The global anti-poverty organization Oxfam issued a report Thursday saying that supermarket giants such as Whole Foods, Costco, Walmart and the owner of Landover-based Giant Food share responsibility for widespread suffering of farmers and other food producers around the world.
Oxfam said it hopes the new research will shed light on inequality in the agri-food sector, where it says big supermarkets are squeezing value from supply chains and eroding the bargaining power of small farmers and workers, leading to low wages and poor working conditions.
The group plans to launch a “Behind the Barcodes” campaign Thursday with a series of reports highlighting those issues.
The group ranked 16 food retailers in areas such as transparency, support for small-scale producers and the treatment of supply chain workers, farmers and women. It scored all companies poorly, especially those in the United States, where the top four supermarkets control more than 40 percent of the market.
“The result is widespread human suffering among the women and men producing food for supermarkets around the world,” including forced labor on fishing boats in Southeast Asia, poverty wages on Indian tea plantations and hunger among workers on South African grape farms, according to “Ripe for Change,” one of three reports to be issued Thursday. “Human and labor rights abuses are all too common in food supply chains.”
Of six major U.S. retailers, Kroger and Whole Foods earned the lowest scores and Walmart earned the highest, but with a score of just 17 out of 100. Giant, the Baltimore area’s largest grocer, and sister chain New England-based Stop & Shop, both owned by Ahold Delhaize, earned scores in the middle of the pack, scoring 5 out of 100, Oxfam said.
Walmart issued a statement saying the reports “shed light on important issues throughout the food retailing industry and the global supply chains that support it.”
“We appreciate efforts like these that both recognize the good work we are doing and highlight areas for improvement,” said Marilee McInnis, a Walmart spokeswoman in international corporate affairs. “We focus on operating our business in a way that promotes shared value and that includes supporting our suppliers and advocating for workers in the supply chain.”
McInnis said the retailer expects to collaborate with others in the industry as well as suppliers, governments and non-governmental organizations to create a more responsible supply chain.
Oxfam singled out supermarkets as the last link in the food supply chain, saying they are earning a larger share of food commodity sales than in the past, while a smaller share is going to producers and workers.
“Food retailers are getting bigger … and have more power and making demands on suppliers,” said Irit Tamir, director of Oxfam America’s private sector department. “Laborers are pressured to work quicker on a manufacturing line or in a processioning plant, to work faster with less breaks. Many of these workers do not get paid a living wage.”
Industry experts argue that consumers have come to expect and demand low prices as competition has ramped up from online merchants and discounters. Food retailers need to compete on price to attract and retain shoppers, said Jeremy Diamond, a director of Diamond Marketing Group, a Baltimore-based food retail consulting firm.
“If you want to point fingers, the consumer is the one to point fingers at, not necessarily the supermarket chains,” Diamond said. “They’re trying to stay in business and turn a profit as any business does.”
Traditional supermarket chains, such as Giant, have been especially challenged, he said.
“If they can’t get prices low enough, customers are going to go elsewhere,” Diamond said. “It’s that kind of mentality. Consumers have gotten so used to the discounters, like Aldi and Trader Joe’s and Walmart. The consumers are the ones controlling the prices at the end of the day.”
In a statement, Giant said it holds its suppliers to high standards, citing its commitment to sustainable seafood and sourcing.
“We carry this passion for sustainable sourcing through leadership on various industry task forces focused on sustainable sourcing, such as the Seafood Task Force, as well as conducting social audits of suppliers,” the statement said. “Giant Food will continue to hold our suppliers to strict standards and uphold our commitment to sustainable sourcing.”
The Oxfam report said the current system has brought consumers low prices, convenience and selection, but that too often those low prices stem from unfair trade practices.
Consumers, as well as governments, food companies, farmers and workers, all can play a role in helping to re-balance power in the food supply chain, the report said.
“Part of the campaign is mobilizing consumers and getting them to tell supermarkets they don’t want human suffering to be an ingredient in their food,” Tamir said. “Frankly, supermarkets have a lot of power to change, and they could provide a lot more to farmers and workers without increasing the consumer price.”
In a similar investigation a couple of decades ago, Nike was accused of using sweatshops to make its apparel and shoes, claims the brand initially denied while distancing itself from some subcontractors. But pressure eventually led to the company’s auditing its factories for health and safety issues.
Because of the complexity of supermarket supply chains, grocers may or may not have information about those who supply their suppliers, said Ravi Srinivasan, associate professor of operations management in Loyola University’s Sellinger School of Business and Management.
“Because of the complexity involved, you cannot completely put these companies at fault,” Srinivasan said. “These kinds of reports essentially bring out some of the deficiencies in terms of how the supply chains are manged … [and] raise awareness among consumers, which puts pressure on companies that are closest to the consumer.”
Changes to improve conditions within the supply chain could lead to higher prices for consumers, he said.
“In today’s world, we are not just price-conscious, but conscious about the environment, sustainability and workers,” Srinivasan said. “The companies are going to respond to what the customers feel is important.”