PATOS DE MINAS, Brazil (Thomson Reuters Foundation) - As the coffee harvest drew to a close in the rolling hills of southeastern Brazil, labor inspectors raced to two sprawling plantations with one goal - to rescue workers from slavery.

FILE PHOTO: A worker is seen in a coffee farm during a labor ministry operation to identify workers in conditions analogous to slavery, in Campos Altos, Minas Gerais, Brazil August 12, 2019. REUTERS/Adriano Machado

The convoy, escorted by armed police, hit the road one August morning in Minas Gerais - a state bigger than France - that grows more than half the beans in Brazil, the world’s top coffee exporter.

The Thomson Reuters Foundation joined officials on a high-speed chase over fields, searching for coffee bean pickers crouched amid countless rows of lush trees.

The inspectors knew they had to act fast as supervisors running plantations were known to order workers to flee at the first sight of authorities, using WhatsApp to issue warnings.

By sunset, they had raided both plantations and found 59 workers - including children aged 13 - all undocumented, underpaid and lacking safety equipment as required by law.

“The workers had no rights whatsoever,” said Marcelo Campos, the labor inspector who coordinated the raids.

The laborers knew they were being exploited but felt they had no choice in a country of rising poverty and scarce jobs.

“There is no other way,” said one, declining to be named in case it lost him work on another of the state’s many thousands of plantations that are home to at least 245,000 workers.

“It’s not worth it ... but we are weak, right?”

SLAVE-BLIGHTED

A Thomson Reuters Foundation investigation over six months uncovered extensive slave labor running largely unchecked in Brazil’s billion-dollar coffee industry despite years of efforts to clean up the sector - which could now put sales at risk.

Exclusively obtained data, analysis of public records, and dozens of interviews revealed coffee produced by forced labor was stamped slavery-free by top certification schemes and sold at a premium to major brands such as Starbucks and Nespresso.

Labor inspectors said they were hampered by a shortage of staff, money and political will - and fear abuse is rising even though consumer demand for slave-free products is increasing.

Prosecutor Mateus Biondi said he was alarmed by the number of investigations into labor violations in the main coffee growing area of Minas Gerais in recent years, but that such efforts did not match up to the true scale of the problem.

“The numbers are scary,” said Biondi, regional anti-slavery coordinator for Minas Gerais, referring to new data - revealed by the Thomson Reuters Foundation - showing an average of about 25 probes per year into coffee plantations since early 2014.

Civil society groups, unions and lawmakers voiced concern about the reputation of Brazil’s coffee industry being damaged on the global stage if the failure to stop slavery continued.

“We started a dialogue with the coffee sector in 2016, predicting that human rights violations, especially slave and child labor, would grab the world’s attention,” said Mercia Silva, director of Inpacto, a leading anti-slavery charity.

“This is proving to be true now.”

The Thomson Reuters Foundation found via sources that the state’s coffee plantations this year attracted the attention of U.S. customs officials who can block imports of slave-tainted goods, fuelling fears about trade with Brazil’s biggest buyer.

U.S. Customs and Border Protection (CBP) met this year with labor inspectors and prosecutors in Minas Gerais - thought by sources to be the first such meetings - to discuss the industry.

CBP officials can block any goods they suspect were made by forced labor, and have this year ramped up efforts by stopping several imports including tobacco from Malawi and gold from artisanal mines in Democratic Republic of Congo.

Two Brazilian sources present at separate meetings with CBP officials voiced concern some coffee exports could be detained.

“We are not naïve, we are aware it’s a possibility,” said one Brazilian source on condition of anonymity.

Two U.S. officials confirmed the meetings. A CBP source said they could not discuss “potential or ongoing investigations”.

“The government of Minas Gerais is aware of the concern of the United States ... and other importing countries regarding coffee and other products,” a state government spokesman said.

REPUTATIONAL RISK

U.S. giant Starbucks, Swiss-based Nespresso and Brazil’s Nucoffee have all used coffee plantations found by labor officials to have exploited laborers in recent years.

Asked about the findings, the companies - two global heavyweights and a major Brazilian player - said they were committed to tackling slave labor and were working with producers to improve their labor practices and avoid slavery.

The Rainforest Alliance, a global non-profit that certifies farms as slave-free, said it was considering changing its system to boost the number of unannounced audits and visit more farms.

Minas Gerais’ government - which runs a similar scheme - said it was monitoring cases filed by labor prosecutors against farms it had certified after the investigation found that three were suspected by officials of having violated labor laws.

Brazil’s Ministry of Economy said it started discussing ways to improve labor practices with coffee producers last year, but lacked data on how many workers were victims of modern slavery.

In Brazil, slavery is defined as forced labor but also covers debt bondage, degrading work conditions, long hours that pose a risk to health, and any work that violates human dignity.

More than 300 coffee workers were found by officials in slave-like conditions nationwide in 2018, the highest in 15 years, but the true extent of slavery in the sector is unknown.

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The economy ministry said in a statement that there were “no reliable statistics” on the number of workers in slavery-like conditions in any industry in Brazil when asked if the scale of labor abuses in the country’s coffee sector was underestimated.

“We are a great global producer, and the number of abuses identified is not proportional to our production,” said federal judge Carlos Haddad, who runs a legal aid scheme for victims of modern slavery in Minas Gerais.

MISSING: MONEY, STAFF, BACKING

Worldwide coffee consumption is set to reach a record in 2020, U.S. data shows, and Brazil accounts for more than a third of global supply. It exported about R$18 billion ($4.4 billion) of coffee in 2018, according to United Nations trade data.

But lawmaker Helder Salomao, head of the Human Rights Commission, a congress body that proposes laws and carries out investigations, warned that Brazil stood to lose without action.

“Either we solve this problem, or more workers will lose their dignity, while we lose business opportunities,” Salomao said. “Soon, Brazil will have losses because of this.”

Statistics compiled by a labor prosecutor and handed to the Thomson Reuters Foundation showed that 121 farms were probed in Minas Gerais’ southern and central-east region since April 2014.

Labor violations were identified by officials in 10 farms certified by Rainforest or Certifica Minas, raising questions about the effectiveness of labels that lead to higher prices.

“Certifiers know that there are big problems with non-compliance in certified supply chains,” said Genevieve LeBaron, a politics professor at Britain’s Sheffield University who has studied labor conditions at certified tea plantations in India.

“Consumers believe that when they pay $2 more for certified coffee, that money is being handed to workers when there is very little actual evidence that is the case.”

The scale of slave labor across Minas Gerais is likely to be significant and largely unchecked, academics and activists said.

The state has at least 119,000 coffee plantations and hundreds of thousands of workers but only 245 inspectors.

“There is a lack of resources, technical support and personnel,” said Adriano Santos, a sociology professor at local university Unifal-MG who has studied the state’s coffee sector.

He said the true picture was one of “dramatic” worker abuse.

UNDER THE RADAR

Labor officials in Minas Gerais and beyond are concerned as the overall number of workers rescued from slavery tumbles.

Last year 1,154 laborers across all industries were rescued, down from 2,604 in 2012, government data showed. [L5N2277LU]

Labor judges and inspectors told Congress in April that the main government body responsible for the fight against slavery and workplace infractions in Brazil was in a “calamitous” state.

Facing a deep recession in 2017, Brazil’s previous government cut funding for labor inspections by about half, which led to a sharp drop in the number of workers rescued.

Labor associations and anti-slavery groups said they were also wary of President Jair Bolsonaro, who earlier this year said child labor was not harmful and complained that the legal definition of slave labor under Brazilian law was too broad.

Against this backdrop, Brazil’s leading anti-slavery labor prosecutor said her office would next year hone their efforts on a couple of sectors - with coffee likely to be one of them.

“Given our financial limitations, lack of personnel, and the size of Brazil, both we and labor inspectors need to act in a ... strategic way,” said newly-appointed Lys Sobral Cardoso.

For while mechanization has boosted productivity, replacing man with machine may also have exacerbated worker exploitation.

More than two-thirds of workers on coffee farms in Minas Gerais are estimated to be informal workers, with no right to a minimum wage, overtime pay, severance or state benefits.

“With mechanization, the number of workers has fallen,” said Jorge Ferreira dos Santos, a director at the local chapter of Brazil’s biggest trade union confederation, known as CUT.

“But their situation is more precarious, as they submit themselves to work in whatever conditions they can find.”

Undocumented work is deep-rooted and common in the coffee industry, fuelling widespread labor exploitation, said Paula Nunes, a lawyer for anti-slavery charity Conectas Human Rights.

“This makes it very hard to track who they (coffee bean pickers) are, or where they are from. They have none of the rights guaranteed by ... Brazilian legislation,” said Nunes.

“(But) some companies prefer to turn a blind eye to it.”

RAID AND RESCUE

Dozens of workers caught on one plantation in the August raid - Alvorada do Canta Galo farm - told labor inspectors that the owner had provided them with no safety gear, food nor water.

“With what we earn, we can’t afford to buy (boots),” said 55-year-old Maria Helena Marques. “We pay rent, gas, food, water, power. What’s left? They give us nothing.”

More than 50 workers found at Canta Galo were judged by labor inspectors to be victims of slave labor. The owner of the farm, Jose Maria Domingos da Silva, declined to comment.

Days later, he struck a deal with labor prosecutors - paying a fine to the state and compensation to the victims, and vowing to improve conditions to avoid the risk of being prosecuted.

Workers said they were paid R$14 ($3.43) for every 60 litres of beans they picked, which for some could take a day of work.

One woman earned R$ 672 ($164) for 43 days work - about R$2 (49 cents) an hour. Inspectors found many other workers who were earning less than the legal minimum of R$998 per month.

The rescued workers lived in Campos Altos - a nearby town that hosts hundreds of seasonal coffee workers from northeast Brazil - mostly in dirty, sparse shacks without beds or fridges.

“We’re paid too little,” said Sales Felix, who shared a room with his wife and two young daughters next to another room housing three men, at the cost of about R$300 a month.

“We come from far away, and we gain nothing.”

“DIRTY LIST”

Industry certification schemes used to reassure customers that goods are slave-free and environmentally friendly have come under particular scrutiny in Minas Gerais as farms certified as clean have been punished for falling short of the standards.

Many growers have been added to the government’s “dirty list” of employers that have engaged in slavery, seen as one of Brazil’s sharpest anti-slavery tools as blacklisted firms cannot get credit from state banks or other public money.

On the latest dirty list from August, 18 of 190 companies were coffee producers - 13 of them based in Minas Gerais.

The coffee sector was topped only by the cattle industry in terms of the amount of companies featured on the register.

Cecafe - Brazil’s main council of coffee exporters with 120 members - would not be drawn on the industry shortcomings uncovered and instead listed anti-slavery measures it had taken.

“Social responsibility and sustainability are fundamental aspects in all Brazilian coffee agribusiness,” a spokesman said.

Domingos’ farm - which the inspectors raided - supplies Nucoffee, part of agribusiness giant Syngenta, which said it sources beans from 4,000 farms and helps producers sell abroad.

Nucoffee said Domingos had signed a deal with labor prosecutors promising to improve working conditions but it would “follow the case to evaluate appropriate measures”.

Coffee plantations found to have used slave labor risk official fines that can exceed R$1 million ($250,000), legal damages and court orders mandating improved labor conditions.

Those that strike deals with officials - standard practice to avoid court proceedings - face sanctions if caught again.

“Nucoffee repudiates practices that go against fair work and has clear commitments regarding respect for rural workers,” a spokesman said. If Domingos were to be added to the “dirty list”, Nucoffee said it would break all ties with the supplier.

Domingos was also a supplier to Nespresso until March 2018, when the relationship ended after a company review of suppliers.

“We work with producers who are constantly seeking to improve their processes, as well as those who are certified by Rainforest Alliance,” said a spokesman for Nespresso, without revealing why the relationship ended.

Starbucks cut ties this year with a Rainforest-certified farm, which was added to the “dirty list” in April after 25 workers were found by officials in slavery-like conditions.

“We have zero tolerance for any form of slave labor and have engaged (with) ... farms about this topic,” a spokesman said.

NO WAY OUT

Rainforest endorses hundreds of coffee plantations in Minas Gerais through a system of ‘group certifications’ despite auditing only a fraction of any collective’s many farms.

In 2017, a Rainforest-backed farm was judged by officials to have exploited workers who were forced to do illegal overtime.

Rainforest said its group certification system was “strong and efficient” but was considering a change to ensure all farms were independently audited at least once every three years.

“We believe certification is an essential tool for solving ... labor challenges on the ground,” Rainforest said in a statement.

“(But) a certification system alone is not enough to achieve the change we want to see on the ground. We need governments, business, and other stakeholders to play a significant role.”

Back in Campos Alto, workers from Domingos’ farm were pleased to receive up to R$15,000 compensation each from their former boss and three months of state unemployment benefits.

One 36-year-old worker said by phone he had received R$7,500 and bought a small plot of land in Bahia after his rescue.

“It was good, because we found out we had the right to something,” he said. “God willing, we will build a house.”

Yet the prevailing attitude among the workers rescued in the August raids - most of whom asked to remain anonymous for fear of not finding more work in the future - was one of resignation.

“It’s hard,” said Joseilton de Jesus, who planned to return to the region to pick coffee next year despite having been exploited as a slave. “We have to go where the work is.”