Pioneer Press

David Nassar
Wed Apr 30                     [back to top]      

It's tax rebate time, and no one is hungrier for the tax rebate checks arriving in mailboxes today than Wal-Mart. The retailer is advertising tax-rebate sales and has offered to cash the checks for free -- all in hopes that consumers will spend their newfound money at Wal-Mart stores. But spending your tax rebate at Wal-Mart won't stimulate the economy -- and here's why:

Despite bringing in over $378 billion last year, Wal-Mart repeatedly underpays its American workforce. More than 80 wage & hour lawsuits, including a recently certified class action lawsuit in California, are currently pending against the company. Plus, it faces more than 200 discrimination lawsuits for unfair promotion practices, pay discrepancies and other issues, including the nation's largest workplace gender discrimination lawsuit. By failing to fairly compensate its employees, Wal-Mart cheats states out of income tax revenues. Wal-Mart also pays poorly. While the company seeks to benefit from the government's rebate payout, Wal-Mart's low wages means store employees have little or no disposable income to spend to stimulate the economy. Think about what even a small raise for Wal-Mart's 1 million+ workers would mean nationally, or what it would mean to your city or town if everyone at your local Wal-Mart got a raise.

Wal-Mart sources the vast majority of its products from countries overseas, meaning most of the cost of a given Wal-Mart product doesn't go into the U.S. economy. Rather than boosting the U.S. economy, Wal-Mart has played a major role in exporting U.S. manufacturing jobs to countries with low labor and environmental standards. Meanwhile, the company has embraced unions in its Chinese stores and has negotiated with them to raise Chinese salaries. Apparently, what is good enough for China is not good enough here at home.

Wal-Mart underfunds its health care plan and cuts corners whenever possible, forcing many of its employees to postpone care, thus decreasing their productivity and increasing the eventual cost of their treatment. In desperation, many of them rely on state-sponsored care and drain yet more funds from American communities. That means when Wal-Mart employees end up in emergency rooms, it's U.S. taxpayers who end up footing the bill. If Wal-Mart were truly interested in stimulating the economy, it would begin to adequately fund its health care plan and take care of its own Associates.

Wal-Mart routinely dodges state and local taxes, meaning money spent at a Wal-Mart store won't end up in your community. Wal-Mart actively works to challenge property tax assessments and creates complex real estate arrangements to obscure how much taxes the company owes. When Wal-Mart dodges its tax burden, it takes precious revenues away from cities and states to pay for roads, schools and other services. In turn, individual taxpayers are forced to pay more to make up the difference (which takes more money out of their pockets) or get by with less.

With its low price focus, Wal-Mart may appear to help the U.S. economy. But, the reality is that with its poor wages and benefits, massive China sourcing and tax avoidance, Wal-Mart makes its workers and the communities where it operates poorer.

As our nation's largest employer and most financially-successful company, Wal-Mart is a singular American institution. It occupies a unique position in our world by virtue of its size, reach and responsibility for the livelihoods of millions of workers and the needs of billions of consumers. And with such overwhelming influence comes certain moral responsibilities. It is the acceptance or rejection of those responsibilities that determines greatness.

For the time being, Wal-Mart has rejected those responsibilities and because of that choice, the money spent there does nothing of what it could to strengthen our economy. Higher salaries, quality affordable healthcare and paying what they owe like any good American, are just three things Wal-Mart can do tomorrow that will make them a company worthy of our money.

Copyright © 2008 HuffingtonPost.com. All rights reserved. 

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Keep Promise To Debbie

David Nassar
Wal-Mart Watch                                [back to top]      

Remember when Wal-Mart told Jim Shank on April 1 that the company would not claim Debbie Shank's money in her trust so it could be used for her medical care? Apparently, Wal-Mart is not keeping its promise to Debbie and her family. They still have not released a single penny to the Shank family.

In fact, Jim Shank called the bank this week and is no longer authorized to request a statement on the account.

After a massive public outcry against Wal-Mart's efforts to sue this brain-damaged former employee for the money in her trust, Wal-Mart finally agreed in writing to let Debbie keep her money to pay for her ongoing medical care. But it's a month later, and Wal-Mart has failed to make good on its word.

Check out MSNBC's Countdown with Keith Olbermann tonight at 8:00pm EST for Jim Shank's thoughts on Wal-Mart's failure to keep its promise.

Wal-Mart did what it needed to do to put out a public relations fire, yet it's not keeping its promise to Debbie Shank and her family. We know that the only way Wal-Mart will act is if we keep the pressure on.

Send an e-mail to tell Wal-Mart's executives that the company needs to keep its promise to the Shank family right now:

http://action.walmartwatch.com/promise

When Wal-Mart tried to grab the little bit of money Debbie Shank has for her medical care, thousands of people like you took action. Together, we called on Wal-Mart to relinquish its claim to the remaining $200,000 settlement money in Debbie's trust fund so her family could continue to pay for her medical expenses.

The national and local media harangued Wal-Mart for its heartless treatment of Debbie Shank. Finally, Wal-Mart Executive Vice President Pat Curran contacted Debbie Shank's family and told Jim Shank that Wal-Mart would not claim the money so the Shank family could use it for Debbie's care.

But despite its promise, the company still retains all rights to the money and has not relinquished the principal or the accrued interest to the family.

Debbie, who is permanently brain-damaged, paralyzed and in a nursing home, needs every penny to cover her current and future care. Wal-Mart needs to surrender the money and all accrued interest immediately.

Please contact Wal-Mart executives and let them know Wal-Mart needs to keep its word to Debbie Shank now:

http://action.walmartwatch.com/promise

Thank you for your help.

Sincerely,

David Nassar
Wal-Mart Watch

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Is There Any Way to Stop Wal-Mart & Co. from Sweatshop Profiteering?

By T.A. Frank,
Washington Monthly
April 29th, 2008                                   [back to top]      

I remember one particularly bad factory in China. It produced outdoor tables, parasols, and gazebos, and the place was a mess. Work floors were so crowded with production materials that I could barely make my way from one end to the other. In one area, where metals were being chemically treated, workers squatted at the edge of steaming pools as if contemplating a sudden, final swim. The dormitories were filthy: the hallways were strewn with garbage—orange peels, tea leaves—and the only way for anyone to bathe was to fill a bucket with cold water. In a country where workers normally suppress their complaints for fear of getting fired, employees at this factory couldn't resist telling us the truth. "We work so hard for so little pay," said one middle-aged woman with undisguised anger. We could only guess how hard—the place kept no time cards. Painted in large characters on the factory walls was a slogan: "If you don't work hard today, look hard for work tomorrow." Inspirational, in a way.

I was there because, six years ago, I had a job at a Los Angeles firm that specialized in the field of "compliance consulting," or "corporate social responsibility monitoring." It's a service that emerged in the mid-1990s after the press started to report on bad factories around the world and companies grew concerned about protecting their reputations. With an increase of protectionist sentiment in the United States, companies that relied on cheap labor abroad were feeling vulnerable to negative publicity. They still are.

Today, labor standards are once again in the news. Barack Obama and Hillary Clinton have criticized trade deals such as NAFTA as unfair to American workers, and the new thinking is that trade agreements should include strict labor standards. Obama has cited a recent free trade agreement with Peru as an example of how to go forward. I hope he's right, but let's remember that NAFTA was also hailed, in its day, for including labor protections. Our solutions on paper have proved hard to enforce. Peru attempts to remedy some of the problems of NAFTA, but we're still advancing slowly in the dark.

In the meantime, as governments contemplate such matters on a theoretical level, what's happening on the ground is mostly in the hands of the private sector. Companies police themselves, often using hired outside help. That was the specialty of my company. Visit the Web site of almost any large American retailer or apparel manufacturer and you're likely to see a section devoted to "ethical sourcing" or "our compliance program." (Those are terms for making sure that your suppliers aren't using factories that will land you on the front page of the New York Times.) Read on and you'll often see that the company boasts of having a code of conduct that its suppliers must follow—a code of labor standards by which the factories in question will be regularly measured and monitored. Are they to be believed? Well, yes and no. Private monitoring, if done properly, can do a lot of good. But it's a tricky thing. A simplified story of Nike may be the best way to introduce the origins of the type of work I was in. In the 1960s, Nike (before it was named Nike) based its business on the premise that the company would not manufacture shoes—it would only design and market them. The physical goods would be produced by independent contractors in countries such as Japan or Taiwan, where labor was, at the time, cheap. In short, Nike would be offices, not factories. The idea was innovative and hugely profitable, and countless companies producing everything from sweaters to toys to exercise equipment have since adopted it. It is now standard.

The problem that arose for Nike and many other companies, however, was that the media, starting in the 1990s, began to run stories on terrible labor conditions in factories in Asia. When consumers started to get angry, Nike and many other companies were nonplussed. We're just buying these shoes, they said—it's not our business how Mr. X runs his factory. And they had a point. If, for example, I learned that my dry cleaner was paying his employees less than minimum wage, I might feel bad about it, but I doubt I'd spend hours vetting alternative dry cleaners for labor compliance. I've got too much else to worry about in life, including my shirts. But such musings hardly make for a great press release, and Nike's case included nasty allegations about child labor—twelve-year-old Americans playing with soccer balls sewn by twelve-year-old Pakistanis, that sort of thing. The company's stock value sank.

In this same period, the U.S. Department of Labor, led by Robert Reich, began cracking down on sweatshops within the United States and publicizing the names of firms who were their customers. Because of this, companies such as mine began to offer their services as independent, for-profit monitors of factory labor conditions. We would act as early-warning systems against shady suppliers who mistreated their workers. Based on the reports we provided, our clients could choose either to sever their relations with a given supplier or to pressure them to improve. Business at my old company is still going strong.

In Los Angeles, where small garment shops of, say, thirty employees were the main focus, we usually worked in pairs and did three inspections a day. Outside the country, where the factories were often quite large (several thousand employees) and made anything from toys to gym equipment, we worked alone or in pairs and did one or two a day. The procedures were similar, but the inspections were more thorough abroad. While one of us might tour the work floors to note all the health and safety violations (the gazebo factory, for instance, had no secondary exits, no guarding on machines, no first aid supplies, no eye protection—the list kept going), the other might review permits, employee files, and payroll records to see what shortcomings were apparent on paper alone.

Then we would begin interviewing employees in private, usually twenty or so, hoping to learn from them what our eyes wouldn't tell us. Did the factory confiscate personal documents, such as identity cards, and use them as ransom? (This was most common in the Gulf States, where foreign laborers from places like Bangladesh could find themselves effectively enslaved. But bosses sometimes confiscated national identification documents in China, too.) Were employees free to enter and leave the compound? How many hours a week did they really work—regardless of what the time cards might say?

Unfortunately, we missed stuff. All inspections do. And sometimes it was embarrassing. At one follow-up inspection of a factory in Bangkok at which I'd noted some serious but common wage violations, the auditors who followed me found pregnant employees hiding on the roof and Burmese import workers earning criminally low wages. Whoops. On the other hand, sometimes I was the one who uncovered what others had missed. A lot of it had to do with luck. Was the right document visible on the work floor? Did we choose the right employees for interviews—the ones who were willing to confide in outsiders? If we were working through a translator, was his manner of speaking to people soothing?

The major challenge of inspections was simply staying ahead of the factories we monitored. False time cards and payroll records, whole days spent coaching employees on how to lie during interviews, and even renaming certain factory buildings in order to create a smaller Potemkin village—all of these were techniques used by contractors to try to fool us. We were able to detect some of them. A collection of crisp time cards that showed every employee arriving within seconds of the next was easy to spot as having been punched by a single worker standing alone at the time clock. An employee whose recollection of hours worked differed markedly from her time sheet was another indication of shady bookkeeping. But others were hard to defeat. Employee coaching deserves special attention for its crude effectiveness. The following composite dialogue, in which every answer is a lie, is typical of the sort of thing we endured:

Me: How many days a week do you work?

Employee: Five.

Me: Any overtime?

Employee: Almost never. We get time and a half in pay for overtime.

Me: How much do you make per hour?

Employee: I don't know.

Me: How much did you get for your most recent pay period?

Employee: I can't remember.

Me: Rough idea?

Employee: I can't remember.

Me: How do you deal with the fumes from the glue?

Employee: It's no problem. We have masks. [Note: This was often true—harmful cotton masks that concentrated the fumes.]

Me: How much do you get paid for Sunday work?

Employee: We don't work on Sundays.

Me: Do you have any sort of worker representative here?

Employee: ?

Me: Someone who represents the workers and talks to your bosses?

Employee: ?

Me: What sort of accidents happen here—you know, people bumping themselves, or cutting themselves?

Employee: No accidents.

Such exchanges, needless to say, rarely produced killer testimony. Sometimes we could work around uncooperative interviewees, or we could get them to stumble over their own answers. However, just talking to employees was no guarantee of anything, no matter how gifted an interrogator you were.

Because any inspection misses something, there were factories that managed to embarrass everyone. In 2000, BusinessWeek published an expose about a factory in Guangdong, China, the Chun Si Enterprise Handbag Factory, which made bags for Wal-Mart. Titled "Inside a Chinese Sweatshop: 'A Life of Fines and Beating,'" the article described a nightmarish place in which nine hundred workers were locked in a walled compound all day, and security guards "regularly punched and hit workers for talking back to managers or even for walking too fast." The reporting, by Dexter Roberts and Aaron Bernstein, was superb. Unfortunately, that reporting led to the door of my company, which had been among the auditors monitoring the factory for Wal-Mart. While they had found excessive overtime work and insufficient pay, inspectors had missed the captive workers and physical abuse.

To be sure, the Chun Si Enterprise Handbag Factory episode was a debacle. (I have no inside account of the story, since it took place several years before my arrival.) I suspect, however, that the fault lay with Wal-Mart as much as with the inspectors. I say this because there's a broader point here: Monitoring by itself is meaningless. It only works when the company that's commissioning it has a sincere interest in improving the situation. In the case of Chun Si, inspectors visited five times, according to BusinessWeek, and kept finding trouble. Now, anyone in the business knows that when inspections uncover safety violations or wage underpayment more than once or twice—let alone five times—it's a sign that bigger problems are lurking beneath. Companies rarely get bamboozled about this sort of thing unless they want to.

And many prefer to be bamboozled, because it's cheaper. While companies like to boast of having an ethical sourcing program, such programs make it harder to hire the lowest bidder. Because many companies still want to hire the lowest bidder, "ethical sourcing" often becomes a game. The simplest way to play it is by placing an order with a cheap supplier and ending the relationship once the goods have been delivered. In the meantime, inspectors get sent to evaluate the factory—perhaps several times, since they keep finding problems—until the client, seeing no improvement in the labor conditions, severs the bond and moves on to the next low-priced, equally suspect supplier.

For the half-assed company there are also half-assed monitoring firms. These specialize in performing as many brief, understaffed inspections as they can fit in a day in order to maximize their own profits. That gives their clients plausible deniability: problems undiscovered are problems avoided, and any later trouble can be blamed on the compliance monitors. It is a cozy understanding between client, monitoring company, and supplier that manages to benefit everyone but the workers.

While private monitoring can be misused, however, when it's done right it can really produce positive change. I've seen it. When companies make a genuine effort, the results can be impressive: safe factories that pay legal wages. That sounds modest, but it's actually hard to achieve in any country. Just visit a garment shop in Los Angeles.

At my company, I quickly figured out which clients cared. The first test was whether they conducted "pre-sourcing"—inspections of labor conditions before placing an order instead of after. This small step truly separates the top-rung companies from the pack, because to prescreen is to forgo the temptation of hiring the cheapest suppliers. (Those suppliers are the cheapest because they tend to break the rules, so they usually fail the preliminary inspection.) The second test was whether the company had a long-term relationship with its suppliers. Long-term commitments are what motivate both parties to behave: the supplier wants to preserve the relationship, and the customer wants to preserve its reputation. The third test was whether the company requested unannounced inspections as opposed to ones that were arranged in advance. The advantages of this are self-evident. And the final test was whether the company made inspection results public. This was almost never done.

Who, then, were the good actors of the trade? There are a number of them, actually, but here I'll just point out two that often surprise people. The first is Mattel, the same company that was tarnished last summer by a recall of toys that were found to have lead paint on them. Whatever the chemical flaws of their products, Mattel had a reputation among us monitors for earnestness in pressuring its suppliers to improve their labor practices. It also owned and operated a few factories in China—a country with dreadful factories—that were exemplary. These facilities were regularly inspected by independent monitors, and anyone who wants to know what they've found there can visit Mattel's Web site: the reports are public. The second unexpected company is Nike, which long ago took its bad press to heart and remade itself into a role model of how to carry out thoughtful labor monitoring. Nike has become such a leader in the field that its Web site may be the single best resource for those trying to understand the difficult business of international labor standards. Not only does Nike prescreen factories, it also discloses the name and address of every factory it uses and makes public much of its monitoring.

But let's not be confined to praise. You may get the sense that I'm not Wal-Mart's biggest fan. You'd be right. I betray no confidence here, since Wal-Mart wasn't a client of ours while I was at my company. Nevertheless, I still got to visit plenty of its supplier factories. That's because any given factory usually has more than one customer, and during an audit we would always ask the bosses to name their other customers. Wal-Mart was often one of them. And its suppliers were among the worst I saw—dangerous, nasty, and poorly paid even by local (usually Chinese) measures. I noticed that Wal-Mart claimed to require factories to maintain decent labor standards—but why did it seem to think it could find them among the lowest bidders?

Now, I know about good and bad actors mostly because I saw them directly. But ordinary consumers searching on company Web sites—Walmart.com, Nike.com, etc.—can find out almost everything they need to know just sitting at their desks. For instance, just now I learned from Wal-Mart's latest report on sourcing that only 26 percent of its audits are unannounced. By contrast, of the inspections Target conducts, 100 percent are unannounced. That's a revealing difference. And companies that do what Nike does—prescreen, build long-term relationships, disclose producers—make a point of emphasizing that fact, and are relatively transparent. Companies that don't are more guarded. (When in doubt, doubt.)

As for those who feel especially strongly about the issue and kick up a (peaceful) fuss about sweatshops, I think they're doing a valuable thing. Even when they take actions that are sometimes off-base—such as continuing to boycott Nike when its competitors are the bigger problem—the effect is still, overall, good: it scares businesses into taking compliance more seriously. Boycotts, protests, letters to Congress, saber-rattling lawmakers, media exposes—they do have an impact. And just imagine if members of Congress or the executive branch made an effort to praise or shame companies for their records with foreign suppliers and to encourage transparent monitoring in the private sector. I suspect it would do more for international labor standards in months than the most intricate trade agreements could do in years.

I don't pretend that everything monitoring brings about is for the best. An example: Mattel's factories in China are superb, but workers there often earn less than their peers in shadier factories because their employers confine them to shorter workweeks to avoid paying overtime. Another: You may rightly hate the idea of child labor, but firing a fourteen-year-old in Indonesia from a factory job because she is fourteen does nothing but deprive her of income she is understandably desperate to keep. (She'll find worse work elsewhere, most likely, or simply go hungry.) A third: Small village factories may break the rules, but they often operate in a humane and basically sensible way, and I didn't enjoy lecturing their owners about the necessity of American-style time cards and fifteen-minute breaks. But labor standards anywhere have a tendency to create such problems. They're enacted in the hope that the good outweighs the bad.

One final thought: If you're like me, part of you feels that Peru's labor standards are basically Peru's business. It's our job to worry about standards here at home. But that sort of thinking doesn't work well in an era of globalization. We are, like it or not, profoundly affected by the labor standards of our trading partners. If their standards are low, they exert a downward pressure on our own. That's why monitoring and enforcement have such an important role to play. We don't expect developing nations to match us in what their workers earn. (A few dollars a day is a fortune in many nations.) But when a Chinese factory saves money by making its employees breathe hazardous fumes and, by doing so, closes down a U.S. factory that spends money on proper ventilation and masks, that's wrong. It's wrong by any measure. And that's what we can do something about if we try. It's the challenge we face as the walls come down, the dolls, pajamas, and televisions come in, and, increasingly, the future of our workers here is tied to that of workers who are oceans away.

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Wal-Mart's perfect storm paying off

By Kimberly Morrison,
The Morning News
April 29th, 2008                              [back to top]      

Wal-Mart was hesitant to credit a tough economy and penny-pinching consumers with its solid performance in recent months, but said it plans to capitalize on cash-strapped shoppers by continuing to focus on low prices.

"I feel like we are well positioned to take advantage of the current market," Eduardo Castro-Wright, executive vice president and CEO of the Wal-Mart Stores division for Wal-Mart Stores Inc., said during a Tuesday morning Lehman Brothers retailing conference broadcast online.

The retailer announced the same morning plans to cash economic stimulus checks for free, enhance rollbacks through July and offer money-saving tips to consumers.

Castro-Wright downplayed the role of the economy in better-than-expected comparable store sales and increased earnings guidance in February and March, instead crediting improvements in merchandise assortment, management changes and a better store experience.

"I'm not going to say that (the economy) has not played a factor, but I'd like to think fundamentally the business is a lot stronger than it was six months ago," Castro-Wright said.

The economy is also considerably weaker.

Gas prices have increased almost 25 percent in the first quarter, reaching $3.59 this week. That's pushing squeamish consumers also facing increased food prices, job worries and plummeting home values to trade down, said Patricia Edwards, fund manager with Seattle-based Wentworth, Hauser and Violich.

"They couldn't have known this was coming, but they got to the right place at the right time, and the economy decided to help them out with that," Edwards said.

Castro-Wright said the retailer continues to see declines in its shoppers using credit for payment at U.S. stores, and that's clamping down on discretionary purchases.

"People don't have as much credit as they used to, and clearly this is having an impact on how they behave," Castro-Wright said. "Price matters today more than ever before."

New York-based Citigroup said 72 percent of consumers it surveyed gave Wal-Mart credit for the lowest grocery prices, a perception that will pay off for the retailer, according to a purchasing behavior study the company released last month.

"We believe Wal-Mart's business will benefit from the challenging consumer environment due to its strong value proposition," Deborah Weinswig, Citi analyst, said in the report.

Analysts are also confident the retailer's improved merchandising and inventory management is paying off, making it easier for Wal-Mart to attract affluent shoppers.

Castro-Wright reported that traffic at affluent-traited Wal-Mart stores outpaced the rest of the chain.

"We are very well-positioned, because first of all, we have credibility in price leadership, and you don't build that overnight," Castro-Wright said.

The retailing executive outlined Wal-Mart's growth strategy, a plan that is the brainchild of merchandising head John Fleming, who the company hired in 2005 as part of a management shake-up to turnaround lagging categories like apparel.

The company will focus on growth categories including entertainment, apparel, pets, and seasonal. Castro-Wright said the company's site-to-store program, a concept introduced in 2007 that allows consumers to circumvent shipping costs by sending online purchases to the store, has been "incredibly successful" with doubled online sales in one year.

"I know you've been hearing about how bad apparel is for us, and that is starting to turn around," Castro-Wright said.

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Wal-Mart to cash economic stimulus checks for free

Associated Press
04.29.08                               [back to top]      

BENTONVILLE, Ark. - Wal-Mart says it won't charge a fee to cash customers' economic stimulus checks.

The world's largest retailer said Tuesday that no purchase will be required. Wal-Mart (nyse: WMT - news - people ) typically charges up to $3 to cash payroll or government checks.

Wal-Mart Stores Inc. says customers can also, without charge, load the stimulus checks onto the company's Wal-Mart MoneyCard, which acts as a prepaid debit card. The company's Sam's Club warehouse stores will also cash the checks at no charge.

The tax rebates are expected to reach 130 million households. The payments range up to $600 for individuals and $1,200 for married couples, plus $300 per child for eligible parents.

Copyright 2008 Associated Press. All rights reserved. 

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Environmental Cost of Shipping Groceries Around the World

By ELISABETH ROSENTHAL,
New York Times
April 26th, 2008                              [back to top]      

Cod caught off Norway is shipped to China to be turned into filets, then shipped back to Norway for sale. Argentine lemons fill supermarket shelves on the Citrus Coast of Spain, as local lemons rot on the ground. Half of Europe’s peas are grown and packaged in Kenya.

In the United States, FreshDirect proclaims kiwi season has expanded to “All year!� now that Italy has become the world’s leading supplier of New Zealand’s national fruit, taking over in the Southern Hemisphere’s winter.

Food has moved around the world since Europeans brought tea from China, but never at the speed or in the amounts it has over the last few years. Consumers in not only the richest nations but, increasingly, the developing world expect food whenever they crave it, with no concession to season or geography.

Increasingly efficient global transport networks make it practical to bring food before it spoils from distant places where labor costs are lower. And the penetration of mega-markets in nations from China to Mexico with supply and distribution chains that gird the globe — like Wal-Mart, Carrefour and Tesco — has accelerated the trend.

But the movable feast comes at a cost: pollution — especially carbon dioxide, the main global warming gas — from transporting the food.

Under longstanding trade agreements, fuel for international freight carried by sea and air is not taxed. Now, many economists, environmental advocates and politicians say it is time to make shippers and shoppers pay for the pollution, through taxes or other measures.

“We’re shifting goods around the world in a way that looks really bizarre,� said Paul Watkiss, an Oxford University economist who wrote a recent European Union report on food imports.

He noted that Britain, for example, imports — and exports — 15,000 tons of waffles a year, and similarly exchanges 20 tons of bottled water with Australia. More important, Mr. Watkiss said, “we are not paying the environmental cost of all that travel.�

Europe is poised to change that. This year the European Commission in Brussels announced that all freight-carrying flights into and out of the European Union would be included in the trading bloc’s emissions-trading program by 2012, meaning permits will have to be purchased for the pollution they generate.

The commission is negotiating with the global shipping organization, the International Maritime Organization, over various alternatives to reduce greenhouse gases. If there is no solution by year’s end, sea freight will also be included in Europe’s emissions-trading program, said Barbara Helferrich, a spokeswoman for the European Commission’s Environment Directorate. “We’re really ready to have everyone reduce — or pay in some way,� she said.

The European Union, the world’s leading food importer, has increased imports 20 percent in the last five years. The value of fresh fruit and vegetables imported by the United States, in second place, nearly doubled from 2000 to 2006.

Under a little-known international treaty called the Convention on International Civil Aviation, signed in Chicago in 1944 to help the fledgling airline industry, fuel for international travel and transport of goods, including food, is exempt from taxes, unlike trucks, cars and buses. There is also no tax on fuel used by ocean freighters.

Proponents say ending these breaks could help ensure that producers and consumers pay the environmental cost of increasingly well-traveled food.

The food and transport industries say the issue is more complicated. The debate has put some companies on the defensive, including Tesco, Britain’s largest supermarket chain, known as a vocal promoter of green initiatives.

Some of those companies say that they are working to limit greenhouse gases produced by their businesses but that the question is how to do it. They oppose regulation and new taxes and, partly in an effort to head them off, are advocating consumer education instead.

Tesco, for instance, is introducing a labeling system that will let consumers assess a product’s carbon footprint.

Some foods that travel long distances may actually have an environmental advantage over local products, like flowers grown in the tropics instead of in energy-hungry European greenhouses.

“This may be as radical for environmental consuming as putting a calorie count on the side of packages to help people who want to lose weight,� a spokesman for Tesco, Trevor Datson, said.

Better transportation networks have sharply reduced the time required to ship food abroad. For instance, improved roads in Africa have helped cut the time it takes for goods to go from farms on that continent to stores in Europe to 4 days, compared with 10 days not too many years ago.

And with far cheaper labor costs in African nations, Morocco and Egypt have displaced Spain in just a few seasons as important suppliers of tomatoes and salad greens to central Europe.

“If there’s an opportunity for cheaper production in terms of logistics or supply it will be taken,� said Ed Moorehouse, a consultant to the food industry in London, adding that some of these shifts also create valuable jobs in the developing world.

The economics are compelling. For example, Norwegian cod costs a manufacturer $1.36 a pound to process in Europe, but only 23 cents a pound in Asia.

The ability to transport food cheaply has given rise to new and booming businesses.

“In the past few years there have been new plantations all over the center of Italy,� said Antonio Baglioni, export manager of Apofruit, one of Italy’s largest kiwi exporters.

Kiwis from Sanifrutta, another Italian exporter, travel by sea in refrigerated containers: 18 days to the United States, 28 to South Africa and more than a month to reach New Zealand.

Some studies have calculated that as little as 3 percent of emissions from the food sector are caused by transportation. But Mr. Watkiss, the Oxford economist, said the percentage was growing rapidly. Moreover, imported foods generate more emissions than generally acknowledged because they require layers of packaging and, in the case of perishable food, refrigeration.

Britain, with its short growing season and powerful supermarket chains, imports 95 percent of its fruit and more than half of its vegetables. Food accounts for 25 percent of truck shipments in Britain, according to the British environmental agency, DEFRA.

Mr. Datson of Tesco acknowledged that there were environmental consequences to the increased distances food travels, but he said his company was merely responding to consumer appetites. “The offer and range has been growing because our customers want things like snap peas year round,� Mr. Datson said. “We don’t see our job as consumer choice editing.�

Global supermarket chains like Tesco and Carrefour, spreading throughout Eastern Europe and Asia, cater to a market for convenience foods, like washed lettuce and cut vegetables. They also help expand the reach of global brands.

Pringles potato chips, for example, are now sold in more than 180 countries, though they are manufactured in only a handful of places, said Kay Puryear, a spokeswoman for Procter & Gamble, which makes Pringles.

Proponents of taxing transportation fuel say it would end such distortions by changing the economic calculus.

“Food is traveling because transport has become so cheap in a world of globalization,� said Frederic Hauge, head of Norway’s environmental group Bellona. “If it was just a matter of processing fish cheaper in China, I’d be happy with it traveling there. The problem is pollution.�

The European Union has led the world in proposals to incorporate environmental costs into the price consumers pay for food.

Switzerland, which does not belong to the E.U., already taxes trucks that cross its borders.

In addition to bringing airlines under its emission-trading program, Brussels is also considering a freight charge specifically tied to the environmental toll from food shipping to shift the current calculus that “transporting freight is cheaper than producing goods locally,� the commission said.

The problem is measuring the emissions. The fact that food travels farther does not necessarily mean more energy is used. Some studies have shown that shipping fresh apples, onions and lamb from New Zealand might produce lower emissions than producing the goods in Europe, where — for example — storing apples for months would require refrigeration.

But those studies were done in New Zealand, and the food travel debate is inevitably intertwined with economic interests.

Last month, Tony Burke, the Australian minister for agriculture, fisheries and forestry, said that carbon footprinting and labeling food miles — the distance food has traveled — was “nothing more than protectionism.�

Shippers have vigorously fought the idea of levying a transportation fuel tax, noting that if some countries repealed those provisions of the Chicago Convention, it would wreak havoc with global trade, creating an uneven patchwork of fuel taxes.

It would also give countries that kept the exemption a huge trade advantage.

Some European retailers hope voluntary green measures like Tesco’s labeling — set to begin later this year — will slow the momentum for new taxes and regulations.

The company will begin testing the labeling system, starting with products like orange juice and laundry detergent.

Customers may be surprised by what they discover.

Box Fresh Organics, a popular British brand, advertises that 85 percent of its vegetables come from the British Midlands. But in winter, in its standard basket, only the potatoes and carrots are from Britain. The grapes are South African, the fennel is from Spain and the squash is Italian.

Today’s retailers could not survive if they failed to offer such variety, Mr. Moorehouse, the British food consultant, said.

“Unfortunately,� he said, “we’ve educated our customers to expect cheap food, that they can go to the market to get whatever they want, whenever they want it. All year. 24/7.�

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Most Grocery Chains Not Jumping On Buying-Limit Bandwagon

By Rebecca Townsend
and Ian Berry,
Dow Jones
April 25th, 2008                                            [back to top]      

CHICAGO -(Dow Jones)- The move by some wholesale food outlets to restrict purchases of certain food staples caught the public's attention, but major supermarket chains aren't following suit, and food industry analysts say U.S. consumers shouldn't be worried about shortages.

Food prices have risen sharply this year, driven by increased global demand, drought and biofuel production. The March consumer price index reported food prices up 4.5% versus a year ago.

On Wednesday, Costco Wholesale Corp. (COST) indicated it had decided to limit bulk rice purchases in some stores. Likewise, Sam's Club, a division of Wal-Mart Stores Inc. (WMT), said it was limiting customers to four bags at a time of some types of rice.

However, the purchasing restrictions on staples like rice are limited to wholesale outlets, as several retail grocery store chains said Friday they weren't taking similar action.

Publix Super Markets Inc. (PUSH) has no plans to limit purchases of rice or any other items, said Dwaine Stevens, spokesman for the Florida-based grocery chain. Stevens called the possibility that the company would ever have to consider limits "not very likely at all."

Likewise, Food Lion LLC stores are "not limiting sales whatsoever," said spokeswoman Karen Peterson.

The Salisbury, N.C.-based grocery chain, which is a subsidiary of the Delhaize Group (DEG), maintains continuous contact with suppliers and hasn't heard anything from them to indicate rice purchase limits are necessary, she said.

While limits were placed on rice purchases at Sam's Club stores, spokeswoman Ashley Hardie said Wal-Mart's retail stores were not affected.

Safeway Inc. (SWY) and Kroger Co. (KR) were not immediately available for comment.

The Food Situation Is Not Dire - Industry

Ron Sterk, an editor at trade publication Milling and Baking News, said the food supply situation is not as dire as some have portrayed it. For instance, he rejected any comparison between the present situation and World War II.

"That's not a fair characterization," he said. "In World War II, there actually were food shortages."

That's not the case now, he said. Despite the actions of wholesale stores, there's no rice shortage "certainly not" in the U.S., Sterk said.

Sufficient supplies of other commodities such as wheat and rye are available, and prices for both are well off their peaks from earlier this year, he noted. For instance, Minneapolis Grain Exchange wheat prices hit $25 a bushel earlier this year, but forecasts for bigger crops this spring have pushed prices to around $11.20 a bushel.

"There's no doubt that wheat supplies are tight," Sterk said. "But no one's saying we're going to run out of wheat. It's just tight."

Bakers can also find the flour they need, "they just don't like paying what the price has shot up to," he said.

Tight Supply Doesn't Equal Shortage

There's no doubt grain supplies are tight. Wheat and rice supplies in the U.S and globally are at multi-decade lows and soybean supplies are also down sharply. Last year corn production was expanded to devote more acreage to ethanol production.

But it's not just biofuel usage that is lifting corn demand. Growing economies in China and India mean more sophisticated palates and demand for food there has grown. Livestock production continues to be the No. 1 user of corn in the U.S. Grain trade is dollar-based, and a weak dollar means greater buying power for foreign buyers, which has lifted U.S. agriculture exports.

Further, two years of bad weather in wheat-producing countries hammered output across the globe as demand rose. Poor rice harvests in Vietnam and other rice- producing countries combined with little advancement on acreage has limited global production.

Worldwide, demand for rice has outstripped demand for several years, said Bob Cummings, senior vice president of the USA Rice Federation, an industry group.

The U.S. rice industry is "confident there's enough rice in the U.S. to meet domestic demand as well the demand of our traditional export customers," Cummings said. But, he added, due to tight global supplies and higher production costs "it's fair to say that we don't see any slackening of cost pressure side." Cummings also said his group had not seen any across-the-board change in demand.

A significant factor in food costs is transportation. Crude oil prices are hovering just under $120 a barrel and the high energy costs reflected in manufacturing and transportation of packaged food items -- will sustain some level of inflation.

Consumers paid about $1.78 for a 20-ounce loaf of white bread in the first quarter of 2008, about 20% more than a year earlier, according to American Farm Bureau's market basket survey. During the same period, the farm-gate wheat cost reflected in that loaf's price increased to 7%, or 14 cents, from 4%, or 6 cents, a year earlier.

Consumers who are stocking up at wholesale outlets simply might be seeing a bargain.

"Most Americans have never really experienced absolute hunger; it's more likely a case of basic level arbitrage -- buy it while it's still cheap," said Michael Swanson, an agricultural economist at Wells Fargo. "Don't confuse disappearance (of supplies) with demand."

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Wal-Mart Plays Politics with Charity

David Nassar
HuffingtonPost
April 24, 2008               [back to top]      

New video footage of Wal-Mart manager meetings released by the Center for Public Integrity and aired on Dan Rather Reports Tuesday evening, provide a rare and disturbing glimpse into the private culture of the world's largest company.

The footage features several Wal-Mart executives at various meetings using a hard sell approach to convince their managers to contribute to the company's PAC. As an incentive for PAC contributions, executives offer a 2-for-1 company donation in the managers' names to the Wal-Mart Associates in Critical Needs Fund. It's a "win-win" they say. The managers look like they care about their employees, Wal-Mart grows its PAC, and everybody goes home happy. So, what's wrong with this program? Most experts say it's legal, if not totally ethical. And, don't a lot of companies do the same thing - offer charitable contribution incentives for PAC contributions just like Wal-Mart?

Well, yes and no...and here's where it gets a little dicey. Certainly, employee incentives for PAC contributions are not new - although this is the first time we've actually seen it on video - thank you Flagler. But, the first major difference in the Wal-Mart circle of money is that typically the corporations' incentive programs include charitable contributions to independent, third party organizations such as the American Red Cross or United Way. In this case, the Wal-Mart Associates in Critical Needs Fund is a Wal-Mart-controlled foundation, which means all decisions regarding fund management and expenditures are made by Wal-Mart, not an independent organization. So, Wal-Mart gets its PAC money and it makes itself look good to its employees with its "generous" contributions to the Fund, which - unbeknownst to the employees - are based on PAC contributions. Indeed, if we are to take Becky Reithemeyer at her word, the company may base its entire contribution to the Fund on PAC contributions. Now, that's a lot of pressure to get those managers to give.

The second major difference in Wal-Mart's program is the twisted hypocrisy of using donations to the Wal-Mart Associates in Critical Needs Fund as an incentive for PAC contributions.. If 2007 typifies an average year, the Wal-Mart Associates in Critical Needs Fund helps less than 1% of Wal-Mart's 1.3 million employees, while the PAC actively fights against legislation that would help all of the low-wage, hourly workers, such as the Patient's Bill of Rights and workplace safety requirements. So, the managers are in effect giving to an organization - Wal-Mart's PAC - which fights against legislation that would protect and help the employees they manage in exchange for doling out one-time, small contributions for a tiny number of employees during a time of hardship.

Wal-Mart is absolutely playing politics here while feigning concern for its employees - at the expense of its employees. For years, Wal-Mart has promoted the idea that it has a family culture, but these videos reveal that the Walton family circle absolutely does not extend to its low-wage, hourly employees in stores across the country - employees who are struggling to make ends meet. The videos show Wal-Mart is more concerned with its image and immediate bottom line than with the company's long-term sustainability, which would have to include the well-being of its employees.

Wal-Mart has always resisted any real change to its company policy because it fears the immediate costs . The company's health care model relies on poor benefits to cut costs and it does just about anything to suppress wage costs, including forcing employees to work off the clock. But, the company is finding that lawsuits, public relations disasters, and high employee turnover cut deeply into those savings. Wal-Mart could save money in the long run - and improve the economic well-being and quality of life for its employees - by turning its attention to company policy, instead of DC lobbyists and political influence.

These latest PAC videos are just a tiny sample of the Wal-Mart video library; Wal-Mart might want to consider cutting its losses and doing the right thing.

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Report ties U.S. retailers to sweatshop shrimp

By Zain Verjee, Elise Labott,
Justine Redman and Kocha Olarn,
CNN
April 24th, 2008                                           [back to top]      

(CNN) -- Americans on average eat three pounds of shrimp a year, but can U.S. shoppers be sure the shrimp they love was produced without slave labor?

A three-year investigation by the AFL-CIO affiliated Solidarity Center found several leading U.S. retailers received shrimp from plants in Thailand and Bangladesh where workers as young as 8 are subject to sweatshop conditions.

The center's findings were supported by the State Department, which shares concerns about human trafficking in Thailand and worker abuse in both countries.

The report makes clear not all shrimp imports into the United States from Thailand and Bangladesh come from problem plants.

However, with shrimp imports from those two nations totaling $1.5 billion annually each year, the report suggests U.S. consumers are in a position to put pressure on producers to improve worker conditions.

The report names some of the most popular retailers in America, including Wal-Mart, Costco and Trader Joe's.

But only Wal-Mart responded to CNN inquiries about the shipments and pledged to examine allegations of abuse in plants which supply some of its shrimp.

"Safety is a top priority at Wal-Mart," spokesman Deisha Galberth said in a written statement to CNN. "We hold our shrimp suppliers to the highest safety and quality standards -- including maintaining processing plants and packaging facilities that meet or exceed Best Aquaculture Practices standards set by the Global Aquaculture Alliance.

"Although we have not seen the Solidarity Center's report, we are working with our suppliers to investigate the allegations shared by CNN. We're not aware of any issues in our supply chain," the company said in the statement.

The center's 40-page report found sexual and physical abuse, debt bondage, child labor and unsafe working conditions are common in Thailand and Bangladesh's shrimp processing factories, and that Thai plants often use trafficked workers.

"There's so much slime on the floor you can hardly stand up, and that just keeping your bearing and footing while you are trying to do work that involves using sharp knives," Ellie Larson, the executive director of the Solidarity Center, told CNN.

"They are treated in ways I'm sure most American people think went by in the days of slavery. In fact that's the kind of conditions these workers are engaged in -- slave conditions," Larson said.

In the past two years Thai police have raided several shrimp processing plants and rescued hundreds of trafficked workers.

Mark Lagon, the State Department's ambassador at large for trafficking in persons, visited Thailand and met a young Burmese girl rescued from one of the plants.

Lagon said guards at the factory made an example of her and a handful of other who tried to escape.

"Her head was shaved. She was beaten. You can't describe this in other fashion except slavery," he said.

The State Department and the International Labor Organization are working with both countries to improve the conditions for workers in their shrimp industries. The Department of Labor told CNN it has been working with the Thai government on a project aimed specifically at eliminating child labor from the shrimp industry.

In interviews with CNN, diplomats from both countries said their governments are working to address problems in the shrimp sector but stressed their economies were still developing.

"We proceed from the same common premise that this thing is evil. This thing has to be tackled squarely," Krit Granjana-Goonchorn, Thailand's ambassador to the United States told CNN. "I don't think you will find anyone more willing than the government of Thailand in that regard."

Bangladesh's ambassador to the United States, Humayun Kabir, said about 15 cases have come to the country's labor court since 2006. About half of them have gone to trial, he said and those responsible have been punished.

"So the government is taking those legal measures," he said.

The shrimp industry's global trade group, the Global Aquaculture Alliance, says it is not aware of its member plants operating under the conditions the Solidarity Center report describes, but said it is going to take a harder look and the offenders could be cut out from the global marketplace.

"We absolutely will investigate any specifics that come forth from this report," GAA's Executive Director Wally Stevens told CNN. "If those plants are in any way conducting themselves in an inappropriate way, they'll be dropped from our program"

The Solidarity Center says it is publishing this report in an effort to raise consumer awareness.

The State Department also hopes the report will force consumers to think before they buy, Lagon said.

"If consumers are concerned about the tuna they buy and if dolphins were harmed, surely the consumer would care about potential slavery."

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Wal-Mart workers to remove, turn off radio tags

By JON GAMBRELL
Associated Press
04.23.08                                      [back to top]      

LITTLE ROCK - Wal-Mart Stores Inc. promised state legislators Tuesday that any product with a radio tag would be clearly labeled, as the retail giant tries to put the inventory-tracking devices on all products sold at Sam's Clubs by 2010.

Wal-Mart (nyse: WMT - news - people ), based in Bentonville, wants to pla