Point-by-Point Response to Trader Joe’s second “Note to Our Customers on Florida Tomatoes and the CIW”

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What follows is a point-by-point breakdown of Trader Joe’s recent “Note to our Customers on Florida Tomatoes and the CIW,” with a response to each point by the CIW. It is structured in two columns, with excerpts from Trader Joe’s “Note” on the left and the corresponding CIW response on the right.

We have posted two more in-depth analyses of Trader Joe’s most recent “Note” to its customers, which you can find here, and here.

Trader Joe’s
Fact Check
“We buy only five Florida tomato items and we only buy them during the growing season in Florida (generally from October to May). We purchase these products through wholesalers who aggregate the product and package the tomatoes for shipment to our warehouses that supply our stores. These wholesalers have indicated to us that they have agreed to pass along an extra ‘penny per pound’ to the workers who harvest these tomatoes.” Trader Joe’s wholesalers have not agreed with the CIW to do anything. Over a month ago, two of Trader Joe’s wholesalers called us, and we discussed various ways in which we might work together to achieve the purposes of the Fair Food Program. They indicated they would discuss each of the alternatives with Trader Joe’s, and get back to us. They never called again.
“Additionally, these wholesalers are willing to provide reasonable ‘audit’ rights to the CIW or their agents to verify the pass through for all of their purchases. Our wholesalers have told us they are willing to sign an agreement with CIW that includes a pass through of the ‘penny per pound’ and reasonable audit rights to provide a basis for verification of such pass through.” The wholesalers have not told the CIW what they allegedly have told Trader Joe’s. As noted, they have never called us back after checking with Trader Joe’s.
“Accordingly, it appears to us that all of the expressed goals of the CIW that were indicated in their presentation at the Georgetown University Conference on the “Future of Food” as posted on the CIW website on May 10, 2011 can be met by a readily available relationship between our wholesalers and the growers. This relationship will be supported and endorsed by Trader Joe’s.” Trader Joe’s attempt to foist its social responsibility obligations off on its wholesalers will not in fact satisfy ‘all of the expressed goals of the CIW.’ Trader Joe’s buys tomatoes from Florida through several totally separate, competing produce wholesalers, not one of which knows the specifics of the others’ business, much less the total pounds of Florida tomatoes Trader Joe’s buys across its supply chain. Only Trader Joe’s knows that, and only allowing an independent auditor to review its records can insure that the company is not buying from non-participating farms, or even banned farms, without reporting those purchases.
“The draft agreement defines the ‘penny per pound’ as ‘The Premium will be set at a level which will result in an increase in Qualifying Worker pay resulting from paying a 1.5 cents per pound gross premium (or 1.3 cents per pound net premium).’ This makes no sense and is at odds with the expressed CIW request for ‘only a penny per pound.’” Actually, this makes perfect sense. Trader Joe’s does not seem to understand that every company since the McDonald’s agreement has been paying 1.5 cents more for their Florida tomatoes as a Fair Food Premium, with 1.3 cents of that amount being passed through to the workers as a Fair Food bonus and .2 cents being retained by the grower to offset the increased payroll taxes associated with paying the workers more money. The workers actually get 1.3 cents per pound of “gas green” tomatoes they pick (as opposed to 1 cent) because they pick more tomatoes than eventually get sold. The “additional” .3 cents therefore is an adjustment for those tomatoes that are picked, but culled out in the packing house.
“The draft agreement says that ‘Trader Joe’s will require a Participating Grower to ‘pass through’ at least 87% of such Premium received from Trader Joe’s as additional net wage compensation for Qualifying Workers, using the Participating Grower’s normal payroll process.’ We support the concept of getting the workers an extra penny per pound. We have no idea where or how 87% fits. We and our wholesalers are willing to pay the ‘penny per pound’ but have no way to determine if such payment is actually getting to the individual worker. We wonder where the excess is supposed to go.” Apparently, Trader Joe’s is better at innuendo than math, or they would be able to figure out that 1.3 cents is 87% of 1.5 cents.

The 87% is expressed as a percentage of the amount received by the grower because the grower will receive different amounts for different types of tomatoes, but it will always be 87% (i.e., the ratio of 1.3 to 1.5) that must be passed on to the workers.

The Fair Food premium goes from the buyers to the growers who distribute it to their workers through the payroll system. The payments, both in to the growers and out to the workers, are audited by an independent third party (as the Fair Food template agreement sent to Trader Joe’s makes clear). So, yes, Trader Joe’s and its wholesalers would know perfectly well whether the payments are actually getting to the workers.

“The draft agreement requires Trader Joe’s to provide monthly detailed reports and historical reports of ‘Florida Tomato’ purchases… This information is readily available from our wholesalers and they are willing to provide it to verify that Trader Joe’s has paid the extra ‘penny per pound’ to them and through them to the growers.” It is hard to know what, if anything, Trader Joe’s is complaining about here, since they say their wholesalers have agreed to do this. The problem is that, as mentioned above, none of their wholesalers knows how many tomatoes — in total — Trader Joe’s purchases from Florida. Each only knows how much Trader Joe’s purchases from it. To the extent Trader Joe’s is complaining about being unable to comply with this provision, it’s important to remember this: Others companies that purchase far more tomatoes than Trader Joe’s have agreed to the same provision.
“The draft agreement contains a requirement that Trader Joe’s somehow will pay the total premium whether or not the supply of Florida Tomatoes is sufficient to meet our demands or regardless of where we actually buy the tomatoes. This, of course, is a ridiculous requirement to which no serious business would agree.” Half of this claim is merely misleading, while the other half is just wrong. The provision in question is a contingency in case we ever revert back to a situation in which not enough growers are participating to meet the supply of the purchasers who are, as was the case last year before the entire FTGE signed-on to the Fair Food Program. In that case, Trader Joe’s would have to pay the premium on all the Florida tomatoes (not all tomatoes) that it purchases, whether or not the tomatoes are purchased from Participating Growers. The total premium payment would then be divided proportionally among the workers of the Participating Growers from whom Trader Joe’s purchased. The formula is a bit complicated, but it is designed to not allow buyers to walk away from their commitment to improve farmworker wages in the event that an insufficient number of Florida growers is willing to pass the penny-per-pound bonus on to their workers.
“The draft agreement requires Trader Joe’s to terminate any vendor or supplier upon written notice from the CIW. This is one of the reasons for our characterization of ‘overreaching.’” The provision on termination of growers who are out of compliance with the Code of Conduct is hardly as arbitrary as Trader Joe’s says. Trader Joe’s has to cut off a grower if the independent auditor, or any other source that the CIW and Trader Joe’s both find acceptable, reports that a grower is out of compliance. So, for example, if the Justice Dept reported a slavery case on a farm, we and Trader Joe’s would not have to wait for the auditor to confirm that before cutting off the grower.
“The draft agreement contains a confidentiality requirement that can be breached upon the sole judgment of the CIW. That is among the reasons we believe the draft agreement is improper.” This, again, is just wrong. It appears that Trader Joe’s has confused the Agreement itself with the Code of Conduct. The CIW can of course disclose the Code as it wishes, as could Trader Joe’s, for that matter.