Opinion
Column TM

A Marketing Lesson in the Supply Chain

Is fair trade really fair?

A Marketing Lesson in the Supply Chain

Visited a chocolate factory a few months back. No, it doesn’t resemble Willy Wonka’s Chocolate Factory, and yes, I was a bit disappointed. But surprisingly, this wasn’t the largest disappointment I had visiting a place where beans are “magically” turned into chocolate. That came when I asked what the process was for fair trade certification. Our host looked at me, snickered, and said, “We just sign a piece of paper.” Crestfallen disbelief was clearly evident in my expression, which prompted our host to explain further: “Yeah, that’s a joke around here.”

Seriously?

The World Fair Trade Organization (WFTO) would have you believe there’s a rigorous process to become and remain fair trade-certified. I now believe they should change their acronym to WTF. It seems much more appropriate, as it matches the feeling you’re left with when you realize you’ve been misled. This isn’t meant to crush any beliefs on whether fair trade is a legitimate endeavor, because the farther we are from the origin of food and consumer goods, the more we need to know about how and by whom they are produced. Because fair trade certification lacks rigor, it diminishes the impact on what people in far-off places earn for their work.

In fact, children as young as 10 could have harvested the beans that end up in your favorite chocolate bar; The Washington Post reported last year on the child labor epidemic on Ivory Coast cocoa farms. Doesn’t sound very fair to me.

If you’re now choking on your “fair trade” chocolate, this doesn’t mean someone didn’t earn a fair wage from what you purchased, but you can’t be confident someone certified this as a fact. What you have experienced is a bad form of marketing, a facade to make people feel their purchase is not exploitative—like how you pretend that contestants on The Bachelor aren’t real people so you don’t feel bad about watching their lives derail on television. Not judging; we all do it.

We could continue to burst bubbles and explore label fatigue in consumer behavior. Instead, let’s wade into the warm waters of the Nash Equilibrium, an economics theory that says no one can make changes in a vacuum—the best decisions are made by the whole group.

In the past, when you purchased a fair trade chocolate bar, you probably thought that everyone wins: the farmer, farmworkers, certifier, manufacturer, retailer, and you. The truth about even the sweetest of chocolate may be socially bitter, however. The retailer and manufacturer are not losing (unless you buy on deep discount). But, someone is. Because certification is a singular event and verification is scant, the individual farmer is potentially being exploited, and so are workers. Meanwhile, the certifier wins with every transaction because he or she gets paid to certify without having to police ongoing compliance.

Angry yet? Keep reading. If you need someone to blame, try the selfie mode on your phone.

Let’s look at fair trade through the lens of John Nash (a brilliant mathematician who looks nothing like Russell Crowe). One of Nash’s key insights is that human beings do what’s best for our self-interest (we are selfish beasts) and the group (social order). This means the manufacturer, retailer, and certifier will do what’s good for themselves and the group (society as a whole) only if the group can see what’s happening—which, in the current cocoa industry, we can’t.

The objective public scrutiny of public trading markets—where a company making unbelievable profits compared to competitors will eventually get called out (see Enron)—doesn’t exist for the fair trade certifier. And, I’d argue, even if the certification bodies are government run, government bureaucracy doesn’t exactly scream transparency. But we have a modern invention up to the task.

Blockchain, baby! Yes, that thing you might associate with Bitcoin is actually a public database that allows everyone to see all the transactions. So when a certifying organization completes a transaction, adding a new member to the WFTO, or a manufacturer certifies a batch of beans from the Ivory Coast of Africa as fair trade, we can all see it. This creates more public accountability and the veracity of the certification improves.

When enough people call out a certifying organization and demand transparency, the thick fog of trade becomes more clear. Certification must be rigorous enough to survive public scrutiny. You can help by reaching out to WFTO.com and requesting more insight into the process for policing their certifications. Moving forward, ask yourself: Who is certifying the certifying organizations?

Whatever you do, enjoy your “fair trade” chocolate with a bite of skepticism, because wrongs won’t be righted unless we question things first.

Aaron Keller (aaronkeller@capsule.us) is co-founder and managing principal of Capsule (capsule.us), a Minneapolis branding agency. He co-authored The Physics of Brand, physicsofbrand.com.