As big supermarkets chase profits, new research shows increasing exploitation of shrimp farmers

BANGKOK (AP) – Indonesian shrimp farmer Yulius Cahyonugroho operated more than two dozen ponds just a few years ago, employing seven people and making more than enough to support his family.

Since then, the 39-year-old says the prices he gets from buyers have halved and he’s had to cut back to four workers and on about a third of the ponds, some months they don’t even break even of profitability. His wife had to take a job on a watermelon farm to support their two children.

“It’s more stable than shrimp farms,” ​​said the farmer from Indonesia’s Central Java province.

As major Western supermarkets reap windfall profits, the 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, an investigation has found of an NGO alliance. focused on three of the world’s largest shrimp producers, provided to The Associated Press ahead of its publication on Monday.

The review of the industry in Vietnam, Indonesia and India, which supplies about half of the shrimp in the world’s top four markets, found a 20%-60% drop in earnings from pre-pandemic levels as producers struggle to meet demand for prices by reducing labor. costs.

In many places, this has meant unpaid and underpaid work through longer hours, wage insecurity as rates fluctuate, and many workers not even making low minimum wages. The report also found hazardous working conditions, particularly in India and parts of Indonesia, and even child labor in some places in India.

“Supermarket purchasing practices have changed and working conditions have been affected — directly and quickly,” said Katrin Nakamura of the Sustainability Incubator, who wrote the regional report and whose Hawaii nonprofit led the industry research. from Vietnam. “Those two things go together because they’re tied together by prices.”

Tubagus Haeru Rahayu, director-general of aquaculture for 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 price pressures.

“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 linked to facilities where labor exploitation has been reported include Target, Walmart and Costco in the United States, Sainsbury’s and Tesco in the UK, and Aldi and the Co-op in Europe.

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The Swiss cooperative said it has a “zero tolerance” policy for labor law violations and that its producers “receive fair and market-driven prices.”

Germany’s Aldi did not specifically address the pricing issue, but said it uses independent certification schemes to ensure responsible sourcing of farmed shrimp products and will 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 were committed to sourcing products at a “fair, sustainable price” and that the wellbeing of people and communities in supply chains was fundamental for their purchasing practices.

None of the other traders named in the report responded to multiple requests for comment on the report, titled “Human Rights for Dinner.”

In Vietnam, researchers found that workers who clean, devein and devein shrimp typically work six or seven days a week, often in rooms kept extremely cold to keep the product fresh.

About 80 percent of those involved in shrimp processing are women who get up at 4 a.m. and return home at 6 p.m., except for pregnant women and new mothers who may stop an hour earlier.

“The working day for peelers consists of sitting in a cold and disinfected room and working extremely quickly with a knife, taking care not to make mistakes,” the researchers said.

Salaries are generally not disclosed in advance and are based on production. Sometimes workers earn minimum wage, but often they don’t.

The Vietnam Association of Seafood Exporters and Producers issued a statement calling the allegations in the report “baseless, misleading and damaging to the reputation of Vietnam’s shrimp exports.”

It cited government labor policies in a four-page statement but did not specifically address the findings or respond to questions.

After food supply chain disruptions during the COVID-19 pandemic, the US Federal Trade Commission reported earlier this year that some grocers used the situation “as an opportunity to further raise prices to increase their profits, which remain up today”.

Demands for lower wholesale prices for shrimp — combined with rising production costs and an oversupply — mean farmers often have to sell their produce at premiums just to keep operations going, the Sustainability Incubator analysis found.

Cahyonugroho said he was stuck selling his shrimp at the price offered by middlemen who then sell them to factories for processing. He cannot raise the start-up costs needed to sell directly to factories or markets to earn more.

“The opportunity is there,” he said, “but you need a lot of capital if you want to jump into something like this.”

The middlemen who buy the shrimp obfuscate the true sources of the shrimp that appear in Western supermarkets, so many retailers may not honor the ethical commitments they have made regarding the procurement of shrimp.

Only about 1,000 of the 2 million shrimp farms in the main producing countries of India, Indonesia, Vietnam, Ecuador, Thailand and Bangladesh are certified by either the Aquaculture Stewardship Council or the Ecolabel for best aquaculture practices.

“With the yield from most certified shrimp farms being very low, it is mathematically impossible for certified farms to produce enough shrimp per month to supply all the supermarkets that boast commitments to buy certified shrimp,” the report said.

Ideally, supermarkets should pay higher wholesale prices and make sure the extra money goes all the way down the supply chain, Nakamura said.

U.S. policymakers could use antitrust and other laws already in place to establish oversight to ensure fair prices from Western retailers, rather than adding punitive tariffs on suppliers for labor violations, she said.

Awareness of trends affecting suppliers is growing.

In July, the European Union adopted a new directive requiring companies to “identify and address the negative human rights and environmental impacts of their actions inside and outside Europe.”

The UK’s Food Code adjudicator’s office has published an “in-depth” look at suppliers’ views on the behavior of supermarkets, saying they have chosen to wage “war” on suppliers.

Higher wholesale prices don’t have to mean higher prices for consumers, the Sustainability Incubator said.

“Prices for farmers would be at least 200% higher than today if the shrimp sold in Global North supermarkets were produced at minimum wages and in accordance with applicable domestic labor, health and safety laws” , the report states. “This would not necessarily mean higher consumer prices as supermarkets are already taking advantage of existing consumer prices.”

Researchers at the Corporate Accountability Lab found that workers in India’s shrimp industry face “dangerous and abusive conditions” and that highly saline water from hatcheries and newly dug ponds, contaminated with chemicals and toxic algae, is contaminating the surrounding water and soil .

Unpaid labor prevails, including wages below the minimum wage, unpaid overtime, wage deductions for labor costs and “significant” debt bondage, the report found.

Child labor was also identified, with 14- and 15-year-old girls being recruited for peeling work.

In Indonesia, three non-profit research organizations found that wages for shrimp workers have fallen since the pandemic and now average $160 a month, below Indonesia’s minimum wage in most of its biggest shrimp-producing provinces. It was found that to clean the shrimp they are required to work at least 12 hours a day to meet the minimum targets.

Still, given widespread poverty, most workers said they were happy to have their jobs, said lead researcher Kharisma Nugroho of the Migunani Research Institute.

“It’s exploiting the vulnerability of workers, because they lack options,” he said.

“They are paid the minimum wage, but they have to work 150 percent of normal,” he told the AP. “Can they live? Yes. Can they move? Yes. Are they making a complaint? Not. I’m still there.”

The regional report compiled over 500 face-to-face interviews with workers in their native languages ​​in India, Indonesia and Vietnam, supplemented by secondary data and interviews from Thailand, Bangladesh and Ecuador.

After the Indonesia country report was published recently, government officials asked to meet with the authors, and Nugroho said they showed a “real desire to improve the situation.”

Vietnamese officials also engaged with the Sustainability Incubator to discuss the findings.

Government and industry intervention has already helped in Thailand, which has come under fire after AP exposed serious labor abuses in the shrimp industry in the past. However, this has led to higher prices for Thai shrimp, prompting some buyers to shift their supply to India and Ecuador.

Ecuador has an industrial approach to shrimp farming – unlike the smaller, often family-run operations in Southeast Asia – and is now the world’s largest shrimp exporter. It has the lowest prices, followed by India; China, which was not included in the report; then Vietnam and Indonesia.

But with demand for lower wholesale prices, while Ecuador’s exports rose 12% in volume in 2023, they fell 5% in value. India’s exports rose 1% but fell nearly 11% in value.

Meanwhile, with their relatively higher prices, Vietnam’s exports fell by 25% in 2023 in volume to Indonesia by 9.5%.

“Labour exploitation in shrimp aquaculture industries is not company, sector or country specific,” the report concluded. “Instead, it is the result of a hidden business model that exploits people for profit.”

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Associated Press writer Edna Tarigan in Jakarta, Indonesia contributed to this report.

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This story was supported by funding from the Walton Family Foundation. AP is solely responsible for all content.