Organic products from abroad: are prices and wages fair ?

Picture: Female workers on an organic farm in Tumisia. Photo © Karin Heinze

The objective is clear: people producing organic goods must earn enough to live on. But do importers in fact pay prices that enable the producers and the workers in the fields and plantations to have a decent standard of living? If the answer is that they often don't, what does that mean for the specialist organic trade?

This organic-market.info analysis deals with the issue by taking fruit and vegetables as an example. The situation problem is described by the problem  of organic tomatoes from Morocco and explains why minimum wages are often not enough to live on. Wages and prices that ensure people have a basic standard of living would be fair and just – but they are not cheap.

Picking organic tomatoes for starvation wages

Morocco: the north-African country has in recent years become an important exporter of fruit and vegetables. The ecological consequences of intensive cropping under plastic in the Souss Massa Draa region are similar to those in the south of Spain. The Moroccan farms compensate for the disadvantages of logistics and having a lower level of efficiency than their Spanish competitors by means of very low labour costs. Two-thirds of the people who work on the farms are unemployed agricultural workers from other regions in Morocco.

“They are paid starvation wages for the hard work in the fields and in the packing stations,“ writes the development organisation CIR in its report „Nicht die Bohne wert“. It says that the wages are only approximately at the level of the minimum wage in Morocco, which is 230 euros gross per month for workers in packing stations and  150 euros gross for workers in the fields (male and female). It points out that even the higher wages in the packing stations are not enough to feed a family. CIR writes: “The trade unions estimate that today a minimum wage of 500 euros a month is necessary to cover the cost of living of  male or female workers and their families. In a report on tomato production in Morocco,  Fairfood International gives 310 to 500 euros as a living wage.

Tunisian landscape. Photo © Karin Heinze

Especially in the early months of the year, organic vegetables come from Morocco to Germany and into our organic shops. The source is, for example, the company PBS – Primeur Biologiques du Souss - an organic pioneer with high aims and social standards that are certain to be much better than those of their conventional colleagues. PBS has for many years been a supplier of Naturkost Schramm and Biotropic .

Picture: Many organic projects have been launched in North Africa - but do they pay enough to ensure the livelihood of their workers?

But, as Herrmann Heldberg, the managing director of Naturkost Elkershausen, made clear  in an open letter in March, only the Moroccan minimum wage is paid on farms and in the packing stations. “It wouldn't be difficult for the importers among us to insist on the exporters increasing the wages,“  Heldberg wrote and linked the issue to the current debate about refugees: “If all manufacturers and importers agreed to pay product prices that would enable people to have a decent standard of living in their own country, the organic sector would be making a contribution to combating the causes of migration.“ Putting it the other way round: importers of organics pay prices for fruit and vegetables that are not high enough to ensure that the producers of the goods can have a decent standard of living. Strong stuff – but there's truth in what he says.

Minimum wages are not enough to live on

Organic providers are always telling us in flyers and brochures about the conditions in which their goods are produced in countries in the south. Fair trade relations, prices and wages considerably higher than the conventional level plus more technical and social commitment – all that with and without logos. The social conditions in the case of many organic suppliers are undoubtedly better than those of their conventional counterparts. Numerous studies also prove the positive social effects of certified fair trade relations. Nevertheless the old adage is more likely to apply: in the land of the blind the one-eyed man is king. Because, as the example of  Morocco shows, the organic industry is also paying wages that keep people on the poverty line. And it's only marginally better in the case of fair trade. Putting it crudely: organic and fair makes poverty more bearable but it's not an effective way of combating poverty itself.

Picture: Organic fruits from abroad in a German organic supermarket. Photo © Karin Heinze

The reason is the organic industry (like all the others) has taken as its yardstick the wage levels commonly found in a country and the minimum wage fixed by the state. The fact that such minimum wages exist in many countries is down to the efforts of the  International Labor Organisation ILO. It writes: “Establishing minimum wages should be an important part of policy in order to overcome poverty and to ensure the needs of all workers and their families are covered.” But the ILO has left the market out of account, and it's the market that gives rise not to appropriate wages but low wages because  low wages are an advantage in global competition.

As the globalisation debate has proceeded, through the commitment of NGOs and trade unions in the textile sector in particular it became clear that minimum wages introduced by the state are not high enough to ensure that employees receive a wage they can live on. This set in motion a wide-ranging discussion – including the relevant workers and their organisations –  about what a living wage really means and what is included under basic needs that such a wage is supposed to cover.

Picture: Orange pickers travelling with their harvest to the factory (Mexico). Photo © Karin Heinze

Livelihood means more than food

The current action for a living wage launched by the Clean Clothes Campaign defines it like this: “A living wage is an income that enables a woman sewing garments, for example, to feed herself and her family, to pay the rent, to cover the cost of health, clothing, mobility and education and also to put aside a little money for unexpected expenses. A living wage should be the basic wage paid in a normal working week and must not include overtime and bonuses. This normal working week should never be more than 48 hours.“

The Asia Floor Wage Campaign has for the first time calculated what would constitute a living wage in Bangladesh, Cambodia and other south-east Asian countries. Its figures were three to five times higher than each state's minimum wage. It also revealed that companies certified in compliance with social standards like BSCI, SA8000 and Fairtrade are still a long way from paying living wages.

The pressure exerted by NGOs has resulted in some countries raising the level of their minimum wage and some fashion companies have put the issue of living wages on the agenda at least of their  PR departments. In March 2016, the international fair trade organisation FLO introduced a new textile standard that applies not only to cotton growing but also the whole textile chain. “As the first standard worldwide, it stipulates precisely by when living wages must be achieved. Wages must be raised to the level of a living wage within six years,“ FLO managing director Martin Hill explained.

Even fair trade is still paying too little

This admission is evidence that even fair trade certification is currently not a guarantee of a living wage. The same applies to all other social logos. For a long time, they have all simply referred  to national minimum wages.

“The business partners are obliged to pay at least the legal minimum wage or, if higher, to comply with industry standards approved on the basis of collective negotiations,“ is what it says in the 2014 Code of Conduct of the Business and Social Compliance Initiative (BDCI), behind which stand the big international chains.

The Fair for Life Standard of IMO  (2013) points to minimum wages and the lower limit, but it defines this level as the income having to cover the basic needs of a worker and his family, with a little money left over. This is what you find also in the codex of the Ethical Trade Initiative ETI.

The fair trade standards for wage earners referred for a long time to agreed industry wages, regional average wages or official minimum wages, whichever was higher. With the  revision of the standard in 2014, living wages were included in the regulations, together with the demand for continual wage increases in order to reach this level. “The gradual move towards this level and the time-scale for implementing wage increases must be negotiated with elected representatives and take into account living wages,“ is stated in the standard.

Members of various coffee cooperatives in Central America discussing fair wages. Photo © Karin Heinze

In the meantime, FLO, Utz, Rainforest Alliance and some other setters of social standards in the ISEAL Alliance have focused on the issue. They have agreed a method of calculating living wages. First reports, for example for Kenya and the Dominican Republic, have already been published and 18 more are being prepared. “These reports show us how much work we still have to do. But now we've at last got clear figures that tell us how high a living wage is and how big the gap is that we've still got to close,“ says FLO expert Wilbert Flinterman about the initial reports. So the relevant labelling organisations have put a move on.

Another article you can read on this issue is Mitka: practising fair trade in Central America  and you can also see the video of organic coffee production in Nicaragua.