Ethical trade initiatives in the South African wine industry: a brief comparison
Ernst Idsardi, North-West University | 22 October 2024
Case Study 12 of the MATS project evaluated the social standard schemes in the South African wine sector. The sector is renowned for its “high-quality-good-value” wines and is highly export orientated. In 2022, 37 percent of the sector’s export was destined for the EU. However, over the last decade the local wine sector has received quite some negative international publicity on the poor working conditions of farm workers. Various reports have raised issues with labour contracts, housing, working hours, wages, migrant and female workers, and occupational health and safety.
To improve the situation, several voluntary ethical trade initiatives haven been implemented in the sector. Fair Trade International, the Sustainability Initiative of South Africa (SIZA) and the Wine Industry Ethical Trade Association (WIETA) are the most prevalent ones in the wine sector. The latter two initiatives were developed locally and follow a more “bottom up” approach in setting social criteria. In doing so they are addressing a common complaint that many sustainability standards are too “top down” where requirements are set in the export market and “pushed” down the value chain to producers (and workers).
All these ethical trade initiatives have developed a of set of core principles which are underpinned by a multitude of social standard requirements. These criteria deal with, amongst others, a safe work environment, freedom of association, working conditions and wages. The compliance of member wine farms with these criteria is audited and certified within set intervals. Many wine producers seeing it as “doing the right thing” as well as a means by which they maintain their position and reputation in overseas wine markets.
The case study reviewed a vast body of previous research on the impact of voluntary sustainability standards, both globally as well as in the South African wine sector. Not surprising, the outcomes of most global studies were mixed but most found a positive impact on social sustainability. At local level, some research argues that social standards will not be able to redress the inequalities in the agricultural sector and propose the inclusion of worker equity schemes. Other points of concern raised are the auditing process which is sometimes perceived as flawed as well as the limited representation of workers in the standard setting procedure. Overall, most publications acknowledged that ethical trade initiatives do have a role to play in enhancing working conditions in the wine sector.
The case study also conducted a brief comparison of the three social standard schemes and found that almost 170 wine cellars and more than 1 300 wine grape producers are members of one of these social standard schemes. This is a relative high coverage among the estimated total of 2 487 wine farms. Apart from alignment with international labour conventions, the two local standards (SIZA, WIETA) are also relative strongly aligned with local labour legislation enhancing their local relevance. It was also found that of the three programs, WIETA has the most members, but it has a narrower scope as it merely focusses on social standards. On the other hand, Fair Trade International has the least number of members but it has a much wider coverage as it also embraces other pillars of sustainable wine production (e.g. environmental impact). Fair Trade traditionally focused on fair working conditions for small-scale farmers in the Global South, but it has developed a special standards code for farm workers in the wine sector.
It is also the only of the three programs that pays a price premium to its producers for complying with their standards. In doing so it tackles a common complaint amongst wine producers that the risks and cost of compliance with social standards are not spread along the value chain but only burdened by wine (grape) producers. This burden is being amplified by the lower levels of profitability that producers experiencing for some years now.
Furthermore, the payment of a “living wage”[i] remains a contentious issue in the local wine sector, but it could go a long way in improving the livelihoods of farm workers. There is no universal method in determining a “living wage”, however, the Decent Standard of Living (DSL) project uses a set of 21 socially perceived necessities that are widely accepted as essential to live a decent life in South Africa. For 2022, their estimated “living wage” amounted to a monthly household income of R 6 034 (€ 351). The current minimum wage in agriculture should be increased by 48% to cover the shortfall to this estimated “living wage”.
Of the three ethical trade initiatives evaluated in the case study, only Fair Trade international stipulates a “living wage” requirement. The SIZA code states that the wage must be at least equal to the national minimum wage for the agricultural sector. Furthermore, the WIETA code recommends a “living wage” but only if it is endorsed by government. They do however require that farms must demonstrate how a “living wage” can be reached over time. Thus, three different approaches to the remuneration issue.
This raises a few questions: Should the “living wage”” requirement be specified by an international social standard or rather be tackled by local minimum wage regulations? In a sector with decreasing profitability, will an increase in labour cost not lead to alternative employment strategies or even increased mechanisation resulting in lower job security and employment? The bottom line here is that there is a shared responsibility within the wine export value chain, including wine consumers, to ensure fair remuneration and labour conditions.
Ernst Idsardi is a senior lecturer in Agricultural Economics at the North-West University in South Africa. His research interests include international agricultural trade and agricultural development.
[i] “Remuneration received for a standard work week by a worker in a particular place sufficient to afford a decent standard of living of the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, healthcare, transport, clothing and other essential needs including provision for unexpected events.” (Anker and Ankler 2013)