Should Retailers React to Reports of Forced Labor in Shrimp Industry?
Retailers strive to build trust with consumers for their brands and banner. This is why virtually all major U.S. and European banners have adopted sustainability policies for sourcing seafood, and for many other products as well.
What happens when these policies are violated, or when they fail? How should retail seafood buyers react?
When an individual company fails to meet specifications and ships deficient products, the answer is easy: the load is rejected, and if the problems continue, the supplier is dropped by the retailer.
But for problems that can’t be detected in a shipment – such as whether the item was produced in a sustainable manner; whether it was produced with acceptable labor practices; or whether it was legally caught – retailers need more than their ability to reject suppliers.
They have demanded their suppliers get third-party assurances and meet standards set by such organizations as the Global Aquaculture Alliance (GAA) and the Marine Stewardship Council (MSC). And they have demanded traceability so they can be confident about the origin of their products.
Seafood is the most heavily traded international food commodity, according to the WTO; the U.S. imported seafood from 113 countries in 2015.
No retailer can monitor its supply chain for abuse of labor standards across all these countries. Instead, they must rely on certifications, such as GAA’s Best Aquaculture Practices for Shrimp.
Thailand is one of the largest shrimp and tuna exporters in the world, and also exports a range of other food commodities from rice to fruits, including canned and dried fruit.
It's also a country with structural problems that lead to abuse: undocumented migration and businesses that rely on immigrants who are ethnically different than the Thai population. The situation is the same in many other countries, from the Middle East to Europe, and even in some parts of the U.S.
So when a major story from The Associated Press on forced labor and slavery – where workers are bought and sold, and unable to voluntarily leave – hits the public, they naturally question whether their store is tainted by this problem.
Trust But Verify
However, simple denial is not enough. The banner has to extend its umbrella of trust to its major shrimp suppliers.
Thai Union Foods, a multinational company that sells shrimp, frozen seafood and tuna, and is owner of many global canned tuna brands, was the supplier highlighted in the AP story.
Thai Union purchased shrimp that had been peeled by sub-contractors who used forced labor. They had audits in place to make sure this did not happen, but audits were clearly insufficient.
Thiraphong Chansiri, CEO of Thai Union, admitted this in statements and a letter to customers. He said the company would institute an outright ban on using external "peeling sheds," which up until now, has been a common practice in Thailand.
Thai Union is bringing all of its shrimp peeling into its own facilities, planning to hire thousands of workers to do so, and will employ legitimately and legally many of those workers whose illegal factories may close due to this decision. Thiraphong says the change will cost Thai Union about $5 million dollars next year.
The GAA, which is responsible for the Best Aquaculture Practices (BAP) certification, under which most of the retail shrimp in the U.S. is sold, announced that they were updating BAP requirements so as to prohibit third-party shrimp processing and peeling.
“The current BAP processing plant standards require facilities that outsource their peeling or heading operations to maintain appropriate controls over the environmental, social and food-safety practices of those outsourced operations," said GAA Executive Director Wally Stevens. "But obviously it would be far better if these processing steps were conducted in-house. Accordingly, we will prohibit BAP-certified facilities from outsourcing their peeling and heading operations, effective Jan. 1, 2016.”
Retailers and Suppliers Are Vulnerable
No supplier or retailer mentioned in the AP article condones forced labor. Yet because peeled shrimp is such a fungible commodity, once it enters into a legitimate supply chain, it's impossible to segregate. That's why the retailers and suppliers mentioned in the article are vulnerable to the charge of profiting from forced labor, because under U.S. anti-trafficking laws, there is no difference whether it's a small amount of product or a large amount. If any forced labor or child labor is used in making the product, the company is in violation.
Initial reports of forced labor in Thailand frequently focused on fishing vessels. These charges have been documented, but most of these fishing vessels have a very tenuous connection to the international supply chain. The primary connection to the shrimp industry was indirect, through use of locally produced fishmeal from these catches as part of shrimp feed.
CP Foods, the other major Thai food giant, and the largest producer of fishmeal and shrimp feed, took action to bring all of its sourcing of fishmeal in house, and to no longer buy from anonymous or unregistered vessels. Thailand also cracked down on vessel registration, and has forced hundreds of vessels to leave the fishery.
Yet no laws in the world can overcome corruption. And in a climate of corruption, the supplier has to take responsibility for eliminating it.
In the case of the Thai shrimp industry, this means that simple audits and inspections of third-party shrimp peeling houses will not suffice, as corrupt police and inspectors turn a blind eye to abuses.
Only those suppliers who follow the lead of Thai Union, and agree to fully take their entire production chain in-house, can guarantee their customers that they are producing shrimp not tainted with forced labor.
The significance of the GAA statement is that it will force most Thai shrimp producers shipping to the U.S. to follow the lead of Thai Union, and cease using outside peeling houses.
This action can be reliably audited through third-party inspections. It will also provide the basis for a retailer to extend that banner of trust to its shrimp supplier.
The answer then to the consumer is not a simple denial, but an explanation that the retailer has built a robust, two-way trust relationship with particular suppliers, and knows exactly the actions these suppliers are taking to avoid being tainted by forced labor.
This long-term trust commitment is not compatible with the open auction process some retailers have used in the past to purchase shrimp.
Auctions where the companies invited to bid are not fully vetted for their compliance with GAA standards, or whether they are vulnerable to the use of external peeling sheds should be a red flag to a buyer concerned about forced labor.
Without building this two-way, long-term supplier trust relationship, retailers will not be able to confidently say to their customers, "yes, our shrimp is not tainted in any way by slavery or forced labor."