Working Conditions and Livelihoods

Issue Overview

Smallholder farmers in the developing world play a critical role in key commodity supply chains. Yet they typically face high levels of poverty and debt. Accessing credit and high-quality seeds and inputs is a challenge for many, which limits their ability to invest in productivity-improving equipment and sustainable practices. In addition, agriculture is still one of the most hazardous work sectors due to fatalities, injuries and work-related sicknesses. At least 170,000 agriculture workers are killed on the job each year globally, and millions more are seriously injured in workplace accidents. 

Agriculture employs a high number of children – more than 98 million children in 2012 – particularly for commodities such as cocoa, coffee, tobacco, sugarcane, cotton and rice. An estimated 3.5 million people work in forced labor situations globally in agriculture, fishery and forestry. Smallholder farmers often have limited power in contract negotiations and are subject to middlemen who pay them below market prices. Inattention to these impacts can lower both the quality and quantity of supply for agribusinesses.

In many countries, including the U.S., agricultural workers are exempt under most national labor laws, and may have few social protections that other workers enjoy, particularly regarding wages, overtime pay, freedom of association and collective bargaining. Furthermore, the sector is plagued by illegal and unethical employment practices.

Food and agriculture companies face considerable exposure to labor rights violations among suppliers, many of whom are based in countries lacking basic worker protections. Migrant agricultural workers are at risk for exploitation by labor brokers who may employ unethical practices such as high recruitment fees, passport retention, and contract fraud to lure them into forced labor schemes, and use threats of deportation to keep them from reporting abuses.

Forced and child labor in food company supply chains can cause reputational damage when “bad actors” tarnish the image of an entire industry or sector and subject companies to lawsuits. In addition, social conflict can cause disruptions in agricultural supply chains.  

Commodity Exposure to Working Conditions and Livelihoods Issues

Business Risks Associated With Working Conditions and Livelihoods Impacts

Market

In 2016, the Consumer Goods Forum (CGF) passed the Social Resolution on Forced Labour, a commitment to fight forced labor throughout its global supply chains. Nestle, a signatory to the resolution, implemented an internal monitoring system to investigate human rights abuses.

IMPACTS

  • Costs of complying with human rights and labor certifications, including costs to implement internal monitoring policies

Reputational

A line of Hershey’s chocolate was dropped by Whole Foods and the company agreed to more aggressive human rights and labor certification in its supply chain in 2012 after NGOs (International Labor Rights Forum, Green America, etc) campaigned against the company, including threatening to run a Super Bowl ad on the issue of abuses in the coca supply chain. The company agreed to improvements (which have been further strengthened since) and the ad was dropped.

IMPACTS

  • Brand equity damaged due to consumer concerns and advocacy campaigns
  • Costs of complying with human rights and labor certifications

Litigation

In 2015, the consumer rights law firm Hagens Berman filed separate class action lawsuits against US food companies Mars and Hershey and Swiss Nestlé for failing to report the use of child labour in their cocoa production.

IMPACTS

  • Legal fees and monetary settlements for violating laws and regulations

Priority Commodities

Among the most commonly sourced commodities profiled in Engage the Chain, impacts related to livelihoods and working conditions are significant in the production of palm oil and sugarcane. 

The following summarizes how the production of palm oil and sugarcane contribute worldwide to impacts on livelihoods and working conditions. It is important to consider that the scale of the impacts depends on the practices used by individual producers, as well as regional and local conditions.

Palm Oil

Rapid plantation expansion is creating exploitative working conditions, including child labor, forced labor and trafficking of migrant workers. In many regions, small-scale operators lack access to resources, which limits their productivity and food security.

The U.S. Department of Labor identified palm oil production in Indonesia, Malaysia, and Sierra Leone as high risk for child labor and Malaysia as high risk for forced labor. Smallholders play a key role in the labor-intensive palm oil industry, making it critical to get them involved in driving changes in production. Smallholders need help gaining access to markets and may require additional technical and financial resources to support productivity improvements and shifts in cultivation practices

  • In Indonesia, for example, smallholders produce up to a third of the country’s palm oil.
  • Globally, around three million smallholders are involved in oil palm cultivation.
  • Since smallholders’ productivity is 35 percent lower than larger plantations, improvements could help meet increasing demand without further expansion of palm plantations. 

Social disputes with local communities and workers can disrupt operations through roadblocks, development delays, demonstrations or employee strikes. Though the palm oil sector provides employment for millions and significantly reduces poverty, the current work is done through long, hard hours at low pay. The development of new large-scale oil palm plantations is also leading to social conflict when the rights and livelihoods of the local communities are ignored.

Sugarcane

Numerous violations of the International Labour Organization’s (ILO) core labor principles are linked to sugarcane production. In some regions, small-scale operators lack access to resources, which limits their productivity and food security. 

The U.S. Department of Labor has identified 19 sugarcane producing countries with high risks for child and/or forced labor, including three of the five largest producers of sugarcane: Brazil, India and Thailand.

Other human rights challenges include inadequate compensation, restricted rights to associate and lack of contracts for laborers. One example of the impacts includes recent reports of working conditions among some sugarcane cutters in hot temperatures linked to an unusually high incidence of deadly kidney failure.

Occupational safety and health hazards arise from hand harvesting of sugarcane with sharp tools like machetes; the monotony of the work combined with long hours working in hot sun lead to frequent accidents. In addition, pre- and post-harvest burning can result in smoke inhalation and respiratory concerns for workers while also generating air pollution in the neighboring communities.