The Story Behind the Pineapples Sold in Our Supermarkets

The story behind the Pineapples Sold in Our Supermarkets:

The Case of Costa Rica

Update on the 2010 Report from Consumers International and Bananalink

Contents:

Executive Summary

1. Export Data

1. Data on Area under cultivation

1. Key Players and their Certification

1. Impact of the Pineapple Agro-industry in Costa Rica

4.1 Weakening of the small producers sector

4.2 Wages

4.3 Impact on Health

4.4 Unionisation

4.5 Follow-up of workers’ testimony in the 2010 report

4.6 Impact on the community – water pollution in Cairo, Lusiana, and Milano

1. Are good practices being followed in labour relations in the Costa Rican pineapple plantations?

1. National Pineapple Policy Initiative: Platform for the Production and Responsible Trade of Pineapples in Costa Rica

1. Recommendations for Consumer Organisations

ANNEX 1: Methodology Followed

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Executive Summary

Since the Consumers International 2010 investigation 'The story behind the pineapples sold on our supermarket shelves; a case study of Costa Rica' there have been a number of changes in the Costa Rican pineapple industry, including:

• an increase from 75 to 84 percent in Costa Rica's share of the world fresh pineapple market ;
• a squeeze on producers due to a decrease in the FOB value of pineapple exports to the U.S and Europe, a fall in the value of the Colon and increases in production costs;
• the emergence of relatively new producers exporting their fruit directly to the European market, such as Chestnut Hill Farms and Orsero;
• a shift within Fairtrade markets away from the small producers of ASOPROAGROIN (declining sales) to the large-scale Collins Street Bakery/Corsicana (linked to Dole);
• the emergence of the UNDP/ICCO/IDH backed tripartite initiative 'Platform for Responsible Production and Trade if Pineapple in Costa Rica' ;
• an increase in the occurrence of direct supermarket certification, in particular Tesco as part of moves to 'cut out the middle man '(the big fruit companies) and establish direct trading relations with national producers.

Concerning labour conditions on the plantations – regardless of which producer, exporter or supermarket they are supplying, and which certification schemes these companies are subscribed to - workers continue to suffer violations of their basic human rights: exposure to toxic agrochemicals and inadequate provision of protective equipment prevail; wages have risen slightly but have decreased significantly in comparison to the cost of living; anti-union practices such as those promoted by the Solidarismo movement as well as discrimination in the workplace and in hiring policies continue unabated throughout the industry.

The tripartite dialogue sought by the National Platform has led to minimal tangible developments for workers due to the lack of involvement of trade unions and workers in this process (labour issues have still not been included on the Platform's agenda) and the unwillingness of CANAPEP (the National Confederation of Pineapple Producers and Exporters) to engage in open dialogue.

Costa Rican pineapple production therefore continues to pose a number of serious social and environmental concerns with the only 'ray of light' coming from a small handful of social dialogue initiatives (such as with Corsicana and Dole). However, these limited initiatives have so far created more expectations than they have tangible results.

When it comes to establishing a direct linkage between the conditions on the ground for workers and their communities and the policies and certifications of supermarkets at the consumer end of the chain, it remains virtually impossible to get a fully detailed picture from plantation to fruit bowl. The 'bottleneck' of a limited number of packing plants does nothing to assist this investigation, with numerous producers packing their fruit in one central packing plant. This fruit is then branded with equally numerous labels within that one packing plant before being sent to the next stage in the chain, with most commonly no reference whatsoever to the name of the plantation or the producer company.

In comparison to the 2010 research, the 2013 European supermarket shelf data indeed shows that the names of the big pineapple brands - Chiquita, Del Monte, Dole and Fyffes -appear less frequently, whilst the names of exporter brands or of the supermarkets themselves appear more frequently. This transition could be considered positive when we take the example of Tesco who are moving towards direct trading relations with producers. More transparent and effective auditing processes in Tesco chains seek to ensure that these new relations with producer partners are based on their ability to supply a product that adheres to the Ethical Trading Initiative's Base Code of labour standards. However, this remains rather a unique case amongst major European retailers.

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1. Export Data

The European supermarket shelf data compliments the Fruitrop 2012 statistics that Costa Rica provides at least 84% of Europe's pineapple imports (in comparison to 75% in 2010) and this share of the market remains on the increase[1]. Other key supplier countries include, in order of market share, Ghana, Ecuador, Panama and the Ivory Coast.

The table belowwascompiled using the datafromthe state Trade PromotionAgency -SitePROCOMER on September 13, 2013. It isbased on the three main Costa Rican pineappleexport regions.

Value of Costa Rican Exports of Pineapples in US $ based on FOB prices from 2009 – 2nd trimester 2013.
2009 / 2010 / 2011 / 2012 / 2013*
North America / Canned / 260 / 483,660 / 157,830
Fresh / 264,265,740 / 305,032,190 / 331,205,970 / 381,778,710
Fresh Organic / 734,540 / 223,030
Dried / 57,630 / 164,440 / 279,950 / 130,100
Total / 265,057,910 / 305,419,920 / 331,969,580 / 382,066,640
European Non- EU States / Fresh / 2,960,560 / 8,258,070 / 14,506,950 / 12,944,090
Dry
Total / 2,960,560 / 8,258,070 / 14,506,950 / 12,944,090
EU / Canned / 84,870 / 57,120 / 30,850 / 18,310
Pineapple / 303,487,050 / 347,465,820 / 368,399,870 / 393,301,270
Organic / 574,090 / 124,530
Dried / 70,390 / 69,600 / 89,370 / 713,790
Total / 304,216,400 / 347,717,070 / 368,520,090 / 394,033,370
Grand Total / 572,234,870 / 661,395,050 / 714,996,620 / 789,044,100 / 482,461,960

Export of fresh pineappleshas maintained asteadygrowth, driedpineapplesalsoespecially inthe European Union, meanwhile cannedpineapplesis highly variable inthese markets.Particularly striking is thedisappearance oforganicpineapple exports, which generallyinvolve smalland medium sized farmersin the northern region. Since 2009, theFOBvalueof exports ofpineappleshas surpassedtheexportof bananas in thecountry and pineappleis now Costa Rica’s most importantagriculturalexport.

The following tableshowstonnage exported, using the samedata source.

Costa Rican Exports of Pineapples in tonnes from 2009 – 2nd trimester 2013
2009 / 2010 / 2011 / 2012
North America / Canned / 0 / 365 / 86
Fresh / 663,739 / 777,811 / 819,859 / 940,925
Fresh Organic / 1,721 / 550
Dried / 7 / 33 / 57 / 32
Total / 665,466 / 778,393 / 820,282 / 941,043
European Non- EU States / Fresh / 5,882 / 17,990 / 30,382 / 28,478
Dry
Total / 5,882 / 17,990 / 30,382 / 28,478
EU / Canned / 50 / 53 / 19 / 2
Pineapple / 749,643 / 851,774 / 882,756 / 896,789
Organic / 1,443 / 354
Dried / 283 / 11 / 14 / 115
Total / 751,419 / 852,192 / 882,789 / 896,906
Grand Total / 1,422,768 / 1,648,576 / 1,733,454 / 1,866,426

The average FOB price per tonne shows price differences between the three export destinations, North America consumes more pineapple, but generates slightly lower income than exports to Europe.

Average FOB price per tonne in US$
2009 / 2010 / 2011 / 2012 / 2013*
North America / Average / 398 / 392 / 405 / 406 / 417
Non-EU Europe / Average / 503 / 459 / 477 / 455 / 455
EU / Average / 405 / 408 / 417 / 439 / 439
Average / 402 / 401 / 412 / 423

The Fruitrop Pineapple Close-up October 2012 explains that 'movements of exchange rates have a strong effect on the value of a kilo of pineapples... A 20% decrease in value in colons of a kilo of pineapple on the European market was observed from 2007 to 2012. Worse still, the US market has fallen in dollars and in colons by respectively 16% and 26% from 2009 to 2012. When it is added that factors of production, and especially those whose price is strongly linked to oil prices (fertilizer, packaging, transport) have increased strongly, it is legitimate to consider that financial returns have decreased distinctly at production. Over the last 12 years inflation in Costa Rica has totally absorbed and even eroded the increase in import prices in Europe and in the United States'

In relation to this the former president of CANAPEP (National Chamber of Exporters of Pineapple) Abel Chaves pointed out in an interview, "The appreciation of the colon is hitting us hard. Two years ago we needed to produce about ten boxes to pay a labourer, today it’s between 15 and 18 boxes. "

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2. Data on Area under Cultivation

While information on the increase in area devoted to growing pineapple is unclear, figures from the Costa Rica Chamber of Pineapple Producers and Exporters [Cámara Nacional de Productores y Exportadores de Piña – CANAPEP] indicate that there are approximately 45,000 hectares actively under cultivation, distributed according to breakdowns contained in the report at their disposal. However, the CANAPEP figures also show that 60,000 hectares are not being farmed, either because the land is protected or for other reasons that affect pineapple plantations, most notably pending certification by the Rainforest Alliance and government incentives for forest conservation.

Of the total area devoted to growing pineapple, 51% is located in the northern region of the country, where owners of small and medium-sized farms predominate. By contrast, plantations owned by multinational companies and the country’s large producers – for example, Dole and Grupo Acón – are located in the country’s Atlantic region and account for 28%. The remaining 21% of pineapple growing takes place in the country’s Pacific south-central region, where Pindeco, a division of the Del Monte multinational, is the main player.

Since the area under cultivation has essentially remained the same, the increase in pineapple exports is probably explained by the larger yield per hectare, since Costa Rica currently averages more than 80 tons per hectare, possibly the highest figure in the world.

In an interview granted to the newspaper La Nación on 7 August 2013, the new president of CANAPEP, Christian Herrera León, stated that the pineapple producers are not planning to increase their area under cultivation and that his organisation is only awaiting assurance by the National Technical Environmental Secretariat [Secretaría Técnica Nacional Ambiental – SETENA], the agency that declares the environmental viability of crops, that two pineapple producers have met all environmental requirements.

These statements by the president of CANAPEP were made shortly after residents in the canton of Guápiles organised a demonstration on 5 August 2013 to protest the expansion of pineapple cultivation. His remarks also coincided with a possible end to the ban on further planting of pineapple imposed by the Municipality in this canton in 2010. It has been alleged that there was pressure by the Government to lift this temporary ban.

Didier Leiton, Secretary General of the Agricultural and Plantation Workers Syndicate [Sindicato de Trabajadores Agrícolas y Plantaciones – SITRAP], issued the following statement: “In 2013, in light of an appeal for amparo [petition for relief] introduced by CANAPEP to lift the moratorium imposed by the Municipality on the planting of more pineapple in the canton of Pococí, the Constitutional Chamber, through a preliminary report, has indicated to the Municipal Government of Pococí has no authority to declare such a moratorium. The situation, given the clout that the industrial sector has with State institutions and the municipalities, is awaiting final resolution, while in the meantime the pineapple growers in the canton of Pococí continue to be sacrificed.”

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3. Key Players and their Certification

The 'supermarket shelf' data provided by Consumers International partners in Italy, Portugal, Spain, Belgium, Holland and Sweden helped to identify the key brands of pineapples currently sold in these European markets (which is consistent with the data from the 2010 investigation).

For Costa Rican pineapples, the main identifiable brands found across all European partner countries were, in order of frequency; Chiquita, Del Monte, Banacol[2], Dole and Agricola Agromonte. Other key producers that were not identified in the 2010 investigation include Chestnut Hill Farms and F.lli Orsero de Italia. The main Fairtrade producers are now the medium to large scale Corsicana (Collin Street Bakery) with fewer exports being seen from the Fairtrade certified small farmers association of PROAGROIN (as detailed in section 4.1.)

For each of the major European supermarkets, the key pineapple brands (where information on the producer and brand exists) were as follows:

• Carrefour: Del Monte, Banacol and Dole
• El Corte Ingles: Del Monte and Banacol
• Jumbo: Chiquita, Del Monte
• Dia:Banacol
• Eroski:Del Monte
• Lidl: Chiquita

There were many other label names that were common across the European market that belong to exporters (which buy from national producers but do not have their own farms) such as Fyffes, Simba, Agroindustrial del Caribe, Capa Oro Dulce and Caribbean Pineapple Export S.A.

While data from both the Costa Rican Government and CANAPEP agree that some 1,300 pineapple growers are engaged in production for export, there are only 72 packing plants devoted to the selection and packing of pineapples. The number of packing plants is considerably smaller than the 170 registered pineapple exporters. These figures imply that many of the latter are not only export service companies working for various growers but also pineapple producers themselves, usually certified for quality and compliance with environmental and social regulations. The 72 packers, for their part, function like in-bond processing plants, or maquiladoras, providing services for various brands and plantations.

This arrangement greatly reduces costs for producers, but it also makes it difficult to monitor the plantations in terms of good production practices and compliance with standards for good labour relations. According to CANAPEP, 70% of the pineapple plantations are certified, but the type of certification is not specified. CANAPEP has its own standards and systems for good production practices.

The Platform for the Responsible Production and Marketing of Pineapple in Costa Rica in an initiative that seeks to set general standards for production throughout the country. This undertaking will be analysed in detail later in the present report.

The Agribusiness Development Program [Programa de Desarrollo Agroindustrial – PROAGROIN] has recorded some 500 small and medium-sized growers in the northern region. This means that many of the growers serve as providers for the 170 registered exporters.

Main Producers and their Respective Certifications[3]

* BCS OKO Garantie and #94011 certified organic

[en proceso = pending]

On their websites the growers indicate that they have these certifications and have been audited, but the specific plantations, products, and countries are not always clear. Information about who buys the fruit, who markets it, and where it goes is handled as if it was a trade secret. In fact, the plantation owners have warned workers not to make use of the labels for any purpose and that doing so would have legal repercussions. This is what the workers told us in the focus group meeting on 11 August – even though the information is of no interest to the workers and is usually printed in another language.

In addition to the voluntary certification schemes such as SA8000, Rainforest Alliance, Fairtrade and Organic, some Costa Rican producers are audited directly by European supermarkets to ensure compliance with quality and production standards and, less commonly, social standards. This is particularly the case with producers that are supplying company and retail members of the Ethical Trading Initiative - a UK based alliance of national and multinational companies (supplying the UK market) that have committed to adhere to the ETI Base Code of Conduct[4] and carry out second party (in-house) or third party (external) social audits of suppliers to ensure compliance.

Tesco, founder members of the ETI, are one of the only major European supermarkets that have taken on an approach that goes beyond the standard reputational risk management towards compliance with their own code of conduct – and in the case of the UK retailers the ETI base code of conduct - with Costa Rican pineapples suppliers. Currently the ETI initiative, and therefore that of its members, which focuses on labour standards and therefore direct and visible contact with producers and their workers during social auditing procedures is unfortunately not a common phenomenon across European supply chains. There are however similar initiatives in northern Europe, including Norway, Denmark and an emerging initiative in the Netherlands.

Although the UK is not the focus of this report, the relative awareness and concern of British consumers[5] - at least as far as retailer perceptions are concerned - means that, particularly in international fresh produce trade chains, the UK leads trends relating to ethical compliance. This drive for greater technical quality (including pesticide use and residues) and social/labour standard compliance is impacting on pineapple supply chains to continental Europe, but also to North America and beyond. The enforcement by retailers of their written policies in this area therefore depends on consumer awareness and the individual retail company's perception of - and reaction to - pressure to change.

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4. Impact of the Pineapple Agro-industry in Costa Rica

4.1 Weakening of the small producers sector

The PROAGROIN initiative was originally financed with funds from a debt conversion agreement between the governments of Costa Rica and the Netherlands in 2001. The project created a mechanism to provide technical and marketing support for exporting the products of small growers in the northern region. It led to the creation of an association of these small producers, the Association of Producer-Users of the Northern Zone Agro-industrial Development Program – ASOPROAGROIN], more popularly known as AGRONORTE. PROAGROIN provided incentives to market pineapple products under fair trade conditions and using organic practices.

According to the interview with Mr Sánchez, director of PROAGROIN, since 2008 pineapple cultivation has been affected by a number of external factors: the international crisis of 2008 that kept prices for fruit in general at a standstill and then caused them to decline; the fall in the exchange rate relative to the dollar; the natural flowering of pineapples, attributed to climate change, which affected planting and harvest times; and the stagnant fair trade market in Europe and North America. These changes affected many small growers who, through debt conversion agreements between the governments of Costa Rica and the Netherlands, were available to extend credit to the small pineapple growers. It was possible to adjust the debts, but the market didn’t grow, and a second debt conversion was not possible because of national credit policies, which are very strict. Unable to become economically solvent, many small growers began losing their crops and their land. Faced with this situation, which was generating social unrest throughout the country, 526 of them were forced to stop growing pineapple.