BANGKOK (AP) — Indonesian shrimp farmer Yulius Cahyonugroho operated more than 20 ponds just a few years ago, employed seven people and earned more than enough to support his family.
Since then, the 39-year-old says the prices he gets from buyers have fallen by half and he has had to scale back to four employees and about a third of the ponds, some months not even breaking even. His wife had to take a job on a watermelon farm to help support their two children.
“It is more stable than the shrimp farms,” says the farmer from the Indonesian province of Central Java.
While major Western supermarkets are making windfall profits, their aggressive pursuit of ever-lower wholesale prices is causing misery for people at the bottom of the supply chain – people like Cahyonugroho who produce and process the seafood, a study by an alliance of NGOs has found. focused on three of the world’s largest shrimp producers provided to The Associated Press ahead of publication Monday.
Industry analysis in Vietnam, Indonesia and India, which supply about half of the shrimp in the world’s four largest markets, shows revenues are down 20% to 60% from pre-pandemic levels , as producers struggle to meet price demands by cutting back on labor. costs.
In many places this has led to unpaid and underpaid work due to longer working hours, wage insecurity as rates fluctuate, and many workers not even earning a low minimum wage. The report also found dangerous working conditions, especially in India and parts of Indonesia, and even child labor in some places in India.
“Purchasing practices in supermarkets changed and working conditions were directly and quickly affected,” said Katrin Nakamura of Sustainability Incubator, who wrote the regional report and whose Hawaii-based nonprofit led the research into the industry in Vietnam. “These two things go together because they are linked by pricing.”
Tubagus Haeru Rahayu, director general of aquaculture at Indonesia’s Ministry of Maritime Affairs and Fisheries, said he was surprised by the report’s findings and had already contacted people in the industry to investigate the price pressure.
“If there is such pressure, there will definitely be a reaction – not only in Indonesia, but also in Vietnam and India,” he told the AP in an interview at his office in Jakarta.
Indian and Vietnamese officials declined to comment.
Supermarkets associated with facilities where exploited worker labor was reported include Target, Walmart and Costco in the United States, Britain’s Sainsbury’s and Tesco, and Aldi and Co-op in Europe.
The Swiss Cooperative said it has a “zero tolerance” policy towards violations of labor law, and that its producers “receive fair and market-driven prices.”
Germany’s Aldi did not specifically address the price issue, but said it uses independent certification programs to ensure responsible sourcing of farmed shrimp products, and that it would continue to monitor the allegations.
“We are committed to fulfilling our responsibility to respect human rights,” Aldi said.
Sainsbury’s referred to a comment from industry group British Retail Consortium, which said its members are committed to sourcing products at a “fair, sustainable price” and that the well-being of people and communities in supply chains is fundamental to their purchasing practices .
None of the other retailers mentioned in the report responded to multiple requests for comment on the report, titled “Human Rights for Dinner.”
In Vietnam, researchers found that workers who peel, gut and remove shrimp typically work six or seven days a week, often in extremely cold areas to keep the product fresh.
About 80% of those involved in shrimp processing are women who get up at 4 a.m. and go home at 6 p.m., with the exception of pregnant women and new mothers who can stop an hour earlier.
“The workday for peelers consists of standing in a cooled and disinfected area and working extremely quickly with a knife, while taking care not to make any mistakes,” researchers said.
Wages are generally not announced in advance and are based on production. Sometimes employees earn the minimum wage, but often not.
The Vietnam Association of Seafood Exporters and Producers issued a statement calling the allegations in the report “unfounded, misleading and detrimental to the reputation of Vietnam’s shrimp exports.”
It cited government labor policy in a four-page statement but did not specifically address the findings or respond to questions.
Following disruptions to the food supply chain during the COVID-19 pandemic, the US Federal Trade Commission reported earlier this year that some grocers have used the situation “as an opportunity to further raise prices to boost their profits, which remain high today.” , to increase.”
Demand for lower wholesale prices for shrimp – combined with rising production costs and oversupply – means farmers often have to sell their products below cost to keep operations running, the Sustainability Incubator analysis shows.
Cahyonugroho said he is stuck selling his shrimp at the price offered by middlemen, who then sell the shrimp to factories for processing. He can’t scrape together the start-up costs required to sell directly to factories or markets to make more money.
“The opportunity is there,” he said, “but you need a lot of capital if you want to do something like that.”
The middlemen who buy the shrimp obscure the true sources of shrimp found in Western supermarkets, which may cause many retailers to fail to adhere to the ethical commitments they have made about purchasing shrimp.
Only about 1,000 of the 2 million shrimp farms in the major producing countries of India, Indonesia, Vietnam, Ecuador, Thailand and Bangladesh are certified by the Aquaculture Stewardship Council or the Best Aquaculture Practices ecolabel.
“Because the yield of most certified shrimp farms is very small, it is mathematically impossible for certified farms to produce enough shrimp per month to supply all the supermarkets that commit to purchasing certified shrimp,” the report said.
Ideally, supermarkets should pay higher wholesale prices and ensure the extra money goes all the way up the supply chain, Nakamura said.
U.S. policymakers could use antitrust and other laws already in place to monitor and ensure fair prices from Western retailers, rather than imposing punitive tariffs on suppliers for labor violations, she said.
Awareness of the trends that harm suppliers is growing.
In July, the European Union adopted a new directive requiring companies to “identify and address the adverse human rights and environmental impacts of their actions inside and outside Europe.”
The UK’s Groceries Code Adjudicator Office published a “deep dive” into suppliers’ views on supermarket behavior and said they had chosen to wage “warfare” with suppliers.
Higher wholesale prices do not have to mean that consumers have to pay higher prices, according to Sustainability Incubator.
“Prices for farmers would be at least 200% higher than today if the shrimp sold in Global North supermarkets were made at minimum wages and in accordance with applicable national labor, health and safety laws in the workplace,” the report said. “This would not necessarily mean higher consumer prices, as supermarkets already benefit from existing consumer prices.”
Researchers at the Corporate Accountability Lab found that workers in India’s shrimp industry face “dangerous and violent conditions” and that highly salinized water from newly dug hatcheries and ponds, contaminated with chemicals and toxic algae, is contaminating surrounding water and soil.
Unpaid labor prevails, including salaries below the minimum wage, unpaid overtime, wage deductions for the cost of work and ‘significant’ debt burdens, the report found.
Child labor was also identified, with girls aged 14 and 15 being recruited for fur work.
In Indonesia, three nonprofit research organizations found that shrimp workers’ wages have fallen since the pandemic and now average $160 a month, below Indonesia’s minimum wage in most of the top shrimp-producing provinces. Shrimp peelers were found to routinely have to work at least twelve hours a day to meet minimum targets.
Still, given widespread poverty, most workers say they are happy with their jobs, says lead researcher Kharisma Nugroho of the Migunani Research Institute.
“It’s exploiting the vulnerability of workers because they have a lack of options,” he said.
“They are paid the minimum wage, but they have to work 150% of the normal wage,” he told the AP. ‘Can they live? Yes. Can they move? Yes. Do they file a complaint? No. They’re still there.’
The regional report collected more than 500 face-to-face interviews with employees in their native languages, in India, Indonesia and Vietnam, supplemented with secondary data and interviews from Thailand, Bangladesh and Ecuador.
After the country report on Indonesia was recently released, government officials requested a meeting with the authors, and Nugroho said they showed a “sincere willingness to improve the situation.”
Vietnamese officials also contacted Sustainability Incubator to discuss the findings.
Government and industry intervention has already helped in Thailand, which has been criticized after the AP exposed serious labor abuses in the shrimp industry in the past. However, that has led to higher prices for Thai shrimp, causing some buyers to shift their purchasing to India and Ecuador.
Ecuador takes an industrial approach to shrimp farming – unlike the smaller, often family-run operations in Southeast Asia – and is now the world’s largest exporter of shrimp. It has the lowest prices, followed by India; China, which was not included in the report; then Vietnam and Indonesia.
But due to the demand for lower wholesale prices, Ecuador’s exports will increase by 12% in volume in 2023, but will decrease by 5% in value. Indian exports rose by 1%, but fell by almost 11% in value.
Meanwhile, Vietnam’s exports, with their relatively higher prices, fell 25% in volume in 2023, while Indonesia’s fell 9.5%.
“Labor exploitation in the shrimp aquaculture sector is not company, sector or country specific,” the report concludes. “Instead, it is the result of a hidden business model that exploits people for profit.”
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AP journalist Edna Tarigan in Jakarta, Indonesia, contributed to this report.
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This story was supported by funding from the Walton Family Foundation. The AP is solely responsible for all content.
