Producers from seven Latin American countries condemned the German retailer’s decision to cut the price per box for 2021. The price cut has created an unprecedented crisis involving banana producers, Latin American diplomats, German ministers and EU officials.
Although the banana industry is one of the most important sectors in Latin America, German supermarket chain Aldi has unilaterally decided to reduce the price per box for the upcoming year by $ 1.25. This move is a devastating blow to the industry’s 400,000 workers in Latin America and has exposed a huge gap in EU policies on shared responsibility along the banana supply chain that need to be addressed to ensure respect for rights throughout the production network.
The downward trend in the price of bananas began 5 years ago, despite the increasing production-related costs that banana producers have been facing. As 2020 meant extraordinary investments in biosecurity material for workers during the first wave of Covid-19, current irrigation infrastructure to deal with the Fusarium T4R plague, and costs related to sustainability, Aldi’s announcement has generated frustration among Latin American producers.
Despite the German chain claiming a strong commitment to corporate social responsibility standards, the facts tell another story: Aldi’s business strategy strays from its greenwashing sustainability narrative.
In this context, Aldi runs the risk of abusing its dominant position by violating antitrust legislation, since it is the actor that sets the price of the fruit. Therefore, paying for bananas at a lower price not only compromises wages in rural areas of Latin America, but it also violates the human right to a living wage, breaching existing diligence obligations.
How much is a rebate worth?
As little as it may seem, € 0.06 less per kilo can heavily impact people working in the production and supply chain. Indeed, banana production in Colombia, Costa Rica, the Dominican Republic, Ecuador, Guatemala, Honduras and Panama represent more than 65% of the world banana trade and is mainly made up of small and medium-sized producers (between 1 and 50 hectares), which, in turn, represent 96% of the total banana production exported to the EU. Thus, this is how a decrease in the price paid by supermarkets per box of bananas directly affects people, especially in rural areas.
“The banana price fixed by ALDI sets the benchmark for the retail market in Europe. The company likes to present itself as a champion of sustainability, a proud member of the Business Social Compliance Initiative. Lowering the price ALDI is willing to pay for Bananas in 2021 contradicts this image” says Helmut Scholz, Member of the European Parliament Committee on International Trade.
“ALDI undermines all efforts in producing countries to meet European consumer demands for more sustainability and decent wages and working conditions.”
“What about ALDI’s public commitment from January 2020 to securing living wages in all of its major food supply chains? What about its membership in the World Banana Forum, aiming for sustainability?”
“I call on ALDi Nord CEO Torsten Hufnagel to reverse the strategy of his purchasing managers. This is a time for solidarity and working together, not for seeking even more profits at the expense of workers and nature.”
Additionally, the COVID-19 crisis has had huge impacts on banana production and exports, yet producers have borne the additional costs and adapted as quickly as possible. Despite disruptions in international trade, extraordinary investment has been made in equipment and security measures to maintain supply in the banana chain.
To make matters worse, Hurricane Eta has swept through several Central American countries. Heavy rains have damaged infrastructure and crops and delayed exports, leading to additional costs. This catastrophe has strongly impacted Honduras and Guatemala, also affecting their banana production.
Within this scenario, banana growers have decided to convene a roundtable together with the main retailers in the European Union – including ALDI, REWE and TESCO, among others – on November 27 to design a scheme for redistributing the burden.
Marcella Via is a researcher on EU relations with Latin America and contributing editor at Alborada.net. Her work focuses on Human Rights and Latin American politics.
