UNLAWFUL CONDUCT, ETHICS AND FAIRTRADE: CONTROLLING THE PUBLIC DISCOURSE
PETER GRIFFITHS
ABSTRACT
It has been shown elsewhere that good and generous consumers in rich countries pay $1-2 Billion a year extra to buy Fairtrade certified goods in the belief that the money goes to farmers in the Third World but that nearly all the extra money paid for Fairtrade coffee is pocketed by firms and organizations in the rich countries. The Fairtrade certification standards for coffee require that any money that reaches the Third World is paid to the exporter, not the farmer. Farmers incur higher production costs in meeting Fairtrade standards, but receive the same or lower prices. Much of the marketing implies criminal offences or their ethical equivalent, notably ‘Unfair Trading’, fraud, blackmail, and breaches of consumer protection and trade protection legislation.
In this paper it is asked how this could happen, when most of the people marketing the product in the UK are sympathetic to the plight of Third World farmers, and most of the employees of the Fairtrade Foundation and the volunteers promoting Fairtrade in the UK are passionate about helping them.
INTRODUCTION
This paper examines the marketing of Fairtrade branded coffee to UK consumers. Fairtrade is a certification brand, assuring the consumer that the product has been produced and marketed according to the standards of Fairtrade Labelling Organizations International (This organization has operated under several names over the years, including Fairtrade International, Fairtrade Labelling Organizations International, Fairtrade Labelling Organizations, and FLO. For clarity, it will be referred to as Fairtrade Labelling Organizations International throughout this paper.) The Fairtrade Foundation UK manages the brand within the UK. Fairtrade is the largest of the fair trade (two words) brands, with a turnover of over $6.66 billion a year for all its product lines (Fairtrade International, 2013)[1]. There are many other fair trade (two words) brands and other ‘ethical’ brands, but these have different marketing standards to Fairtrade and a small market share (Ballet & Carimentrand, 2010). Most of the thousands of products marketed under this brand, using this logo, are produced by farmers in the Third World. The intent is similar to that of ‘halal’, ‘kosher’, ‘organic’, and ‘free range’ labels, assuring the customers that the product has been produced according to certain standards, so that they will be willing to pay a higher price for it.
Good and generous consumers pay $1-2 billion a year in higher prices to buy Fairtrade goods, and they do so in the belief that this helps Third World farmers. It has been argued that this belief is wrong (Griffiths P. , 2013; Griffiths P. , 2010; xxx, 2014; Mohan, 2010; Griffiths P. , 2012). The argument is that nearly all the extra money paid by consumers for Fairtrade coffee, for instance, is pocketed by firms and organizations in the consuming countries, with very little reaching the exporters. Much of the money reaching the exporters goes on the costs of Fairtrade membership, and sometimes the exporters and traders lose money on it. The balance is spent on ‘social projects’ which may not even be intended to produce economic benefits. None goes to the farmers as extra price. The farmers incur extra costs in producing Fairtrade but get the same or lower prices and are worse off.
XXX (xxx, 2014) points out that if it is unlawful for a shopkeeper to lie to consumers to get them to buy a product they would otherwise avoid, it is at least unethical for someone else to tell consumers the same lie. It is not productive to hypothesize about who the courts might find guilty in different situations.
Griffiths (2012) argued that virtually all sales of Fairtrade coffee imply the criminal offence of Unfair Trading, or its ethical equivalent, as the average consumer would not buy the product if this information was not withheld from them. Sales would only be lawful, in most cases, if the product were labelled
‘This product costs x pence more than the equivalent non-Fairtrade product. Of this, y pence (z %) goes into social projects, but we have no evidence that these produce benefits to the farmers. We have no reason to believe that any extra money is paid to farmers, though they certainly incur extra costs to get Fairtrade certification. Non-Fairtrade farmers are harmed. We spend much of the money trying to create a non-capitalist political and economic system, which is set out on www.politicalagenda.com.’
Providing false information to the consumer, as firms, organizations and individuals do, is also Unfair Trading or its ethical equivalent (xxx, 2014; Griffiths P. , 2012). Some of the false statements identified are that that the key guarantee behind the FAIRTRADE Mark is
· ‘A fair and stable price to farmers for their products’ (Fairtrade Foundation, 2005),
· that ‘Fairtrade means farmers get a fair price for what they grow. The Fairtrade price is often much more than they would normally get, and it covers the cost of growing the crop, plus enough to live on. The Fairtrade price is paid to farmers by whoever buys their crops.’ (Fairtrade Foundation, 2012?)
· that ‘The international Fairtrade system monitors and audits the product supply chains to make sure the producers are genuinely getting the money’ (Fairtrade Foundation, 2006, p. 1),
· that impact studies show that Fairtrade has a positive impact on the Third World,
· that it would be unlawful for the Fairtrade Foundation to disclose how much more consumers paid when they bought Fairtrade.
Critics also produce evidence of ‘blackmail’, fraud and other breaches of consumer and trade protection legislation. (xxx, 2014; de Janvry, McIntosh, & Sadoulet, 2010; Raynolds, 2009; Valkila, Haaparanta, & Niemi, 2010; Valkila J. , 2009; 2012).
The implication is that $1-2 billion a year that good and generous people think is going to third world farmers is, instead, being pocketed by firms and organizations in rich countries, and that this inevitably causes death and destitution in the Third World (xxx, 2014; Griffiths P. , 2012). This can only happen because there is nearly universal toleration of criminality and its ethical equivalent, notably the suppression of information and the provision of false information. This paper asks how this can be, when it seems probable that most of the people marketing Fairtrade coffee are honest and want to help Fairtrade farmers and that nearly all of the employees of the Fairtrade Foundation UK and the volunteers who promote Fairtrade products are passionately committed to this.
What is Fairtrade?
Fairtrade is a brand which operates worldwide, offering consumers the assurance that any product bearing the Fairtrade logo has been produced and marketed according to standards laid down by Fairtrade Labelling Organizations International. This is a certification brand, creating a credence good, in much the same way as ‘organic’ or ‘kosher’ are. The main money aspects of the standards are that the importers must pay a price to the exporter which is at least the minimum price laid down by Fairtrade Labelling Organizations International , and which is in any case higher than the world market price by a fixed amount, the ‘Fairtrade premium’. Marketing firms in the producing country pay certification and inspection fees for the right to market their product as Fairtrade and the packers in Britain pay a licensing fee of 3% for the use of the brand. There are a large number of other political objectives implied by the standards. Distributors, supermarkets and cafés can charge what they like for products bearing this certification brand.
It was evident when Fairtrade started 25 years ago that if it was to have any noticeable impact, it would have to reach the mass market – the high operating costs would swallow up the margin otherwise. It has been far more successful than its Fair Trade (two words) competitors in developing this mass market, thanks to a brilliant marketing campaign. The first essential step to achieve this market share was for the Fairtrade Foundation to make it very profitable for firms to handle products bearing the Fairtrade brand. They were permitted to charge whatever they liked for Fairtrade branded products. The second step was to provide marketing support so that customers asked for Fairtrade.
The marketing system and strategy for Fairtrade cannot be analyzed in terms of elementary economics or marketing, where we have a clearly defined product and perfect knowledge and where profit maximization is the goal. Nor can we assume that advertising and marketing is done in the way described in the textbooks. And we cannot assume that motivations and ethical issues are the same as when marketing ‘Coca Cola’, ‘Kosher’, or ‘organic’.
INFORMATION AND NARRATIVES
With any charity there is likely to be a discrepancy between what the charity is trying to do and what its marketing claims that it does. Andresen (2006, pp. 141, 142), for example, describes working for a large relief and development agency. The development professionals thought that the marketing, which emphasized emergency aid in disasters, was totally misleading, even harmful, as it did not mention their carefully worked out and implemented programs for achieving real change in the medium to long term. The marketing professionals said that the public would not understand or appreciate these complex programs; indeed they would be put off by being given too much information to digest. The marketing professionals wanted an advertising campaign concentrating on the agency’s emergency feeding programs, using a picture of a girl holding an empty food bowl – and indeed this raised far more money, keeping them all employed. In this simple case we have several different, conflicting narratives or stories. There are the narratives that the development professionals and marketing professionals tell themselves. There are the narratives they tell each other. There are the narratives they tell senior management, separately and jointly. There are the advertising narratives of the organization. Finally there are the changed narratives of the consumers (a public discourse). Some of the motivations for the narratives include ‘lying for the greater good’, and ‘protecting my job’. There are obvious and less obvious ethical issues.
It will be shown below that the Fairtrade industry is much more complex than a single relief and development agency asking for donations, with a much wider range of people and organizations developing narratives to tell themselves, narratives to tell each other and narratives to tell consumers. The narratives dominate the market. It will be asked who controls the discourse encompassing these narratives: as Van Dijk (2003, p. 357) says. ‘virtually all levels and structures of context, text, and talk can in principle be more or less controlled by powerful speakers, and such power may be abused at the expense of other participants’.[2] ‘Discourse is believed to be essential in establishing power relationships and can only be fully understood by paying attention to the historical context and the social and political setting’ (Charteris-Black, 2014, p. 123)p123 discussing (Wodak, 2011) and (Wodak & Meyer, 2009)
The ‘marketing of Fairtrade’ is the sum total of all the narratives from Fairtrade Labelling Organizations International, the Fairtrade Foundation, and the firms selling Fairtrade, including the advertising on their websites. It also includes their very effective public relations campaign. In fact the narratives that individual charity workers, volunteers, politicians, civil servants and teachers develop for themselves from how they understand and process the narratives from Fairtrade’s own narratives to form a general public discourse is a key part of the ‘marketing of Fairtrade’, and is an input into the narratives that the consumers develop for themselves.
What is the product?
Customers know that Fairtrade coffee is normally more expensive than other, identical, coffee without the Fairtrade brand, so they would not buy it if the brand did not give them extra value. The marketing does not sell the utility (satisfaction) that comes from drinking a good cup of coffee; it sells the utility that consumers get from their belief that the extra price they pay goes to helping poor farmers in the Third World. The marketing convinces good people wanting to help the poor that they are acting according to their personal values when they buy the Fairtrade branded coffee, when they drink the coffee and when they know that they will buy it again and again. This is absolutely fundamental to the existence of the Fairtrade industry, which means that if the marketing narrative is false or misleading or withholds relevant information, it is cheating both the consumers and the farmers.
THE FAIRTRADE MARKETING NARRATIVE
The most visible part of the Fairtrade marketing narrative is the one from the Fairtrade Foundation to the volunteers, to the decision makers and influencers and to the general public. There is also a narrative from manufacturers and retailers which so closely follows the narrative of the Fairtrade Foundation that it may be treated as identical. There is another, far less visible, narrative from Fairtrade Labelling Organizations International and its employees to firms marketing Fairtrade in the UK and to those people in the UK sufficiently interested to access its website.
The marketing narrative affects the perception of volunteers, influencers and decision makers, and so helps create their Fairtrade narrative. These narratives come together with other narratives to produce a social discourse.
Two ways in which consumers process what they are told have been identified: System 1, the experiential system, and System 2, the analytic system (Epstein, 1994; Slovic, 2007). System 1 it is affective, pleasure-pain oriented; it has connections by association; the consumers’ behavior is mediated by past experiences; it works through images, metaphors and little stories; the message can be processed rapidly and it calls for immediate action and it is self-evidently valid. System 2, the analytic system is reason based; it analyses with logic and evidence; action is based on conscious appraisal of events; reality is described in abstract words and numbers; the message takes longer to process and there will not be immediate action. Someone using System 1 when investing may end up in a ponzi scheme, and someone using System 2 when a lion walks through the door may end up as lunch.