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The Supplier Ethical Data Exchange (Sedex) announced that changes would be coming into effect on all audits after 10 September 2024

New seasonal worker auditing requirements costing the horticulture sector an extra £90m a year are due to be introduced in September, despite protests from growers. 

In an industry meeting earlier this week, the Supplier Ethical Data Exchange (Sedex) confirmed it would press ahead with the introduction of long-warned changes to its audit regime, which will kick off on 10 September.

The changes from Sedex to its SMETA 7.0 audit will require farming and growing businesses to pay for the recruitment and transportation fees of the seasonal workers they employ in a so-called ‘employer pays principle’.

The organisation has also introduced a need for “credible” living wage standards.

If suppliers do not meet these targets after 10 September they will fail their audits. This could ultimately have knock-on effects for their retail supply partners who require the completion of Sedex audits as part of their contracts.

“There’s a lot of discomfort in the industry that the revised set of standards contained aspirational goals, where it’s simply not clear how the supply chain is going to pay for it,” said Martin Emmett, chair of the Horticulture and Potatoes Board at the NFU.

“This is becoming a consistency and fairness issue as it is a situation where we’ve got standards that are clearly unachievable,” said Emmett, who added the new standards would further undermine sector confidence.

Read more: NFU calls for halt to proposed seasonal worker cost changes

The changes were first floated in the spring and concerns were raised at the time by the sector that they would be expensive and unworkable.

Ali Capper, executive chair of British Apples & Pears, said it was “frustrating” these concerns had been ignored, as the body felt Sedex was “just not listening”.

Her comments were echoed by Nick Marston, CEO of British Berry Growers, who said: “This is a massive extra cost that has been introduced with no consultation or consideration in the consequences of it.”

The core issue regards ‘employer pays principle’ fees, as they are expected to add on £1,500 of cost per worker, according to labour providers.

There were also logistical challenges as seasonal workers often travelled between several farms over the season, he warned.

“In that situation, who would pay the upfront visa and travel costs? It would be unfair for that to fall solely to the first farm employer. If the upfront costs are split between different employers, how is it to be administered and managed? And ultimately how will these costs be funded by the supply chain?” asked Capper.

Emmett also raised concerns about growers having to repay any fees that have been paid, which was “quite simply just going to help finance illegal operatives” who charge workers illegal fees abroad, before they come to work in the UK.

“The idea of regardless paying any fees consequent to any illegal operators, I can’t see how that’s not going to make the situation worse rather than better,” he said.

He added that UK seasonal workers already earned more in the UK than elsewhere. 

Read more: Growers brace for up to £90m in additional seasonal worker costs

“This new standard has the potential to cause chaos and stress in fresh produce if introduced without appropriate consultation across the whole supply chain,” Capper added. “In particular, there are serious implications for UK food price inflation and security.”

According to BAP’s estimates, the cost increase would bring about the equivalent of a 4p-5p price increase on the cost of a pack of apples.

“Given the fact that apple and pear growers’ margins are already stretched to breaking point, these additional costs will have to be covered by retailers,” she said.

Suppliers and growers are required by the UK retailers to pass ethical audits as part of their contracts.

“As things stand, some UK apple and pear growers are looking into alternative ethical audits that enable them to meet important retail requirements,” she said. “They may also consider refusing to comply with this part of the SMETA audit until the Defra impact assessment report has been published.”

Defra is carrying out an impact assessment into the workability of the employer pays principle, which was expected to be completed at the start of next year, said Marston.

Emmett said that the supply chain and retailers needed to work collaboratively “because if the action is not collective then de facto we will move to a new requirement which then some suppliers won’t be able to service”.

He also disagreed with the introduction of a pilot scheme [another solution floated by industry insiders], as it may work for a certain retailer and a certain part of a supply chain but “there’s no guarantee and it’s unlikely that the whole supply chain would be able to serve this cost”.

BAP and BBG have asked for all retailers to align and agree that UK fresh produce suppliers are not expected to respond to the employer pays and credible living wage sections of the proposed SMETA standard 7.0 audit. The organisations have also asked that no action from producers is required if a “collaborative action required” is assigned by an auditor.

“UK retailers want to do everything in their power to protect workers,” said Sophie De Salis, sustainabiltiy policy advisor at the BRC. “They are supportive of the new audit methodology and are working closely with Sedex on this transition, including how this can be aligned with the industry’s ongoing work on recruitment fees, through the Seasonal Worker Scheme Taskforce.”

 “UK retailers are also working together to make sure suppliers get clear and consistent advice and reassure them that the introduction of the “Collaborative Action Required” issue code will be used to encourage collective action and will not require anyone to shoulder the responsibility alone,” she added. 

Read more: Workers’ groups call on supermarkets to pay seasonal labour fees

The Grocer understands some growers have been told by their retail partners they will not be enforcing the new standard. However, as many growers work with multiple retailers this was not overly helpful, and Capper said everyone was “in limbo” as it was not clear “how retailers will treat [the standards]”.

The industry has called for the scheme to be paused until a proper impact assessment has been carried out.

“We are very concerned that the proposed standard has not been properly thought through,” said Capper. “Specifically, the changes are being pushed through without waiting for the Defra-funded impact assessment report on the employer pays principle, which is being conducted by the government’s seasonal worker scheme taskforce.

“Before that proper impact assessment has been completed there is no place for this new SMETA standard.”

“We have heard and understood the concerns from the UK horticultural industry regarding the updates to the SMETA methodology,” said a Sedex spokesperson. “Over the past few weeks, we’ve continued our extensive consultation on SMETA 7 by bringing together UK horticulture industry representatives, retailers and many other stakeholders to gather additional feedback and to collaborate on building in-depth guidance to support Sedex members.”  

”SMETA 7 is based on globally recognised, globally applicable standards on responsible and sustainable practices. It is not aspirational, but grounded in this established international best practice,” the organisation added. “We recognise meeting these standards is often a journey, which is why SMETA encourages continuous improvement to gradually raise the bar on sustainable operations and sourcing for all businesses.

“Collaboration between business stakeholders is crucial – we’re pleased to support this both through SMETA 7 and the process to develop it. We remain dedicated to working closely with our members and other stakeholders to progress sustainable and responsible sourcing.”