Supermarket Giants Accused of Harming Poor

Australian Broadcasting Corporation News Radio

David Taylor reported this story on Saturday, May 21, 2011ELIZABETH JACKSON: Supermarket giants Coles and Woolworths face accusations today that they’re harming the poor.

A new report by World Growth, a US-based free market NGO, claims that the supermarkets’ purchasing strategies disadvantage developing countries.

Our business reporter David Taylor spoke with World Growth chairman, Alan Oxley.

ALAN OXLEY: What we’re finding is that large food companies, the retailers and the processors, are adopting standards for sustainability, for example on food which might satisfies interests in a rich country but in fact actually close off supply for people in poor countries. That’s why we call it irresponsibility rather than responsibility.

DAVID TAYLOR: But surely corporate social responsibility would need to be the same both in developing countries and developed countries, surely?

ALAN OXLEY: Well no, not really. I mean if you go through, which we did, and analyse the social responsibility policies, we find that in the rich countries nowhere do they think that maintaining an economic growth is important.

That’s because they’re wealthy countries and therefore they give a premium to high costs products to protect the environment and to make sure that products are legally produced and government supplied.

In poor countries, the overriding requirement is to support economic growth and if a corporate social responsibility policy blocks someone like Coles or Woolworths from buying products from a developing country because of their own standards, yet that stops jobs and growth in those poor countries, then they’re acting in a way which actually harms the country and those people.

DAVID TAYLOR: So, what would be a fear from the like of Coles and Woolworths in terms of the standards that they’re trying to promote? What would be the worst case scenario?

ALAN OXLEY: Their current fears, which are the same with global companies like Unilever and Wal-Mart in the States, is that they are going to be criticised by NGOs for not being environmentally responsible.

What their real fears should be is that in the future the world’s growth is going to be in these markets in the developing countries like Indonesia or Brazil and if they continue to apply policies in which the people in those countries think they are not acting in the interest of local people, their real fear there should be that they’ll lose markets and they’re not thinking in those terms at this point.

DAVID TAYLOR: And you believe that potentially poor residents in these countries will be negatively affected if this social so-called corporate social irresponsibility continues.

ALAN OXLEY: That’s right. I mean supply, they’ve got choices about where they supply from. I would think we would think that to be responsible that should make sure that they’re sourcing from poor countries to help support economic growth there.

If their policies aren’t permitting that then they’re not.

DAVID TAYLOR: It’s not a particularly good position for Coles and Woolworths to be in is it, especially considering the recent price wars with regard to products like milk and even laundry detergent?

ALAN OXLEY: Well at the moment they’re I think, in a fairly sticky situation but there’s a tendency we see in the part of both of them to force producers to raise their costs, now to supply to them. The real danger here is that they’ll say, we have to have sustainable products, but we’re not going to pay people more to provide them, we’re going to force the producers to meet them.

Now in a poor country where the environmental standards are difficult and quite expensive, what they’d probably be doing is actually closing off supply from poor countries. So two things happen – less support for the poor in developing countries, and in Australia the consumers demand cheaper products.

ELIZABETH JACKSON: World Growth chairman Alan Oxley, speaking with our business reporter David Taylor.