Aldi Süd Buys Bananas More Fairly
On the way to fairer pricing in the banana supply chain, Aldi Süd has decided to take a new approach to procurement policy.
Aldi Süd is now committed to long-term supplier relationships, stable purchase quantities, and covering sustainable production costs. At the same time, the discounter obliges its suppliers to disclose all relevant expenses. The aim is to enable the producers in the countries of origin to earn a living.
While suppliers must show what costs are incurred, for example, wages, production, packaging, and transport, Aldi Süd gives them a purchase guarantee that enables longer-term planning.
The concept is embedded in the international sustainability efforts of the discounter. "These are global challenges, and, in this case, we are happy to lead the way. But we can only create a fair supply chain worldwide and with the participation of all stakeholders," explains Julia Adou, Head of Corporate Responsibility (CR) at Aldi Süd, in an interview with the LZ.
In the past, Aldi, as one of the most important market participants, was criticized by NGOs such as Banana Link or Südwind because sales prices were being lowered "in a downward spiral".
Banana Link now praises that Aldi wants to take on corporate responsibility to enable "constant social, labour law and ecological improvements". Of course, it remains to be seen how this will affect the actual pricing if the contracts for 2023 are signed later this year.
Together with the NGOs, Aldi Süd will carry out regular impact analyses in the future. They are intended to determine what arrives on-site at the workers in the plantations. An annual Corporate Responsibility Supplier Evaluation should provide suppliers with certainty as to whether the measures are working.
"We believe this approach is the first step towards an integrated negotiation process where the banana price better reflects the reality of the business," said Victor Manuel Henriquez, CEO of International Fruit Company. The company is one of the suppliers who continue to work with Aldi as strategic partners, even under the new conditions.
"The new banana procurement approach is based on cost transparency and long-term cooperation," says Adou, who has worked for Aldi Süd for 14 years and built up the sustainability department in Germany. The "partnership approach" reveals production, transport, and packaging cost elements. "This is how we ensure that the costs of our partners along the banana supply chain are covered," says the Sustainability Director.
Aldi Süd already no longer has any purely conventionally produced bananas in its range. Two-thirds of the entire oven is certified by the Rainforest Alliance. The remaining third is Fairtrade or organic. The discounter developed the so-called "open book costing" with essential suppliers and the expertise of Transfair. The organization contributes a calculation tool as an external reference for identifying fair conditions.
Since 2019, Aldi Süd has been part of the "German Retail Working Group on Living Incomes and Wages" supported by the German Society for International Cooperation (GIZ). Rewe, Lidl, Kaufland, dm and Tegut are also involved here. The fact that Edeka, a significant player currently not involved in this, has reduced the chance of a standard signal from the retail trade that they are willing to improve the banana purchasing policy.