Fighting Slave Labor in the Food Supply Chain

Published on December 11, 2015 by Eater

In the early 1900s, Upton Sinclair zeroed in on the terrifying lack of standards in the meat industry. The progressive journalist related gruesome stories of gangrenous, diseased cattle arriving in the same package as those fit for consumption; those packages were shipped to unsuspecting consumers hundreds of miles away. The reports incited such public outrage and scrutiny that, in 1906, the United States passed the Pure Food and Drug Act to monitor production standards.

Over a century later, while consumers can be more or less certain that their meat is produced in a sanitary fashion, the major point of Sinclair’s work — that of deplorable worker conditions — remains an issue. Today, there’s still little assurance that the people handling our food, often thousands of miles away, are being treated humanely. What exactly the gulf between food safety and human rights says about the average consumer’s priorities is open to interpretation. Federal legislation, however, could be on the horizon.

In the wake of an exposé published by The Guardian about slave labor in the Thai fishing industry, the UK introduced and passed the Modern Slavery Act within the space of a year. In early 2015, Nestlé, the world’s largest consumer food product company, decided to investigate its supply chain by enlisting the services of Verité, a research and auditing firm based in Massachusetts.

Like the Guardian investigation, Verité found that many workers in the Asian fishing industry are victims of a deceptive cycle of trafficking, wage theft, debt bondage, and forced overtime. There’s little recourse for the displaced workers who have been stripped of their identity. In many cases, Burmese and Laotian laborers reportedly paid trafficking fees to get to Thailand, an economy more robust than their neighboring homelands, only to be charged another job placement fee by a labor broker. This middleman would then transfer the worker’s debt to a boat captain who would in turn garnish wages until the “job fee” is paid off. The report also cited malnourishment and the use of illicit substances to facilitate long working hours, creating an environment which regularly leads to altercations and in severe cases, death.

Unfair labor conditions are not exclusive to the fishing industry. According to the U.S. Department of Labor136 goods from 74 countries are produced with child labor or forced labor. This list, most recently updated last December, only includes public information, suggesting the problem is even more pervasive.

“American consumers deserve to know how the products they purchase were made,” says Representative Carolyn Maloney (D-NY), writing via email last week. Maloney is the principal sponsor for the Business Supply Chain Transparency on Trafficking and Slavery Act, which she’s brought up in two consecutive Congresses (it didn’t make it out of the committee phase in the 2013-2014 Congress). “We know from investigative reporting and from our own government’s analysis that many products on American shelves were produced using trafficked or slave labor.”

What does the legislation propose? Technically, it would amend the Securities Exchange Act of 1934, the law which sought to make the stock market transparent following the crash of 1929. In 2015, the proposed supply chain bill requires corporations with global revenue exceeding $100 million to identify forced labor conditions occurring within their supply chains — and disclose efforts to eradicate them, if such efforts are underway. In the food and beverage world, this would impact businesses from Kroger to Keurig-Green Mountain. According to the law, these corporations would have to disclose this information in the same manner they deliver annual reports to the SEC. Additionally, their websites must provide readily accessible links to transparency reports.

“My legislation will encourage large corporations to take an active role in their supply chains,” says Rep. Maloney, “and report to the public what actions they are taking to stop these abuses.” But while the bill seems like a silver bullet to solve systemic inequality, it raises a few immediate questions: How “active” will corporations be in the pursuit of transparency? To what degree of culpability will a corporation be held when forced labor is discovered in its supply chain? And what tools, if any, are available to a corporation looking to remedy these problems?

Seafood supply chains, according to experts, are “inherently non-transparent.”

Murky Waters

The seafood industry could provide the first legal precedent for reporting supply chain transparency. The California Transparency in Supply Chains Act, regarded as a precursor to Maloney’s proposed legislation, went into effect in 2012. This August it prompted a class-action lawsuit filed against Costco. The plaintiff, a California resident, alleges the wholesaler’s shrimp purveyor, C.P. Food Products, benefited from the same human rights violations outlined in both the Guardian exposé and the Nestlé-sponsored report. The complaint states the company falsely reported a supply chain free of forced labor when it had knowledge of the contrary. The case is still in the early stages, and it’s uncertain if it will make it to trial.

Even before the lawsuit, however, the initial reports from the Thai fishing industry spurred a multi-stakeholder coalition of retailers to investigate the claims of forced labor. Costco spearheaded the Shrimp Sustainable Supply Chain Taskforce, outlining objectives to eradicate unfair labor conditions. (In response to Eater’s inquiry asking for a progress report on the initiative’s goals, Costco cited a busy holiday season and deferred to its initial report.) Nestlé expressed plans to join the taskforce in their own Responsible Seafood Sourcing Plan [.pdf].

According to the Verité report, seafood supply chains are “often inherently non-transparent.” Social and environmental accountability become obscured in the complex journey from ocean to freezer shelf, as numerous subcontractors participate in production. For instance, the Thai fishing vessels run by slave labor are often at sea for months at a time, using smaller boats to ferry in supplies and transfer the catch — leaving laborers out-of-view. The fish they are shipping is not meant for human consumption, but “trash fish” to be processed into feed for farm-raised shrimp. This effectively launders the deplorable labor conditions from a consumer-focused company only interested in selling low-cost frozen shrimp.

Mapping the Maze

In coffee, the supply chains can be just as circuitous, and labor problems are again often out of the large buyer’s sight and mind. “Coffee is particularly problematic given that most growers are smallholders whose production is aggregated to achieve commercially viable volumes,” says Michael Sheridan of Catholic Relief Services. Sheridan directs the CRS Coffeelands project, which fosters development at coffee origins. “Sometimes a grower’s coffee is bought and sold multiple times before it even reaches the first business unit with the capacity for traceability.”

By “business unit,” Sheridan is referring to cooperatives, exporting mills, and even large estates. Because of low profit margins, farms selling to these entities often cannot afford to employ year-round staff. Hiring staff has grown more costly, with climate change causing an increasingly spread out and sporadic harvest.

These market and environmental pressures result in the temporary hire of migrant workers, often employed by labor brokers. According to Quinn Kepes, a Verité research director based in Guatemala, these middlemen hire temporary staff through verbal agreements. In a recent webinar hosted by the Specialty Coffee Association of America, Kepes detailed the challenges that arise from this hiring structure. “A lot of times, when there is some kind of intermediary, the conditions originally promised differ substantially from the actual work… It’s really important that workers be provided with information on what they’ll be expected to do, what the remuneration is, what deductions will be.”

Kepes believes companies should first understand the intricacies of their supply chains and then adopt codes of conduct to ensure sound labor practices. “If they don’t know where the coffee ultimately comes from, it’s hard to communicate their expectations to the farms,” he says. “Part of [the solution] is supply chain mapping and then following up with those suppliers, having constructive conversations about what the challenges are, having open communication with all the suppliers — rather than hiding things.”

Transparency in Action

If the Business Supply Chain Transparency on Trafficking and Slavery Act of 2015 passes, the Securities and Exchange Commission will work with the Secretary of State to design specific regulations. Essentially, these regulations will require corporations to report any due diligence to engage their supply chain. Companies will also have to report their efforts to remediate transgressions (like setting up victim support services or auditing problematic suppliers) or lack thereof. However, without effective channels for neglected workers to report abuse, the labor issue may continue to slip through the cracks.

CRS’ Sheridan points to the Coalition of Immokalee Workers (CIW) as an example of a successful campaign to improve wages and working conditions. In 2009, CIW created the Fair Foods Standards Council to monitor abuses against tomato harvesters in Florida. As part of its Fair Food program, which enlists large corporations to comply with its labor standards, CIW conducts regular field interviews and maintains a Spanish-language hotline available to any worker that wishes to report abuse.

In Nicaragua, a similar program introduced by the United Farm Workers, the agricultural labor union founded in the 1960s by Cesar Chavez, recently came to the aid of workers at La Revancha Estate, one of the first estates to be certified by Fair Trade USA. As part of the pilot, this estate — which employs up to 550 workers at peak harvest — will introduce a structured wage increase, gaining harvesters 50 percent more than their usual pay over the next five years. WholeFoods Brand Allegro Coffee is among the first roasters to sign on to this program, which fixes contracts at $2.50/lb., delivering $0.40/lb of that to workers. That’s a welcome standard when the world price currently hovers around $1.30/lb., and even fair-trade premiums will only amount to an extra $0.40/lb (or half that if it’s not organic).

A certification like Fair Trade includes labor standards and codes of conducts, but as United Farm Workers vice president Erik Nicholson points out, these regulations are often lost when responsibilities are passed along to subcontractors. “Trade certifications, in and of themselves, are not enough. Go to any community in Mexico and say, ‘There’s a code of labor conduct and you should not have to pay to work.’ They’ll say, ‘Get real. If we don’t pay a recruiting fee, we don’t get the job.’ And if they call out labor brokers for violating this code, not only do they not get the job, they suffer retaliation — we’re talking torture; at times, murder.”

Verité’s report on Guatemala found a national registry of these subcontractors, but local inspection agencies often do not have access to them. Kepes says companies must first stop the practice of retribution carried out by labor brokers. “[Brands] must establish a line of communication with workers and build up trust by showing that they will respond to grievances and will protect workers if they are victims of retaliation.”

“If you have the trust of the community in the workforce, you have fairness.”

Nicholson believes corporations should use third-party organizations like United Farm Workers to engage the supply chain. Workers represented by UFW can contact the union to report problems at any time. “At La Revancha, workers can just call us; there is robust communication. They have access to a laptop. They’re on Facebook, and we’re seeing workers engage through social media,” Nicholson says. “But none of this supplants what is really important to the relationship — building trust. I fear too often people think we can solve everything with technology, when the real issue is trust. If you have trust of the community in the workforce, you have fairness.” Nicholson says UFW won’t wait around for legislation to get passed, but is hopeful that laws already in effect in California and England will be enough to nudge large swaths of the corporate world into compliance.

In September, a group of more than 100 investors representing a total of $1 trillion in assets signed a letter of support for the Business Supply Chain Transparency Act. The letter argues that shareholders have a right to know what (if any) due diligence has been performed by companies to prevent labor abuse. Representative Maloney says her office continues to “build support for the legislation on and off Capitol Hill,” adding that those who wish to see the bill passed should contact their representatives in Washington. (The bill currently has seven co-sponsors in the House.)

United Farm Workers’ Nicholson says there is little incentive for workers themselves to fight for better labor conditions — fear of retribution notwithstanding — when at the end of the day, the work is physically taxing and the compensation is paltry. “There are few that aspire to work in agriculture, but from our perspective, there are fewer dignified ways to make a living when it’s done fairly,” he says. “You’re providing food for someone.”