any other language generally spoken in Lesotho. Even in the US, factories are given 15 days’ notice of inspections, making it hard to detect violations of laws such as those on child labour (GMB, 2005). In this manner, Global-South governments collude with the Walmart squeeze. The incentive for the Chinese government, and other countries hosting such exploitative sweatshops, is a massive trade surplus with the US. In practice, this surplus goes to building up Chinese government sovereign funds and to the wealthy elite who own the factories, with very little going to the workers who actually make the products. Nobody has both an incentive to change the system and the power to do so; the nearest we have to such an agency is the US consumer, so long as they can be bothered to a) find out what is going on across the Pacific and b) have the conscience (and the financial capability; many US consumers are squeezed too, albeit to a far lesser extent) to boycott such artificially cheap goods until the price is raised, just a little, enough to pay decent wages back in China, Lesotho, Bangladesh and elsewhere.
Not only do many supermarkets ruthlessly squeeze down the contractual standard wholesale price they pay to agencies further back up the supply chain, they also make further efforts to cut back on the cost of those payments by delaying them or finding reasons for reducing them yet further or even demanding payments from the producers. Pre-2007, when global interest rates were higher than in 2018, supermarkets would hold back payments for a month or more, which would bring in considerable amounts of interest for the retailer. In 2005, Asda generally paid between 33 and 58 days after delivery—an average delay of 40 days. Sainsbury pays 30 to 60 days after, an average late payment of 45 days. If interest rates were at 5%, that would bring in 0.5% of turnover as extra profit, or some £200 million on Tesco’s 2005 turnover. Supermarkets may also unilaterally switch from monthly to three monthly payments, in arrears of course. So a farmer that got £10,000 a month now has to wait three months to get £30,000, which will likely cause them considerable cash flow issues. If the farmer needs to make up this £10,000 a month that is being delayed for one or two months, they will likely have to take a bank loan, charged at 1% per month, so costing the farmer a total of £300 per quarter in this instance. This also imposes a delay of average 1.5 months on two-thirds of the payment, equivalent to a delay of 1 month on all payments.
Supermarkets have also instituted a whole range of what might be termed ‘supplementary’ charges back onto their suppliers, fees and ‘penalties’, often rather dubious in ethical terms.
These payments include the following:
Slotting fees are charges for allocating optimal positions on shop shelves, also known in the US as ‘pay to stay’ fees. The best place for sales on a supermarket shelf is about 1.5 metres off the ground, just below shopper’s eye level as most people look slightly down when purchasing. The supermarkets justify slotting fees on the grounds that some 80% to 90% of new products fail, so without them, the risk to the store of introducing any new lines would be considerable. However, slotting fees raises barriers to new supermarket entrants. By effectively forcing the supplier to subsidize lower retail prices at the incumbent supermarket, attempts by new retailers to win trade via low prices are blocked; slotting fees have been illegal in Poland since 1993 and are also banned in China, and the US has outlawed them on alcoholic drinks from 1995. Not all supermarket chains demand slotting fees; Walmart does not, although it can negotiate much lower wholesale prices instead due to its size.
On the positive side, for the producer, slotting fees help fend off competition from rival goods, but this arguably reduces choice for the shopper. Slotting fees are one reason why smaller brands are disappearing, whilst large sections of shelves are dedicated to many similar sub-brand variants of the dominant brands. Moreover, the dominant brands are seldom the healthiest ones, leading to less consumption of fresh produce. However, shoppers may then be encouraged to shift to the deep discounters Aldi and Lidl, where numerous tertiary brands can be found at low prices, and increasingly, these discounters are stocking lines not always found in the big supermarkets; the ‘centre aisle’ of an Aldi frequently has a range of non-food goods seldom seen in a Tesco, and this selection changes weekly, encouraging shoppers to return in case they miss a bargain they never even thought of buying before.
Marketing or distribution fees are a variant of slotting fees and are charged by the supermarket for running a marketing campaign to promote a product: a taster session or cut-price deal, for example. In the case of a BOGOF, the supplier may have to pay for the second item. In one case, a supermarket told a Brussels sprout supplier, at short notice, that it was running a cut-price promotion for four weeks, and this price reduction was being passed back to the supplier. In one case, the price reduction was because the product was being delisted by the supermarket, but failure to pay would have been commercial suicide.
Refunds and discounts include any refunds the supermarket pays to customers or discounts because a product has failed to sell well and is nearing its sell-by date and are routinely charged back to suppliers.
Solus agreements are when the supermarkets demand that the producer does not sell to any other retailer. The supermarket then has huge commercial power to demand other terms and conditions—for, example continued slotting fees. The supermarket is relying on the producer not being able to find a market for all its produce elsewhere. With solus agreements, stringent conditions can be set; for example, Oxfam has alleged (Wilshaw, 2016) that in one case, a shipment of fruit was rejected “on spurious grounds, actually coinciding with a period of over-supply in the market”.
Third-party kickbacks. Supermarkets have insisted that growers use a certain haulier or type of packaging, which is not the cheapest; the supermarket has been paid by the packaging manufacturer or haulier to enforce this condition (Seth & Randall, 1999: 284).
These fees started to appear in the 1970s, but were rarely used until the 1990s. However, they have been increased since the Credit Crunch began and supermarket margins began to be squeezed as never before. US retailers are said to take in US$ 18 billion from such fees in 2015, up from US$ 1 billion in 1990 (Economist, 2015: 66). In the UK, such fees may be higher than the operating profits of the supermarkets, and in Australia, they have boosted average supermarket profit margins by 2.5% average, up to 5.7% between 2010 and 2015. Farmers and other producers are afraid to protest, as they may be delisted without notice.
A stage beyond squeezing existing producer brand suppliers with fees and charges is for the supermarkets to establish their own brands. A brand can be copyrighted like any other original idea, and quite often the supermarkets have been accused of imitating or ripping off established brands with copycat own-label versions, selling their own very similar versions of these products. Sainsbury closely copied the ‘Comfort’ fabric freshener, and were forced by Coca Cola to stop selling a very similar version of their beverage. Meanwhile, Asda were ordered to stop selling ‘Puffin’ biscuits, a close copy of Penguin chocolate biscuits (Seth & Randall, 1999: 281). However, the original brand owner can often only hope to win against such parasitic plagiarism when they too are large; smaller producers cannot afford to alienate the supermarkets by being too litigious. However, the Hotel Chocolat company did succeed in forcing Waitrose supermarket to back down when the UK supermarket chain began selling bars very similar in appearance to Hotel Chocolat’s, at half the price. The taste, however, was rather different, with Hotel Chocolate starting a strategic initiative to undermine Waitrose’s copycat version by offering to exchange a partly eaten Waitrose bar for its own. In May 2018, Waitrose agreed to stop making them, but were allowed to sell those already manufactured. Hotel Chocolat was aiming at consumers who “will have bought [the bar] thinking they’re buying Hotel Chocolate quality, taken a couple of mouthfuls and realised they’re actually stuffed full of sugar” (R Davies, 2018). In this instance, Hotel Chocolat had the advantage that Waitrose is an upmarket chain that would very likely suffer bad publicity for ripping off a boutique chocolate manufacturer. In the short term, this free-riding on other companies’ commercial research and investment may widen consumer choice and save them money, as the supermarkets like to point out; in the longer run, it will likely reduce consumer choice and leave them vulnerable to monopolistic (or at least oligopolistic) pricing by the supermarkets, when the original product is no longer viable to produce. There is nothing wrong with own-label brands as such; they must, however, be sufficiently distinguishable in appearance from competitor primary brands so the consumer knows just what they are buying.
The complexities of disentangling, legally and morally (not always coincident), what is a legitimate ‘ask’ from the supermarket for better terms from the supplier, from a coercive ‘demand’ based on bullying commercial clout, are not easy, as illustrated in the 2016 case of the ACCC (Australian Competition and Consumer Commission) against Woolworths; ACCC v Woolworths Limited. Judgement in the Federal Court was handed down on 16 December 2016, and the ACCC lost against Woolworths, although it won in a similar case against Coles in 2015 ((Temby, 2016). The ACCC’s allegations are reproduced here as they broadly summarize the concerns of UK and other supermarket suppliers regarding the major supermarkets:
Woolworths winning defence was that
This again illustrates the opacity and tangled nature of supermarket- supplier relations, and the near-impossibility of deciding what is fair, and what is legal, and what societal norms and ethics say ‘should’ happen in such complex relationships. The ACCC was given until mid-January 2017 to lodge an appeal, but decided not to contest the judgement.
A Supermarket Code of Practice was introduced in the UK in 2002 to redress the imbalance of power between supermarkets and suppliers. However, the paucity of complaints under this code has led some to suggest that fear of delisting was preventing many suppliers from using the Code to seek redress (Blythman, 2004: 186). In April 2010, the Grocery Supply Code of Practice, came into effect. This arbitrates on payment disputes between supermarkets and suppliers, and in 2013, the Grocery Code of Adjudication was established; this was redrafted in 2017 to provide further protection against supermarket coercion. However, this only applies to major supermarkets dealing directly with farmers and not with smaller retailers or where an intermediary, such as a food processor is involved. The new Grocery Code of Adjudication applies to One Stop, as a subsidiary of Tesco, and now that Tesco has taken over the Bookers buying group, it will take effect there too. In the last few years, the supermarkets have begun to improve some of their payment terms and procedures to small suppliers, for fear of bad publicity. In October 2015, Tesco announced it would (from June 2016) pay all small suppliers (those supplying Tesco with under £100,000 goods a year) within 14 days, and it would pay medium-sized suppliers 5 days faster than large suppliers. In January 2016, Waitrose also began to speed up payments to small suppliers after it was revealed that the store, which positions itself as a champion of British producers, was in fact taking considerably longer than Tesco to pay some of its small suppliers.
Supermarket payments and conditions are not just an arcane matter of small rural farm finances or small town food processor viability. The supermarkets, indirectly, are responsible for the vitality, or otherwise, of large swathes of rural society, in the UK and beyond. An example of the sudden and drastic effect a supermarket boardroom decision can have was what happened to the Romney Marsh Potato Company, founded in 1950. Soon after 2000, Tesco demanded an ‘overrider’, a fee which was a percentage of the company’s turnover, which rose from 2% to 3.75%; effectively, a rebate for Tesco on the wholesale price it paid for its potatoes. Then in spring 2004, this company, which had supplied all its produce to Tesco for 47 years, was suddenly ditched by the supermarket giant with no reason and no notice given. Tesco never actually had a formal contract with the potato grower. Annual sales plummeted from £12 million to £1 million, and in February 2005, 81 of the 120 staff were made redundant. The Romney Marsh Potato Company closed down in 2007; the nearest town, New Romney, has a population of just 7,000 and is relatively isolated with no rail link, so finding new jobs for these 100 or more employees, as the Credit Crunch got underway, would not be easy.
Across the UK, between 1980 and 1994, the number of farms fell by 11% and the number employed on those farms fell by 34%. Those made redundant would probably have to find work on industrial estates on the edge of towns, either facing a long commute on low wages or moving. This in turn erodes village life as village homes become occupied by commuters who spend most of their waking hours outside the local community, so the village shop, the pub and the school close down. In Australia, a decline of 56% in number of independent fruit and vegetable retailers, from 3,670 to 1,611, between 1992 and 1999, had been blamed on ‘aggressive activity’ by the big two supermarket chains, Coles and Woolworths, which in 2000 controlled 65%–70% of the take-home fresh food market. The Australian supermarket duopsony has been blamed for “reducing the viability of small fruit and vegetable growers, forcing farmers to ‘get bigger or get out’, as complex accreditation, quality assurance schemes, and contracts can make providing directly to supermarkets unfeasible for smaller producers” (Keith, 2012: 61).
Those farmers who still have contracts with the big supermarkets are only a little better off. Many dairy farmers are working very long hours, perhaps 80 to 90 hours a week, a factor in the rising farmer suicide rate in both developing and developed countries (Fox & Vorley, 2006). Farm worker conditions are also squeezed; low wages may be invisible, but one sign of this deterioration is the multiple caravans that have appeared on the edges of farm complexes in recent years. Most car drivers and even walkers passing by will not see these temporary-permanent homes for low-paid rural workers, but they are very visible from the Google Street View camera, mounted some 3 metres off the ground and seeing over the hedges. Occasionally, a major tragedy hits the headlines, such as the drowning of the Morecambe Bay cockle pickers on 21 February 2004 who were working in the UK illegally, employed by gangmasters at below the National Minimum Wage. This tragedy precipitated the passing of the Gangmaster Bill into UK law, as discussed next, but for the most part, people who go out to enjoy the rural scenery and then go home and shop, forgetting where their food ultimately came from and who harvested it. They give even less thought whilst in the supermarket as to who is squeezing the farms and why farm employment is so poor; they almost certainly give no thought whilst in the fish aisle as to what employment might be like on the boats that brought in that fish. Just so long as the food price is low, everything is all right. It is no coincidence that, across the UK economy, slavery is most prevalent in economic sectors where the workforce is the most atomized, working for the smallest employers, is least unionized, on the most precarious contracts, with long but uncertain hours (which leave no time or energy for worker organization). Sectors such as building, cleaning, distribution and security are notorious for these poor employment conditions. As regards agricultural workers, one can add to the factors just noted earlier, extreme physical isolation, as one can witness by taking a drive along the remoter lanes of the English Fens and passing countless anonymous farms and food processing plants lost in the vast horizons of emptiness. No doubt some are responsible employers; many are not. The landscape may be flat and bleak, but many of the unseen workers labouring unseen out here in the parody of rurality offered by the north Cambridgeshire and south Lincolnshire landscape face even flatter and bleaker work prospects. Yet these lanes are barely an hour’s drive from the expensive lanes and bijou expensive shops and cafés of historic Cambridge itself. Add in further isolation from being in a foreign country and not speaking the indigenous language, let alone being aware of the indigenous employment rights, and exploitation or even slavery is almost inevitable.
Occasionally, the huge submerged continent of invisible underpaid exploited labour that exists to provide our cheap groceries several stages back upstream along the food chain develops a peak that comes rather close to the visible surface where we conduct our supermarket transactions. Quasi-slavery sometimes occurs not just in remote farms but on the supermarket premises itself. In 2014, the Australian supermarkets Coles, Costco and Woolworths came under investigation regarding the employment practices relating to trolley collectors on their retailing sites. Areas of concern to the Fair Work Ombudsman included low wages; lack of payslips; general lack of transparency in the remuneration system, also of the workers’ rights relating to holiday and other leave; and a general usage of ‘vulnerable’ people (Australian Government, 2016). The report noted, on pp. 7–8,
According to the 2011 census, of 1 500 trolley collectors across Australia, almost 50% are under 25 years of age and 40% do not have education beyond Year 10. We consider this number of trolley collectors an under-estimate, with Coles alone reporting it has oversight of 2000 trolley collectors. Vulnerable workers are often unaware of their rights in the workplace and can also be reluctant to report their working conditions.
In an echo of the gangmaster system operating in the Fens, the Australian supermarkets had contracted out their trolley collection services, so direct legal responsibility for their remuneration was one stage removed from the retailer; however, moral responsibility is not so easily shunted away.
One effect of the Morecambe Bay tragedy was to accelerate the passing in the UK Parliament of the Gangmaster Bill, introduced on 7 January 2004 as a private members’ bill by Jim Sheridan, a Labour MP from Scotland. Most private member’s bills fail due to lack of support from other MPs, but the death of the cockle pickers galvanized public opinion, and the influential Labour MP David Blunkett lent his support. The Gangmaster Bill received Royal Assent on 8 July 2004, and the Gangmaster Licencing Act came into force on 1 December 2006. Anyone supplying workers to the agricultural or food processing industries must be licenced or face a prison sentence of up to 10 years. However, there were swift moves by the government to limit the bill’s scope; DEFRA suggested that the bill should not cover secondary food processing, meaning that 200,000 workers in the processing and packaging industries would not be protected (Pollard, 2006: 126). DEFRA is the UK government Department for the Environment, Food and Rural Affairs. Interestingly, the UK government was more concerned about the maintenance of cheap food, which kept down inflation and interest rates, rather than the welfare of the workers who get that food to the table, and all this was not under a Conservative government but the Labour administration of Tony Blair (1997–2007).
UK farm workers may be migrants from Eastern Europe of further afield, with a poor command of English and little knowledge of their rights, and no means of enforcing those rights anyway. Wages may not even meet the legal minimum wage, and there are frequent unfair and excessive deductions, such as for transport to work (poor) accommodation, or tax that is never actually paid by the gangmaster (even if tax was payable anyway on such low wages). Deductions of dubious legality for arbitrary and unexplained reasons from ‘administration expenses’ to interest and charges for minibus transport to the fields and passport confiscation are common and may take net wages to below 20% of UK minimum wage. Furthermore, reports of child labour and assaults on workers, regularly appear in the media in locales from Grimsby to Greece (Pollard, 2006). Employment is also insecure, with no set hours. This may mean too few hours work; a zero-hours contract, with no paid employment actually guaranteed. Or it may mean too many hours, hours being worked but not paid. Workers are frequently employed ‘indirectly’ by agencies, so they can be paid for less hours or days than they actually worked. Necessary breaks are either not allowed, or are an excuse for further pay deductions. Low farm wages may also drive down pay rates at nearby non-farm workplaces, just as Walmart can depress neighbourhood wages. The conditions of fishing crews, even less visible to the affluent end consumer of food, frequently originating from outside the EU to work EU waters, are on call to work 24 hours a day whilst at sea and are paid just £1,060 a month on average, barely over £30 a day (Moulds, 2017). Oddly, middle-class consumers sometimes seem more concerned about the sustainability of the fish stocks being harvested than they do about the welfare of the people doing the fishing.
Issues of low pay, poor conditions and even worse, child labour, labour exploitation and slavery may well occur ‘out of sight, out of mind’ of affluent Global-North consumers in Global-South countries where tropical products, such as chocolate originate. Plantations where unethical labour practices prevail are also likely to be environmentally damaging; it is unlikely that the owners of these enterprises care about the environment if they care so little about worker welfare. A further peril such exploited workers may face is exposure to harmful chemicals, such as organophosphates, which can cause convulsions, cancers and death. As pesticides, these chemicals are designed to kill and prolonged exposure can do just the same damage to humans also. They are often not dissimilar, in molecular structure and function, to chemical weapons agents, such as Novichok. These chemicals may be taken home on workers’ clothes, or drift into communities and school playgrounds, imperilling children who because they are small face even greater danger from exposure to low level but continuous doses of these pesticides. Reduced IQ is another side effect of exposure to these chemicals, which may mean the workers’ children leave school with lower qualifications and can only find work in the low-paid agricultural sector, and then in turn expose their children to these same harmful chemicals.
Inadequate work training also causes employment injuries and even fatalities. In the UK, chicken processing industry alone, between 2010 and 2017, there 1,173 injuries to employees reported to the Health and Safety Executive; of these, 153 were classed as ‘major’, with one death (Fitzpatrick & Young, 2017: 46). The pressure for cheap chicken from supermarkets has played a significant role in causing these accidents. The health hazards of cheap food processing may extend beyond the farm or factory, right to the consumer’s table. Migrant workers in fields in Spain and the UK may labour without any toilet facilities to produce salads and vegetables at a cheap price for UK supermarkets; for toilets they go in the bushes, with no hand-wash facilities. The need for the big UK supermarkets to remain competitive in price with the deep discounters Aldi and Lidl has intensified downwards pressure on workers’ wages and conditions. Similarly, in food processing plants, food (especially chicken and other meat products) may become contaminated and dirty, which may impact back upon the health of the very consumers who like their food bills kept as low as possible.
Cacao, the raw material of chocolate, is mostly produced in Brazil, tropical west Africa, India and South-East Asia. The finished product is a luxury hedonistic item which may have reached the consumer by a complex food chain; the supermarket is the last link before that a chocolate company, such as Lindt, or maybe a lesser-known brand such as Moser Roth (from Aldi), and before that a range of shipping and plantation enterprises. Consuming ‘feel-good’ chocolate, one may have concern for the environment, for the shop workers at the supermarket where it was purchased and the CSR statements from Aldi and Lindt will concentrate on reassuring images of energy saving, green environment, good supermarket and factory staff practices, sponsorship of local charities, maybe even of Ghanaian artists and entrepreneurs. However, it will be a long and arduous chain of research to trace that bar back to the specific Ghanaian plantation the original cocoa beans came from and to check on all the CSR statements of every company involved, assuming the smaller players further back along the chain even actually publish such statements. Taste the nice creamy smooth Lindt; are you really going to undermine that nice feeling by intensive hard research into exploitative and destructive production practices many stages back and thousands of miles away? Highly processed products of remote origin, such as chocolate, illustrate that good CSR on the surface may cover a multitude of sins in the darker remoter recesses of the global food chain.
If consumers push the welfare of farm workers on remote corners of the UK, or in even more distant parts of the Global South, out of mind, they may think even less of the welfare of animals on those farms. Even out in the countryside, we may not notice something that is not there any longer. Over the past few decades, a quintessential element of the British countryside has indeed slowly faded from sight: farm animals. Sheep may still be seen in the higher grassland pastures, but cows, chickens and pigs are not seen as frequently as before. What may be seen more often is large metal sheds, and it may well be here that the farm animals have vanished to. Keeping animals indoors has several attractions for farmers; the animal uses less energy than if it were roaming outside, so the farmer gets more weight of carcass for his feed. What the animal eats can be tightly controlled, and it is less exposed to diseases which might reduce its growth rate. Farmers may be less enamoured with the concerns of animal welfare campaigners, who argue that cows, chickens and pigs are natural foraging animals whose instinct is to roam around for food, and dislike, as humans would, being effectively sentenced to life imprisonment in cramped unnatural conditions where even the normal diurnal rhythm, of day and night can be disrupted or modified by artificial lighting. On a longer timescale (actually not that long, farm animals have greatly shortened lifespans compared to their wild ancestors) the growth schedule of the animal can also be disrupted, modified so as to speed up the ‘production line’. However, when less-valuable parts of the animal, such as its legs fail to keep pace with rapidly increasing bodyweight, then suffering is likely. Animals, say organizations such as the Royal Society for Prevention of Cruelty to Animals (RSPCA) and Compassion in World Farming (CIWF), are not simply mindless machines for turning feed into meat and milk for humans. The financial imperatives for ever greater efficiency and cost reductions imposed on farmers by the supermarkets, however, suggests otherwise.
Supermarkets are highly dependent on a mass supply of cheap outputs from chicken farmers, both eggs and chicken meat. Eggs are used as binders, clarification agents, stabilizers and emulsifiers in a wide variety of products, not as just boxes of half a dozen eggs, but in a range of supermarket products, including bread, chocolates, cosmetics, frozen dairy products, ice cream and other desserts, mayonnaise, medical products, microwave meals, sauces, wine, yoghurts and even in biodegradable food packaging (BEPA, 2009; Government of Canada, 2017). Many of these uses are invisible to consumers, who are then shopping without thought for the welfare of the chickens that produced those eggs. Chicken meat is also used in ready meals and sandwiches, again less visibly; one place where chickens are intended to be prominent in supermarkets is the roast chicken spit, because the aroma of roast chicken, along with that of baked bread and coffee, is a known appetite arouser. Shoppers are very prone to purchase more food when they are hungry.
The categories of chicken husbandry may be as opaque to many supermarket customers as is the uses the eggs are put to. They may be aware that ‘battery’ cages are bad and have in fact been illegal within the EU since 2012, but this does not by any means imply that all chickens can now wander outside in the sunshine. On fact, only 5% to 10% of the 900 million chickens slaughtered each year in the UK have enjoyed outdoor access, and most are in sheds at 17 chickens per square metre, grow too fast and therefore suffer lethargy, with a third enduring painful lameness. There are so-called enriched cages, also known as ‘colony cages’ or ‘furnished cages’, but they are still cages; the birds have less than 0.1 square metres each and cannot go outside. The RSPCA sets standards for chicken housing, and chicken products sold from birds kept at that standard can be labelled ‘Freedom Food’. In 2010, Sainsbury’s supermarket applied for the ‘good chicken’ award from the CIWF, which the CIWF understood was being awarded on the basis that all Sainsbury’s chicken would meet the Freedom Food standard. Sainsbury’s had a different understanding that by 2015 it would be “the biggest retailer of Freedom Food” but not across its entire chicken products range. By 2018, Sainsbury’s said it was “returning the CIWF award because it disagreed with the CIWF’s approach to animal welfare”, whereas the CIWF said it was “publically withdrawing the award because Sainsbury had failed to uphold promises on chicken welfare” (Butler, 2018). About as confusing as the average shopper is about furnished, enriched and colony cages. Co-op, M&S, Sainsbury and Waitrose do not sell eggs from hens kept in cages. In 2016, Iceland promised to end egg sales from caged hens by 2025 at the latest, reasoning that customer antipathy to animal cruelty outweighed any greater profit from the cheaper egg raising methods. Tesco, Morrison and Asda also intend to go ‘cage free’ by 2025.
Pigs may also suffer welfare issues. Two-fifths of farm pigs are born outdoors, but 90% are confined indoors after being weaned. Kept in barren pens, with no opportunity to forage, they start mutilating each other out of boredom. The consumer may want to buy ethically, humanely raised pork and be willing to pay more for that, with almost half of consumers saying they buy free range whenever they can. However, as with chickens and cage standards, they are likely to be confused by a multiplicity of labelling systems, such as organic, Finest, free range, outdoor bred, outdoor reared, Red Tractor assured and more. ‘Outdoor reared’ means the pig spends the first half of its (20-week) life outside, whereas ‘outdoor bred’ means it spends the first four weeks outside, until weaned, and then 16 weeks indoors. The Red Tractor logo simply means the pork complies with certain trade-set standards, and organic means it is antibiotic-free. To add further complexity, there are both environmental and animal-welfare drawbacks to raising pigs fully outdoors; they may suffer from the cold in tin sheds in fields, and their natural rooting behaviour may promote soil erosion, meaning they can only be raised outdoors in certain soil areas. Furthermore, restrictions on sow stalls in the UK, where pigs are confined in narrow crates, has pushed consumers seeking cheaper pork to buy from European countries where sow stall conditions are even worse. Perhaps not as bad, though, as the conditions exposed in 2018 at the idyllically named Fir Tree Farm, owned by Elsham Linc in North-East Lincolnshire. Elsham is a pretty village, with a picturesque hall close by where tourists can have tea and enjoy the sight of local peacocks roaming around. It is a million miles from Fir Tree Farm, out on the remote bleak windswept Humber bank flats 20 minutes’ drive away where an anonymous lane leads to a large complex of low concrete farm buildings, oddly protected by a chain-link fence to deter intruders. Here, where Tesco sourced some of its pork from, terrible mistreatment of pigs was uncovered by Animal Equality (Webster, 2018b). The farm had Red Tractor certification, which was withdrawn after the exposure, along with the Tesco contract, but what is worrying is what other cases of animal abuse may be going on as yet unseen at the head of our supermarket food chains. Perhaps the concept of eating ‘ethical’ or ‘humane’ meat is too much of a paradox, and those who care about such things should really just try and reduce or even eliminate meat from their diet.
Food labelling is meant to advise the customer, but as noted earlier in the case of chicken welfare and pork standards, it often obfuscates more than it informs. Food from outside the UK, or from industrial production, may be given nice ‘rural farm names’. For example, Tesco, in 2016, used names such as ‘Redmere Farms’ and ‘Boswell Farms’. The actual produce may be British, or come from as far afield as Africa or South America, and wherever its nation of origin, it probably didn’t come from a premise, looking like the mental image that ‘Boswell Farms’ might conjure up. Idyllic farm names, with the accompanying pictures of rural thatched cottages and free roaming animals may constitute a kind of greenwash to distract from “wider concerns about sustainability and the impact of industrial animal agriculture” (Lever & Evans, 2017). The National Farmers Union also objects to these labels as they blur the distinction between supermarket food and organic farm produce, perhaps sold at a farm shop. Richard Baugh, proprietor of the Woodside Farm Shop, Nottinghamshire, has faced confusion with shoppers to his premises, or his website, because Tesco uses the same name for some of its food brands. However, supermarkets have justified the use of rural scenes on food products that come from animals who spend all or almost all their time indoors as depicting “the rolling hills of Ireland [where the recipe for this product originally came from]”, or “an illustration, in cartoon form, of Witchingham Hall [where the corporate head office is located]” (Webster, 2018a). Nobody has asked the consumers yet if they are happy with this connection, or they think it might be a little bit stretched.
UK consumers may like to think they are buying British food, a phenomenon known as ‘food patriotism’, but here too the labelling can be misleading. A food product’s ‘country of origin’ is where it was last processed, so Tesco can sell beef from Irish cows processed into sausages in Cumberland and call it Cumberland sausage. Similarly, sheep can be sent to a Welsh farm for the last six weeks of their lives, and then their meat can be branded, at a premium, as ‘Welsh lamb’. Occasionally, the supermarkets have to backed down and amended their branding; in 2017, Waitrose had to change the name of its ‘British’ range of lamb dishes to ‘Classic’ after it emerged the packs contained meat from New Zealand (Humphries, 2017). Waitrose responded to the charge of misleading labelling by saying that the label ‘British’ was meant to refer to the origin of the recipe. However, country of origin of the food is not the only way that food labels can mislead. Food labels may encourage unnecessary binning of food that is still perfectly edible, just past its sell-by date. Besides sell-by dates that encourage BOGOFs and overbuying, there are other labelling issues that have been levelled at the supermarkets. These generally involve attributing the food product with some environmental or social quality, which adds value in the consumer’s mind; the question is, how genuine are these ‘added attributes’?
Fairtrade is a label familiar to many shoppers. The first Fairtrade label was applied in 1988, by Max Havelaar, to Mexican coffee sold in Dutch supermarkets. Fairtrade encourages consumers to buy ‘sustainable’ products, but perhaps necessarily oversimplifies some aspects of the whole supply chain. For example, the Fairtrade minimum price for coffee, US$1,600 per tonne, was not reviewed between 1993 and 2010, despite complaints from producers (Vark, 2016). Yet purchasers of Fairtrade coffee might take it for granted that the producer was getting a ‘fair’ price, whatever that really means. Also, if a producer buys 20% of their raw materials Fairtrade, they can label 20% of their chocolate bars as Fairtrade (so-called mass balancing), but the consumer cannot know if an individual bar was produced under Fairtrade. The Fairtrade label will create a halo of fairness that may make shoppers feel good about the entire shopping purchase, but the main beneficiary here may well be the retail chain, not the original producer.
Carbon labelling is intended to help consumers choose products with less impact on the environment but, like Fairtrade, is necessarily very much a simplification of the entire picture. The idea is to have a version of the traffic light system, with Australia, for example, having three ‘footprint’ symbols, green for least carbon emissions, yellow and then black for the highest. But what does this actually tell us? Foods brought in by ship, in bulk, may have a lower per item carbon footprint from a supermarket near the coast than those produced in the same country and driven to the supermarket over several hundred kilometres by lorry. However, if the same product were bought in a store inland near a domestic producer, the situation would be reversed. In what terms should carbon intensity be communicated or measured; do we say “this item resulted in the emission of 3kg of CO2”, or “this item resulted in the same emissions as driving a car 50 kilometre?” There is no such thing as an average car or an average drive, but stating the absolute amount in kilogrammes would be meaningless for many consumers. We might even create a perverse feeling of “I’ve arrived at the supermarket by a low-carbon travel mode, so I can buy high carbon intensity products and not feel guilty”. Do we include just CO2 or other emissions such as methane (from beef products, cows emit a lot of methane), and methane creates more global warming per kilogramme than CO2 does, but has a shorter life in the atmosphere. Should carbon emissions be disaggregated by manufacture, packaging and transport, and should they include the emissions resulting from the final user of that product, their journey to the store and back home and their disposal of the product packaging? There will be logistical issues of product overload on the packaging, and problems with legibility if the writing is too small for many to read; other important information such as nutritional data or storage instructions may be obscured. Carbon labelling might favour home produced foods over those shipped long distances, but this could favour foods produced by high carbon methods at home over less carbon intensive production from abroad, so the overall carbon per food globally might rise, if much of the product is sold not domestically but abroad (whilst the satisfied domestic consumer thinks they are helping to avert climate change). It is no surprise that Tesco dropped carbon labelling from its products in 2012, blaming the cost and complexity of accurately classifying all its 70,000 products and the fact that its competitors had largely not followed its lead. Overall, if averting climate change is the main goal, there may be better ways to achieve this such as reducing beef consumption and promoting home produced food and less unnecessary consumption of non-food items, rather than relying on one labelling system.
Overall, there is considerable scope for misleading consumers over environmental CSR claims, a practice termed greenwashing. This would include showing factory farm produce meat with labels featuring idyllic rural scenes, open countryside, squirrels, birds, grass and tractors, when in fact the meat is from ‘zero-grazing’ cows, cows that never go outside the barn they are kept in. The issue of animal welfare has been discussed in more detail in Section 5.7, but there are some terms in common usage in supermarkets now that sound good but in reality may mean nothing material at all (Demmerling, 2014: 43). Some of these terms are listed next.
Everything degrades in the environment, eventually, even plastic. A crucial point is, what does it degrade down into, even more harmful chemicals maybe? An electronic device such as a computer contains substances that are harmless so long as the machine remains intact, but gather several thousand old computers and dump them in landfill, and gradually the heavy metals they contain will begin to contaminate the groundwater. Even genuinely biodegradable items like paper-based packaging may breakdown into GHGs, such as methane and CO2, the problem being that consumers think they are helping the environment by using more of this packaging, when really they should be aiming to consume less, use less packaging altogether.
As we saw in Chapter 1, the dose makes the poison; nothing is toxic in small enough amounts, and everything is toxic in sufficient quantities. Excess vitamin doses can kill. Also, toxic to what? Dark chocolate is toxic to dogs but not humans; tardigrades can withstand radiation that would kill a person. Furthermore, if something is biodegradable and non-toxic, what does it biodegrade down into? Something that is toxic to some organism, somewhere? But the phrase non-toxic sounds good on supermarket cleaning products, for example.
So it can be recycled, but will it be? Just about everything can be recycled, sometimes with considerable energy input, like melting down glass bottles to reuse. Plastic bags can be recycled, as bin liners, as padding for fragile goods, as draught excluders, but this is probably not what campaigners against plastic bags had in mind.
A bit more positive than ‘recyclable’, at least this term has been legally defined by the US Federal Trade Commission, but even in the USA, checks to ensure ‘it has been recycled’ do not always happen. Also, there are several types of recycling, some more environmentally friendly than others. Post-consumer waste material, such as old newspapers or used bottles, can be returned to the production process and may constitute a genuine environmental saving on the number of trees cut down for paper, or the amount of sand mined for glass. However, the term ‘recycled’ may also include waste at the production stage, such as wood shavings from furniture manufacture reconstituted into chipboard. Although it could be argued that this too saves trees from being cut down, this sort of recycling simply constitutes more efficient frugal use of resources already taken from the environment; it is not quite recycling as some consumers think it is, a reuse of materials already consumed once.
This term has no legal definition and can essentially mean whatever you want it to mean. At the one extreme, it is ‘cruel’ to keep even free range animals from ranging free in their natural habitat, cows in marshlands, goats on mountain grasslands. At the other extreme, do factory-farmed animals even have a concept that they are being ‘cruelly treated’ if they have known nothing else all their (short) lives? But it sounds good on food packaging.
This word has a little more meaning than ‘cruelty free’ but not much more. In the US, for example, free range legally means “chickens must have access to the outdoors for an undetermined period each day”. So five minutes access would qualify their eggs as free range’, whether they actually do go outdoors at all, often in a large flock in a huge shed, they do not get outside from the far end of the chicken shed at all.
The issue of relating supermarket CSR to what is going on further up the supply chain is complex; as we have seen, we should not let the supermarkets get away with saying, “It’s not our company doing this”, because of the great influence exerted by supermarkets upon their suppliers. Upstream product supply CSR ranges from global climate issues to worker and animal welfare in distant regions to tertiary effects on the wider communities these upstream companies operate in. A large supermarket also exerts a significant influence, for good and bad, upon the community it sells to and its local neighbourhood, and this is the subject of the next chapter of this book.