Top Story: Work in progress


Melissa Wood, SeaFood Business assistant editor

Published on
July 1, 2013

Originally published in Seafood Business Magazine

Workers’ rights join environmental sustainability on the supply-chain checklist

Two conflicting stories are being told about Thailand’s Narong Seafood. The first is illustrated by a photo on the company’s website showing four smiling executives giving the thumbs-up to a man in the middle holding an award. Under the headline “Narong Seafood against any form of child labour, forced labour and human trafficking,” the caption explains that the economic-crimes division of the Thailand police had given the company a good corporate citizen award “for strong leadership and fair trade practices.”

That story reaches outside Thailand: Narong is a Best Aquaculture Practices (BAP)-certified facility. It’s the blessing that allows its frozen shrimp to be placed on shelves of retailers and served by foodservice operators in the United States, Canada and Europe.

The flip side to this story was the June 6 report, “The Walmart Effect: Child and Worker Rights Violations at Narong Seafood, Thailand’s Model Shrimp Processing Factory.” It contains the findings of researchers working with the International Labor Rights Forum and Warehouse Workers Union who interviewed plant workers at Narong’s main plant in Samut Sakhon. The workers told stories of underage workers, falsified documents, excessive fees and wage violations.

They explained how these alleged abuses slipped the notice of auditors. They claim managers knew about audits ahead of time; managers would tell underage workers to stay home during audit days. And audits didn’t occur during night shifts, when most underage workers, as well as undocumented migrants, were employed. Managers selected which workers the auditors would interview and told them how to answer questions. Managers told everyone else to “wear [their] uniforms neatly” and “work more slowly and systematically than on other days,” according to the report.

The paper points the finger at Walmart, which has sold 4.6 million pounds of Narong-supplied shrimp since 2007, according to U.S. Customs data. It blames the “Walmart effect” of promised “everyday low prices,” creating a supply chain that demands cheap labor. As the largest U.S. food retailer controlling 25 percent of the food market, and as the largest U.S. buyer of imported farmed shrimp, Walmart could wield its significant market power to curb abuses: “Walmart is not the only buyer of Thai shrimp, however, due to its size has a large impact on all aspects of the industry,” the report states.

Walmart is routinely criticized for having a negative effect on the global supply chain, but the company’s efforts toward seafood sustainability have been genuine. Since June 2012 Walmart has only carried seafood certified sustainable using Marine Stewardship Council (MSC) standards, BAP and their equivalents that address environmental sustainability, animal rights and social responsibility. If one of the most powerful seafood buyers in the world pledges a commitment to social responsibility and can’t ensure its seafood supply chain is free of human rights violations, can anyone?

It should be easy. The issue of social justice is not a complicated one. Unlike wild fisheries, farms and processing plants are not underwater and don’t move around. A team of scientists doesn’t need to train facilities in how to meet compliance standards. Basic human rights are not hard to grasp.

“They just need to understand what’s required of them and then they need to get on and do it,” says Dan Lee, BAP standards coordinator for the Global Aquaculture Alliance (GAA) in St. Louis. “Having good relationships with your employees, it’s not rocket science. It’s having a commitment and getting on and doing it.”

Labor costs

Labor issues have gotten more attention in the last five years, beginning in 2008 when the Solidarity Center alleged that the global explosion of shrimp production was only possible at the expense of workers. Its report, “The True Cost of Shrimp,” accused facilities in Thailand and Bangladesh of widespread labor rights and human rights violations.

Threat of a U.S. boycott led to government changes and adoption of BAP standards for U.S.-destined shrimp, but allegations of abuse continue to pop up. Last year, Human Rights Watch reported that migrant workers from Cambodia and Myanmar had gone on strike at Phatthana Seafood in southern Thailand, which also supplies shrimp to Walmart, over wage issues and excessive recruitment fees that they say made conditions akin to human bondage.

The problem of labor abuses extends to all areas of the seafood industry in Thailand, says Steve Trent, Environmental Justice Foundation’s executive director. In a report released in May, “Sold to the Sea: Human Trafficking in Thailand’s Fishing Industry,” EJF interviewed six men from Myanmar who said they had been trafficked to work on fishing trawlers for months at sea. They reported being forced to work for up to 20 hours a day with little or no pay, and were subject to forced detention, physical abuse and threats of violence. Two men interviewed said they had seen a fellow crewmember tortured and executed for trying to escape and reported the murder of at least five others.

“We’ve got other investigations under way, and we’re looking at the boats and also the seafood processing factories and most particular in relation to shrimp processing,” says Trent. “We think there’s trafficking and abuses throughout the industry.”

Pedro Bueno, consultant for the Food and Agriculture Organization of the United Nations (FAO) and former director general, Network of Aquaculture Centres in Asia-Pacific, says Thailand’s high profile as a seafood exporter inevitably makes it a convenient target. When allegations come out, they don’t necessarily tell the whole story of the industry there. He says it has curtailed the use of pre-processing plants — which he says were often just sheds — where many abuses took place.

“The problem is that the entire industry is tarred and feathered by a few errant irresponsible operations,” says Bueno. “There are some 300 seafood processors in the province of Samut Sakhon — where they are concentrated — and the larger ones are invariably more wary of reputational damage. So they do comply with legal standards, adhere to certification schemes and adopt a company code of practice.”

It happens in America too. Mexican guest workers at C.J.’s Seafood in Breaux Bridge, La., another Walmart shrimp supplier, went on strike in June 2012. The U.S. Department of Labor cited the company for serious safety violations, failure to pay minimum wage and overtime to 73 workers and for noncompliance with provisions of the H-2B temporary foreign worker visa program.

Almost 45 million people worked in the global seafood industry in 2008, according to FAO. With the increased awareness of the seafood supply chain brought on by environmental concerns, their treatment has also been receiving more attention — primarily through such reports by NGOs that describe the exploitation of workers.

“I hate to equate the two only because the treatment of a human being on a personal basis should be paramount in our consideration,” says John Connelly, president of the National Fisheries Institute (NFI) in McLean, Va. “Will [social responsibility] become the new sustainability with hundreds of millions of dollars being focused on it? I don’t know.”

Connelly says it’s also important not to make the conclusion that they indicate industry-wide standards, especially when allegations are not specific.

“We do think it’s very important that any report provide as much specifically as possible because that allows the value chain to act on it,” he says. “It can be frustrating when there’s broad allegations without identifying the manufacturer, or processing plant or distributor. We can’t solve a problem unless we know where it is. Branded companies particularly are going to expend an enormous amount of effort making sure they don’t have these kinds of problems in their supply chains.”

And while seafood processing jobs may not be the most attractive opportunities, they are important to many people’s lives.

“Seafood processing is tough work. It can be wet, it can be cold, it can be repetitive, but it’s work that provides the livelihood in wages for hundreds of thousands of people,” says Connelly. “That’s an important value that we need to remember, but that doesn’t excuse either forced or child labor. Any abuse is too much abuse.”

Closing loopholes

The industry has used third-party certification as its primary tool to ensure a clean supply chain both on the environmental side and now increasingly for checking on social issues.

“I think that sort of just follows naturally in line with concerns about sustainability and as people became more concerned about sustainability — not only our customers but also shoppers at the grocery store and seafood counter,” says Joe Chekouras, director of social responsibility for Mazzetta Co. in Highland Park, Ill.

Mazzetta requires all vendors to pass third-party social-responsibility audits. Most of the time, the issue may be a lack of documentation: “Specific instances that we’ve run across are things like overtime hours not being documented … and in those instances we require the supplier to give us a corrective action plan to show us how they’re going to document overtime in the future, and also give us a plan to make sure they’re educating managers about their new requirements.

“The drastic things, while they’re examples that get the most attention, and rightly so in many cases, those should be the ones that are easy to find if a company is looking,” he adds. “It’s the more detailed level where I think that you can find issues that can be corrected before they become major problems.”

But major problems are still making their way into the supply chain — and media. Both Mazzetta and High Liner Foods USA in Portsmouth, N.H., were among seafood companies sourcing from Sanford, one of New Zealand’s largest seafood suppliers, which was implicated to be buying from Korean-flagged boats using Indonesians as slave laborers in New Zealand waters. That story was uncovered in a February 2012 Bloomberg Businessweek article.

The industry’s response to the allegations was immediate, and led to lasting changes.

“[The boats] had a hiring agent from Indonesia with forced labor and there were certain types of documents that were taken from individuals to keep them on board these ships,” says Bill DiMento, director of corporate sustainability for High Liner.

The company’s investigation also uncovered payment abuses, which led to “very strong corrective action,” says DiMento, “not only by the company but also the New Zealand government,” which now requires crews on those vessels be paid by a New Zealand company.

It was too soon to verify the validity of the allegations — and any corrective action necessary — the day the Narong report came out, but BAP management was already following up on the allegations, says Steven Hedund, GAA’s communications manager.

“It’s difficult to say exactly what the corrective course of action will be. Basically Narong Seafood will be required to respond to all accusations in the report including the accusations of deceiving the auditor,” says Hedlund. “The bottom line is if you’re not adhering to the standard, you lose certification.”

BAP’s processing plant standards contain 36 clauses related to employee safety and relations. In its farmed multi-species standards revised this spring, BAP increased the number of worker-related clauses from 12 to 33. It was a move driven by the marketplace, says Lee.

“Our mission is to lead the way on sustainable and responsible aquaculture so we are keen on good labor standards, but the message was also coming through loud and clear from the retailers that were backing our program,” he explains. “They wanted this whole social component of the program beefed up and we’ve done just that.”

Still, loopholes remain. In regard to EJF’s report on human trafficking, Trent says trash fish from those boats may be made into fish oil and fishmeal that farmed shrimp eat.

“It is an issue, but it’s not something that people are ignoring, and one of the requirements in our standards is that the feed from 2015 onwards, a high portion of those ingredients must be certified,” says Lee.

As Lee makes clear, the standards will continue to evolve, and while Hedlund says third party-certification is part of the answer, pressure from the marketplace is critical too.

“It is on the marketplace to ensure that the facilities are playing by the rules, and it’s up to third-party certifiers to verify it. The pressure coming from third-party certification and the marketplace is helping to keep suppliers in line and when there are accusations of labor abuse that they’re followed up on immediately — that’s part of the process,” he says.

Bueno, the FAO consultant, recommends voluntary industry-wide codes of conduct based on market-based standards to help fill the gap.

“They are usually more efficient than legally prescribed standards, which are based on only one motivation: not to be penalized,” he says. “Market-based standards tend to reward adherents with better prices. Voluntary measures also relieve government of a large expense on enforcement. This is not to say that regulations should be abolished; they can perform the role of being a background threat to those who might be tempted to take shortcuts.”

As unsavory as reports of abuse are for the industry, they can help close loopholes when increased public attention creates demand for change. That may ultimately ensure the only surprises along the seafood supply chain are the timing of an auditor’s visit.

Email Assistant Editor Melissa Wood at [email protected]

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