The True Cost of Tomatoes: Insights from our Supply Chain Engagement Trip

In late 2019, Sustainalytics traveled to Italy as part of our Stewardship and Risk Food Supply Chain Engagement. We embarked on this trip with a group of investors and Nestlé to gain an understanding of the working conditions in the tomato sector. The goal of this engagement program is to address risks of child labor in the targeted companies’ supply chains as well as remediate potential adverse labor rights impacts.

During this engagement trip, we visited farms, producer cooperatives and processors, and held meetings with NGOs and the labor ministry, among other organizations. A recurring theme across our stakeholder dialogues was the influence of pricing pressure on labor rights issues in the food supply chain and how companies can ensure the well-being of workers further down the chain.

Conditions for workers in the tomato supply chain

In our conversations with these stakeholders, we were presented with a number of pressing issues – including poor working conditions, pay and working hours, and the plight of migrant workers – that pose clear challenges for the sector and agricultural workers. These issues permeate not only tomato production, but food supply chains globally, as highlighted in a recent report from the Guardian.

Overall, it seems that the majority of workers in the Italian tomato sector are migrant workers. Some of these workers have obtained permits specifically to work in agriculture, while others, due to the migrant crisis in recent years, are without permits and must often accept work without legal contracts and under poor conditions. They stated that they are often faced with the choice of turning to illegal work or returning to their home country.

Throughout our trip,several stakeholders also highlighted how living conditions for migrants are regularly substandard,and they often end up living in ghetto-like accommodations.There have also been widespread reports by the media, Oxfam and unions of the mafia controlling workers’ transport and racketeering. Several fatal incidents have occurred as workers were transported in overcrowded and unsafe vehicles. These kinds of working conditions, together with the environment of fear fostered by criminal organizations, can put workers in a vulnerable position where they may not report abuses.

During our dialogues with stakeholders exploring the key drivers of these issues, a reoccurring theme was the effects of price pressure. Driven by increasing competition between retailers, lower prices are believed to be having an impact at the lowest levels of supply chains, where farmers face increasing costs and a decreasing share of the retail dollar.

Addressing social issues in the tomato supply chain

Through Sustainalytics’ Stewardship and Risk Food Supply Chain Engagement, we use constructive dialogue, best practice knowledge and insights gained through in-depth dialogue with multiple stakeholders and actors working within this area, to help companies tackle these matters.

A single company cannot change these systemic issues on its own. Collaboration within and beyond the private sector is needed to determine the appropriate interventions and to bring them to scale. Sustainalytics recently held a virtual round table with the objective of creating a collaborative cross-industry dialogue by sharing unique insights with retailers, food producers and investors alike. Throughout the round table session we highlighted pricing mechanisms, the relationship between procurement and sustainability teams and methods to strengthen current collaborations. The round table also allowed companies wanting to change the situation to connect with like-minded peers and stakeholders, and together raise the bar in food supply chains.

Please visit our website for more information on our Stewardship and Risk Food Supply Chain Engagement. If you’re interested in joining this engagement program, please contact us.

For more information on the supply chain policies and practices of supermarkets in the U.S. and Europe, please review Oxfam’s scorecard for its #behindthebarcodes campaign.