Ethical Issues in the Supply Chain for Tea - Case Study Example

Ethical Issues in the Supply Chain for Tea Name: Institution Introduction Tea is one of the beverages that is consumed in large quantity after water. Tea, which is scientifically known as Camellia Sinensis, in produced by a number of developing countries such as Kenya, Rwanda, Tanzania and India. The largest global producers of tea ate China, Sri Lanka, Kenya India and Indonesia (Wetherly & Otter, 2013). Considering the trend in the global economy for tea, the consumption of tea is increasing, with the latest statistic stated in the year 2010 by the United Nations Food and Agricultural Organisation that the consumption increased by 5.6% . However, ethical issues in the trade of the highly demanded commodity is necessary to ensure the production process consider the issues on sustainability and workers welfare. To ensure ethical issues such as fairness and environmental sustainability in the supply chain for tea, a number of non-governmental organisations have come up with policies and measures that the tea producers must follow for successfully compete in the global market (Clark, 2013). The non-governmental organisations play a critical role in the engaging the agricultural supply chain in agricultural sourcing for tea and getting the ethical issue involved in production in the fair trade agenda. Most interestingly, there has been a realisation that the buyers and the sellers involved in the tea trade have close ties that may affect the implementation of the formulated policies (Crane & Matten, 2007). Therefore, the discussion in this paper address some of the ethical issues that must be considered by all the tea producing companies, supplies and packaging, as well as the consumers. The discussion will carry out an analysis of the ethical issues, and the make a recommendation to Ethico Supremica on the issues to be handled (Bandyopadhyay & Bhoovigyan, 2005). Sustainability in Tea Production The production of tea is labour intensive since the industry is one of the major job creators for many families, both in India and in other countries that grow tea. The industry has created a lot of job in the rural and remote areas where the large tea plantations are grown (Carrier & Luetchford, 2012). Many people gain their wages through tea picking and in the processing zones. In the recent decades, the production of tea has increased, hence influencing the price by making it lower and unsustainable for the production process. The competition in the pricing and market space has prompted the buyers to seriously consider ethical trade in all the countries that produce tea. The ethical trade is ensured to allow the tea traders to conserve the social and environmental dimension in the production and supply chains. The ethics are effective in making the poor producers in the developing countries to realise a suitable income and economic development (Bandyopadhyay & Bhoovigyan, 2005). For a long period, not all the tea producers showed an interest in the environmental or the social dimensions in the supply chain for tea. Therefore, to ensure a sustainable production of tea, the company must only consider sourcing tea from those companies that consider the social welfare of the workers, the environment and the application of sustainable agricultural practices (Clark, 2013). All the companies that are involved in tea production and supply chain are supposed to adopt ethical trading or sourcing. Ethical sourcing means that the company must take the responsibility for the social and the performance of the environment at all stages of the supply chain with much consideration to the primary tea producers. The change is meant for the company to abandon the traditional practices and engage in farming and trading practices by taking the responsibility and behaviour for those responsible for the joint ventures or the subsidiaries (Crane & Matten, 2007). Most companies in the UK have adopted the ethical sourcing to ensure quality environment and protection of the workers. The companies establish their own in-house management systems and operation standards both in the production, processing and supply chains. The adoption of ethical sourcing is also of significant importance for the tea supply chain in building a market place with an emphasis on having a commitment to fair pricing (Sati, 2014). Additionally, the ethical trade is significant for the sheer volume of tea users that promise the producers of the market share and shaping the future of ethical sourcing. The Scope of Ethical Sourcing In the Tea Supply Chain The market and the price mainly influence the supply chain for tea, which in turn affect the application of ethical sourcing. However, pricing for tea in the market is not given much consideration in the application of ethical issues in the business. The supply chain programs and standards are mainly set on the social aspect, mainly the labour force and meeting the environmental criteria that ensure sustainability. The supply chain of tea can mainly be divided into two categories; the producing country and the consuming country. Various critical issues in the supply chain are put into consideration as discussed below (Wetherly & Otter, 2013). Social Issues Tea merchants are fighting to maintain and capture a large market share by technological advancement and innovation in the processing of the commodity. The emphasis and the aim of the traders are to make their products available and affordable to the consumers by offering a relatively low prices. Most of the companies have been seen operating at a relatively flexible prices and carry out speculative transactions (Maheshwari, 2014). However, the quality of the product has to be maintained, and the companies producing the product must realise some revenue at the end of the process to sustain the business. Considering the company strategies of retaining the market and capturing more market place, some have opted for cheap labour at the expense of the business. Low wages have been a common trend in all the tea producing countries like the case of India as well as other regions in Africa and Asia. The tea plantations have for a long time benefited from the cheap local labour and the current research into the tea production have it that the wages are still below standards. In some countries that have not joined the organisations that ensure the ethical standards are met, are still providing wages below the government minimum wage (Sati, 2014). The cost of labour in the tea production process accounts for 55% to 70% of made tea that is being transported to other regions around the world. Since most of the plantations have not adopted the mechanical picking due to quality concern, most of the tea plantations are being handpicked. Therefore, if the price of tea falls, the effect is greatly felt by the tea pickers who are on the receiving end. Most of the workers in India tea plantations are paid piece rate, which is the fixed price that is paid depending on the number of Kilograms picked. Moreover, the wage payment is influenced by the working hours, skills, health and the crop seasonality. The most remarkable part is that the employees do not consider other allowances such as medical care, education and accommodation (Maheshwari, 2014). All the expenses are considered in the wage. Therefore, the workers do not realise the benefit of working in the tea plantations and make it a challenge to gauge the level of the living wage. In contrast to the permanent workers, there is more advantage and allowances that are offered and the wages are not affected by the seasonality or the amount of tea picked. Therefore, it will not be practical for the company to company to develop the range of breakfast teas using leaves sourced from Assam as the region also subject the workers with much workload that is underpaid (Neilson & Pritchard, 2011). Another ethical issue is the housing that the workers live in while working at the plantation. The living condition in Assam is very poor and unsanitary. The housing are expected to have proper drainage system and good ventilation .chimney is a must for the households that used firewood as fuel. Every household in the camp should have an easy access to the latrines and not a case whereby the latrines are few and many people that need to use the facility. The people should have access to clean drinking water, of which is lacking in the Assam village where the workers live. Health and safety of the workers is another ethical issue to be looked into in the tea business. The act of plucking tea may be difficult and hazardous to the employees. The workers will spend most of the time standing, carrying and picking the fresh tea leaves for many hours. The activity may make the workers experience back complication, leg injury due to falling that is contributed by the sloppy terrain. Additionally, the workers are exposed to harsh weather conditions that comprise of hot, wet and cold conditions. The plantation also is a good habitat for insects, snakes rodent and other animals that may cause injury to the workers (Reiboldt & Mallers, 2013). Considering the working environment, most of the tea pluckers suffer from respiratory conditions that are caused by the cold weathers. Since the workers live in a community, some of the workers may get into on and off relationships with different partners. Therefore, there is most likely to be a prevalence of HIV/AIDS among the workers. Considering all the health and safety issues, the ethical standards require that the companies involved in the production of tea to ensure that there is a ready medical facility that can be easily accessed by the workers. The workers should be taken care of with or without cash and be given medicine to help them recover fast and get back to work (Hill & Jones, 2007). The workers that are suffering from HIV should be given good attention by ensuring they get the antiretroviral drugs and vitamins that booth their immune systems. The company is also expected to consider providing the workers with the appropriate personal protective equipment’s while at the plantation. The company policies should ensure that no worker should be allowed on the plantation without appropriate apron and boots that will protect them from scratched and other animals within the plantation (Carrigan, Marinova, & Szmigin, 2005). Consequentially, the most common challenge on the social issues is discrimination and gender-based violence. Considering the global economy under the establishment of tea business, majority of the employees working in the tea estates are unskilled labourers. Due to lack of proper educational background of the tea pluckers, majority of the women have been subjected to discrimination and gender-based violence. In India, most of the workers have complained of some of the women being abused sexually or are engaging in sex with the senior staff so that they can be promoted to be the team leaders, clerks or the team supervisors. Some of the workers get isolated because of their community hence cannot be promoted to a higher level. Some of the workers receive threats from other members hence are forced to leave (Clay, 2005). This issue has affected some of the companies whereby the companies are losing skilled labourer and remaining with teams that are not performing to their expectations. Therefore, the discussed social issues have been realised by the consumer, mostly in UK. The state is therefore concerned with the quality of the tea, and whether the production standards meet the social responsibilities and environmental sustainability. Supplying tea that is produced by cheap labour such as underage children is also affecting the competition for such products since consumers are sensitive to the production process (Neilson & Pritchard, 2011). Environmental Issues Climate change is currently an international concern and every country is playing a role to ensure the environment is used in a sustainable manner. Majority of the factories around the world may not be sensitive to environmental conservation since their main concern is maximising on revenues. Various ethical issues are looked at by the non-governmental organisations that are involved in the tea business, from the point of production to consumption (Reiboldt & Mallers, 2013). For example, Unilever tea, which has Lipton as the biggest buyer, the buying company will not accept tea that is not Rainforest Alliance certified. Therefore, the company, which is also found in India and have ensured that all the farmers are trained in the Rainforest Alliance expectation when farming the tea crop. Therefore, in the Assam that is not rainforest alliance certified will affect the price of the product and most of the buyers will not accept tea that is produced without taking care of the environment (Young, 2011). The tea produced in Assam will not be accepted in the auction centre because most of the buyers will not accept it. Repackaging the tea from other region will involve going against the set policies that govern the market place. The farming practices should not have a negative impact on the environment (Czinkota & Ronkainen, 2013). All tea-producing countries are expected to carry out farming activities that ensure the conservation of the habitat. Since most of the tea plantations are located in the remote areas, many organisms depend on this important ecosystem for various purposes. Therefore, the tea plantations are expected to come up with strategies that that ensure soil erosion is controlled. The estates are also expected to minimise the use of chemicals in the farms. In the tea plantations, chemicals that is commonly used is herbicides for controlling weeds (Philip et al., 2013). The consumers have raised concern, and most of the buyers will not purchase tea that is produced using chemicals. Most pf the buyers want tea in its purest form since tea has no preservative or any additive. Therefore, tea that is produced using various chemical will not have a good price in the market as compared to the ones that are produced naturally. If Assam tea plantation is using chemicals in the tea filed, the company will not have a good market for the products (Hill & Jones, 2007). For the Assam plantation to get a good market for the products, the company must engage carry out integrated crop management by eliminating the use of chemicals products that are known to have negative effects on people’s lives. The form should, therefore, should only use chemicals that are accepted internationally and are recognised to be having little effect on the environment and human. According to the case study of Assam tea Plantation, it is evident that the workers are lured into the plantation with the thought that they will have better pay and good working conditions. The reality is that the workers get to an employment environment with poor working conditions and with low pay. This implies that the company is not committed to delivering better-working conditions. The resultant effect is the development of the poor relationship between the company and the community that are providing the services (Yawar, 2015). The farm will have a better place in the tea supply chain if the tea is produced under good neighbourhood and the surrounding community does not complain about the service provision. This act of community relationship is ensured by the non-governmental organisations that visit that farms to ensure the community is joining hands towards sustainable production (Carrigan, Marinova, & Szmigin, 2005). Conclusions and Recommendations to the Management of Ethical Issues Consumers are sensitive and determined to know where the products they are consuming are produced in a sustainable manner. The strategy has motivated the producing companies to provide clear guideline through the internet so that the production process of the product can be traced and be known by the public (Neilson & Pritchard, 2011). For Ethico Supremica to buy tea from the Assam, Assam company must ensure all the critical criterion in the production process are followed. The most critical issues that must be followed are the working condition, minimum wage payment, environmental protection, natural resource conservation and sustainable agricultural practices such as minimising the use of chemicals (Carrier & Luetchford, 2012). The Ethico Supremica can only by Assam product is the workers working conditions are improved through the provision of personal protective equipment and good rewards for the work done. The company can help in the provision of recommended aprons gumboots to the tea picking team. Most importantly, the company should show commitment to ensuring sustainable farming practices by ensuring total control of soil erosion and minimum use of herbicides and insecticides (Czinkota & Ronkainen, 2013). The company should resort to manual weeding and completely eliminate the use of chemicals in the farms. Consequentially, the farms should not be located in areas that may pose or have a negative impact on the natural resources such as rivers, streams and conservation areas. The farms must have a well-defined boundary that separate the farm and the conservation areas (Philip et al., 2013). Aquatic resources must also be protected against soil erosion and chemicals that can contaminate the waters. Through conservation of the aquatic resources, the plantation will be dedicated to protecting the health of those who might be using the river downstream. Finally, the company should design management policies that must be followed by the farm employees. The policies will be effective in managing the incidence of corruption, tribalism and favouritism. The people working on the farm should all be treated fairly and be given equal opportunity perform their duties diligently (Clay, 2005). By considering all the ethical issue and formulating strategies to manage them, Ethico Supremica as a packaging firm will be able to purchase the processed tea and sell to the consumers. Without proper consideration of the ethical issues, Assam tea plantation will not have a ready market to supply their tea because it will be outcompeted by other farms that produce their tea in a social and sustainable manner (Hill & Jones, 2007). Reference Bandyopadhyay, A., & Bhoovigyan Vikas Foundation, New Delhi. (2005). Sustainable agriculture. New Delhi: Northern Book Centre. Carrier, J. G., & Luetchford, P. (2012). Ethical consumption: Social value and economic practice. New York: Berghahn Books. Carrigan, M., Marinova, S. T., & Szmigin, I. (2005). Ethics and international marketing: Research background and challenges. Bradford, England: Emerald Group Pub. Clark, J. P. (2013). Practical Ethics for the Food Professional: Ethics in Research, Education and the Workplace. Wiley-Blackwell. Clay, J. (2005). Exploring the links between international business and poverty reduction: A case study of Unilever in Indonesia. Oxford: Oxfam Crane, A., & Matten, D. (2007). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford [u.a.: Oxford Univ. Press. Czinkota, M. R., & Ronkainen, I. A. (2013). International marketing. Mason, OH: South-Western Cengage Learning. Hill, C. W. L., & Jones, G. R. (2007). Strategic management: An integrated approach. Boston, Mass: Houghton Mifflin. Maheshwari, D. K. (2014). Composting for sustainable agriculture. Cham : Springer Neilson, J., & Pritchard, B. (2011). Value Chain Struggles: Institutions and Governance in the Plantation Districts of South India. Hoboken: John Wiley & Sons. Philip Sloan, Willy Legrand, Joseph S. Chen. (2013). Sustainability in the Hospitality Industry 2nd Ed: Principles of Sustainable Operations. Routledge Reiboldt, W., & Mallers, M. H. (2013). Consumer Survival: An Encyclopedia of Consumer Rights, Safety, and Protection. Santa Barbara: ABC-CLIO. Sati, V. P. (2014). Towards Sustainable Livelihoods and Ecosystems in Mountain Regions. Cham: Springer. Wetherly, P., & Otter, D. (2013). The business environment: Themes and issues. Oxford: Oxford University Press. Yawar, S. A. (2015). Corporate Social Responsibility in Supply Chains: Relevance of Supplier Development. Kassel, Hess: Kassel University Press. Young, L. (2011). The marketer's handbook: Reassessing marketing techniques for modern business. Chichester, West Sussex, U.K: Wiley. Read More