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ABF in ‘human cost’ supply chain row with Oxfam

By Mike Stones , 27-Feb-2013

Associated British Foods (ABF) is locked in row with Oxfam about what the charity claims is the “veil of secrecy” the food manufacturing giant allegedly uses to hide the “human cost” of its supply chain.

The charity claimed the brand-owner of Silverspoon, Amoy and Kingsmill was “keeping consumers in the dark about how it does its business and failing to ensure suppliers meet the ethical standards required to improve the lives of the world’s poorest farmers”.

Oxfam claimed that its research revealed ABF was “the worst of the ‘Big 10’ global food and drinks companies”. But none of the 10 (see below) scored a good overall rating on their public policies and commitments to protect farmers, local communities and the environment, it said.

Oxfam boss Barbara Stocking, said: “Consumers have the right to know how their food has been produced and the impact this has on the world’s poorest people who are growing the ingredients.

Multi-billion dollar industry

“Companies have a responsibility to treat local producers, communities and environments with respect. It is time the veil of secrecy shrouding this multi-billion dollar industry was lifted.”

But an ABF spokesman dismissed allegations of a “veil of secrecy” surrounding its supply chain as “simply ridiculous”.

The firm said it treated local producers, communities and the environment with the utmost respect. “The company has worked hard for many years, over a wide geography, at all levels of the supply chain to ensure its suppliers meet the highest ethical standards. People the world over, suppliers and otherwise, have all benefited from this over many years. Where issues are found, they are appropriately resolved,” said the spokesman.

He added that transparency was a matter for an individual business to deal with “in its own way and to satisfy its own stakeholders”.

ABF confirmed that its next corporate responsibility report this autumn would deliver significant improvement in disclosure compared with the previous report.

Social media

Oxfam is urging the public to use social media to put pressure on large food companies to improve their policies. In addition to ABF, the charity named Coca-Cola, Danone, Kellogg, Mars, Nestlé and Pepsico, General Mills, Mondelēz (formally Kraft) and Unilever.

The charity wanted the public to ask the firms to “begin to play their part in providing solutions to the scandal which sees hundreds of millions go hungry despite there being more than enough food in the world to feed everyone”.

Meanwhile, earlier this week ABF said in a first half pre-close update that adjusted operating profit would be higher than last year and earnings per share for the first half would be significantly ahead.

But profit from sugar in the first half would be lower than last year with an improvement at Illovo more than offset by a decline in China.

City analysts Shore Capital reacted to the news by cutting predictions for the sugar business’s earnings before interest and tax from £440M to £418M. It repeated its ‘hold’ advice on ABF stock.

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