Why we need a holistic approach to living wages in bananas
Written by Anna Mann, Head of Responsible Business and Claire Hancock, Senior Technical Lead, Living Wage and Living Income – Fairtrade Foundation.
Last week the Fairtrade Foundation welcomed the news that nine UK retailers, convened by IDH (the Sustainable Trade Initiative), have joined forces to commit to a living wage for banana workers in their international supply chains.
A living wage means ensuring workers have enough of an income to afford a decent standard of living for their household – including a nutritious diet, clean water, decent housing, education, healthcare and other essentials – plus a little extra for savings and emergencies so they can plan for the future.
The need for a living wage has always been pressing in the banana sector, but the global economic uncertainty of the last two years has increased the urgency. Last year, producers publicly challenged the banana industry about the cost increases they were facing, urging European retailers for more support amid the unprecedented inflationary crisis. Input costs are also on the rise, including a spike in fertiliser prices and in fuel (up by nearly 40% in banana producing regions in October 2022).
This is particularly important for the UK industry, given this country has among the highest per capita consumption of bananas in Europe, importing on average more than a million tonnes a year.
In the context of a squeezed banana sector, it’s not just critical that we see a commitment to living wages. It’s also vital that workers have safe and healthy working conditions, can access health, education and finance services and, critically, can enjoy dignified and sustainable livelihoods. Moreover, smallholder banana farmers also need to benefit from higher incomes, as well as support for adapting to climate change and accessing global markets.
Fairtrade sourcing: a critical first step
This is where Fairtrade comes in. Not only does the Fairtrade Minimum Price offer producers security of income to negotiate with unions on wages, but it is reviewed annually to ensure rising costs are factored in. We also provide local support to growers through our Producer Networks, who train up farms and offer advice and local expertise in a challenging sector.
Meanwhile, the Fairtrade Premium – an additional sum that producer groups can spend on community or business projects of their choice – can be used as cash-out for workers whilst wages are below living wage benchmarks. This is an important source of additional money, particularly during times like these when local inflation is stretching workers’ salaries further. Retailers sourcing Fairtrade bananas are already making strides to support the closure of living wage gaps, with those with 100% Fairtrade commitments the furthest ahead. The significance of this cannot be understated in such a tough economic climate.
Certification schemes, like Fairtrade, can therefore play a key role in supporting retailers to meet their recently signed living wage commitments. “Fairtrade sourcing is a critical ‘first step’ bundle of interventions to close the Living Wage gap,” explains Claire Hancock, Fairtrade Foundation’s Living Wage Technical Lead. “Through Fairtrade sourcing, producers receive the Fairtrade Premium and Fairtrade Minimum Price protections so that plantations can maintain the costs of production (including wages) during commodity price crashes.”
The importance of the Fairtrade Premium
Recent data from the Fairtrade Foundation has shown that sourcing on Fairtrade terms is a significant step towards achieving living wages for workers. Fairtrade Foundation’s new report, Exploring the benefits of the Fairtrade Premium in the context of living wages, explores this: it explains how investments made through certification support the closing of the living wage gap, and help create the enabling environment needed to make living wages useable and effective in improving livelihoods. On top of the use of the Fairtrade Premium as a cash transfer to workers, this communal fund is providing vital support by reducing the pressure on wages.
Publishing during Fairtrade Fortnight, the report shows that in Ghana, the in-kind benefits generated through Fairtrade Premium have an average cash equivalent of about USD$75 per worker per month and in the Colombian plantations in this study, workers on average receive additional benefits that are equal to USD$88.60 per worker per month.
“Through this study workers have told us of the vital importance of the Fairtrade Premium towards supporting workers’ livelihoods,” continues Claire Hancock. “In Ghana, cost of living increases are putting additional pressure on wages for workers. In a mobile survey 66 percent of workers interviewed said that they used the cash payments from the Premium towards basic needs such as food or household running costs, showing how the Premium plays a crucial role in addressing rising costs of living.”
A farmer-led approach to embedding change
Commitment from UK retailers, alongside retailers in the Netherlands, Belgium and Germany, is an important next step in achieving living wages. However, it is critical that the sector opens the floor to farmers and includes their perspectives in the implementation of commitments being made by end-buyers. Fairtrade is committed to listening to and acting on farmers’ voices: we are continually exploring new ways to ensure their views are represented in supply chain discussions. At the same time, increasing sector-wide collaboration, as well as a focus on understanding and investing in suppliers, is key to seeing targets becoming a reality.
Retailers must therefore commit to producers for the long-term in order to meaningfully invest in, and with, them. This is a core component for supply chain resilience that must not be missing from wage debates.
Anna Mann, Head of Responsible Business at the Fairtrade Foundation explains: “Ultimately it is the producers (both plantation management and smallholders) who are responsible for wages paid to workers, and therefore it’s vital they can make these commitments work for their businesses and families. For the sector, this means validating data used on incomes and wage gaps with farmers to understand the realities farmers face; confirming farm-level price implications of closing the gap; and validating the roadmap of interventions for plantations and smallholders to close living income and wage gaps. These interventions must be created with producers, rather than designed and done ‘to them’ without their feedback.”
Achieving living wages therefore requires rigorous monitoring, evaluation and learning to improve and inform future action, Fairtrade believes. “Any action to fulfil UK retailers’ commitment on living wages for banana workers must not disadvantage small-scale banana farmers, whose livelihoods also depend on international supply chains,” continues Anna Mann.
“If retailers are incentivised to announce that they have closed living wage gaps in their supply chain, they may then switch sourcing away from smallholders and towards plantations with clean living wage datasets, and to countries without a large wage gap. This is why Fairtrade has a strong focus on supporting living incomes for small-scale banana farmers and why we are in discussions with retailers and IDH on how to take this forward.”
Fairtrade is already working with smallholder farmers to improve their incomes through farm efficiencies. We also remain committed to working with IDH and UK retailers to drive action towards the realisation of living wages for banana workers. We must build a better banana sector for the future, taking a holistic approach to ensuring workers’ and farmers’ perspectives and needs are at the heart of changes to bolster resilience in a sector that the UK population would struggle without.
Fairtrade Foundation’s new report is available here: https://www.fairtrade.org.uk/