Majority buyer unlocks sizable change
Kenyan exporter, Mavuno Organics exports around 75% of their avocado production to Dutch trader Eosta who distributes the avocados around Europe. By collaborating with Eosta, the company has been able to make substantial progress on living wages. Workers' livelihoods are impacted through an additional amount of 2- euro cent per kilo of avocado which Eosta generates through sales to its customers. This amount is then invested in the living wage initiative that they have partnered with Mavuno to bridge living wage gaps especially among its factory workers.
Eosta first approached Mavuno in 2021 to discuss the topic of living wages. Mavuno was a good choice, having worked with Eosta since 2016, and it has a keen interest in sustainability initiatives. Generally, the organic avocados are exported to countries such as the Netherlands, France, Spain and Germany. Mavuno was interested in the topic and agreed to help co-create a living wage program.
Mavuno
Located outside of Nairobi Kenya, in Ruiru, Mavuno Organics was incorporated in 2015 and has been dedicated to producing and exporting organic exotic fruits for nearly a decade. Their main exports are avocados and passion fruits. Mavuno partnered with hundreds of dedicated smallholder farmers to ensure that the avocados produced meet buyers’ quality specifications in addition to Global Gap, SMETA, FSSC2200 and recently Fairtrade certified. Mavuno supports small holder farmers with technical knowledge on avocado farming with emphasis on good agricultural practices and requisite market standards certification that allows them access international markets.
Understanding the living wage gap
Mavuno, a young and growing family-owned company that exports avocados in Kenya, works with 20 permanent workers and 50 seasonal workers. The seasonal workers work for the seven-month production season while the permanent workers work all year round. During the non-production months, permanent workers are engaged in other work such as preparation, certification and business development. During the peak season, Mavuno hires the seasonal workers to drive to farms, collect, process and package the avocados which are then picked for transportation by sea.
To start the project, Eosta introduced the Mavuno team to the Salary Matrix, a tool used worldwide to measure living wage gaps in a uniform way. The Salary Matrix helps producers measure wages, bonuses and in-kind benefits and compares with a living wage estimate to calculate the total living wage gap. The living wage estimate used for Mavuno’s gap calculation was the June 2022 Anker benchmark estimates for Rural Kenya (26,932 KES (224 USD) per month). The results of the Salary Matrix showed that 77% of workers were earning below the living wage estimate and the average living wage gap was 31%.
After measuring wages for all workers, the Salary Matrix was used to generate a report. Subsequently, the actors in the supply chain then come up with ideas on how to bridge the gaps monetary wise. In Mavuno’s case Eosta has considered and committed to raise and disburse to Mavuno its supplier of organic avocados 2 cents Euros per kilo sold to their clients. This has gone a long way to bridge the living wage gap and contribute to workers’ standard of living. The income generating activity will be a beneficial and sustainable approach in bridging living wage gaps as seasonal workers will have some income even when out of work.
Using living wage payments to bring value directly to workers
After the Salary Matrix calculation, Eosta agreed to provide the 2 Euro cent living wage contribution needed to bridge the living wage gap for the volumes purchased by Eosta. Mavuno then consulted the workers to agree on the best way to use the living wage funds.
After discussions, it was agreed that a majority of the contribution would be used to increase wages while the remaining amount would be used to start income-generating activity for the workers. This combination of activities was selected in order to enable workers to earn higher wages during the peak season and an income during the non-production months.
Mavuno subsequently distributed the value to workers through topping up their monthly wages with a separate living wage bonus. In order to ensure that workers understand that this bonus is subject to the collaboration with Eosta, Mavuno leadership communicated extensively with workers.
Successes and learnings
The living wage bonus enabled workers to earn enough to meet their essential financial needs and a decent standard of living. Another positive outcome was that workers were able to send their children to better schools because of the higher wages. Productivity within the workplace also improved as workers were more committed and this in turn also reduced employee turnover. Mavuno easily attracts seasonal workers as their wages are higher than minimum wages.
One of the inherent challenges to living wages is that living wage estimates continue to rise while the minimum wage is not frequently updated. And Eosta’s valuable contributions may not be sustainable long term. For a long-term solution, government involvement may become more critical. As a next step, Mavuno hopes to engage relevant institutions like government, academia interested in advancing the living wages conversations and adoption in the wider industries and share the work they are currently doing to support living wages.
Future Plan
As a next step, Mavuno is further developing the income-generating activity, the secondary activity to increase wages. Currently, Mavuno and the workers are exploring options. Two business ideas have been proposed but this is work in progress. There has been a suggestion to raise wages even higher, but the discussion of whether a second income-generating activity could be more valuable is ongoing. Together with workers, Mavuno and Eosta continue to celebrate the positive efforts and many benefits and aim to continue and build on the living wage work.
Living Wage Action Guide
To explore how you can take action with your supply chain partners to close living wage gaps, please check the Living Wage Action Guide. In this free, online resource you can find more case studies, inspiring examples and practical tips.
