How ethical consumption strengthens certification systems and rent seeking agencies

In 2021, Chobani became first in the US dairy industry get Fair Trade status after certification fair trade usa (FTUSA). However, this feat was not enough to prevent a class action lawsuit over claims that Chobani was still not doing enough to ensure fair and sustainable practice. And, unfortunately, FTUSA also criticized regarding his ethical standing in the certification sector.

In order to increase its credibility in the market, FTUSA was put in place. new policy and expanding relationships with popular and respected brands such as Chobani and All products. Whole Foods has attracted the attention of various third-party ethical marketing certification bodies with the launch of its Source for good program Such initiatives reinforce conscious consumption and encourage the trend towards social labeling.

Ethical marketing tactics became mainstream in the 1990s, and firms took advantage of opportunities to meet wider demand. ethical consumer base since then.

Fair Trade certification, in particular, was an intriguing proposition in the marketplace, as it linked wealthy lifestyles in advanced economies with the struggle for livelihoods in Third World countries.

Fair Trade emerged to serve as an innovative supply chain that helps reduce poverty by bringing the world’s poor into the trading system. The main objective of Fair Trade is to distribute greater benefits to poor producers while encouraging businesses and consumers to support development efforts by paying a higher price for certified goods.

The general concept of fair trade can be widely used as a general term, but it should be noted that the terminology “fair trade” is also used in trade law, referring to trade liberalization and non-discrimination policies, and has nothing to do with ethical marketing. campaigns.

The desire of companies to place the Fair Trade label on their product packaging or on their shop windows stems from “halo effectwhere the inclusion of just one certified product in a company’s product portfolio can improve the firm’s reputation and overall ethical standing. A prime example of this, known as “fair washing”, was when, in 2004, Proctor and Gamble’s (P&G) Millstone brand began offering fair trade certified coffee. This marketing strategy was easy for P&G to implement because Millstone’s sales volume is low. compared to its Folgers brand, and yet the entire corporation can be perceived as supporting fair trade.

Likewise, Starbucks was also able to capitalize on the “cleansing of honesty” when its brand gained a more favorable reputation after offering Fair Trade coffee to customers in 2006. This was despite the fact that certified coffee made up only about 6 percent of its coffee imports at the time.

Starbucks and P&G have provided new opportunities for fair trade certifiers, and this has sometimes led to criticism over whether the interests of large multinational corporations are crowding out the needs of small manufacturers. And while some industry leaders like Chobany prefer to use certification agencies, others like Starbucks have chosen to vertically integrate the process. Starbucks launched its own Coffee and Farmer Equity (CAFE) Practices program just a few years after being Fair Trade certified.

As interest in fair trade grew, so did certification schemes, and this was a particular concern for the marketing of certified goods. While fair trade may initially appear financially attractive to poor producers, it does not eliminate areas of macroeconomic instability or guarantee continued sales. Thus, the position of certified growers in the marketplace could be jeopardized if supply ever exceeds demand or if another social label diverts attention from the sector.

To counter demand-side challenges, as well as ensure that rents remain competitive, certification bodies have called on both schools and municipalities to apply for fair trade status, with impressive success.

In 2006, Media, Pennsylvania became first certified city in the USA and now 48 campaigns for fair trade cities and 110 campus campaigns across the country. In 2010 Chicago adopted a resolution support for all fair trade initiatives held throughout the city.

The power and influence of fair trade has been particularly strong in Europe, and only in the UK market is there more 600 certified communities And thousands of certified schools. Wales was first nation to be certifiedand Scotland achieved Fair trade status in 2013, after being mandated by Parliament to promote the promotion and public awareness of fair trade on an annual basis, and to ensure that people regularly buy fair trade goods.

It is clear that certifiers have been quite successful in securing the support of governments and government agencies for further sales, and now fair trade organizations. such as FTUSAeven encouraging certification to help firms advance environmental, social and governance (ESG) goals.

Clearly, the introduction of fair trade has led to new branding practices and networks for rent seeking agencies, and so it would be wise to monitor the performance of this sector over time.

Fair trade seems to encourage softer forms of regulatory power as well as dependency relationships and forced transactions. Indeed, what is most worrying about fair trade is that it normalizes the practices of producers in line with what is approved by certification bodies and deprives the manufacturer of choice in terms of business conduct. Certification may even deter manufacturers from exploring expansion opportunities because, according to basic economic principles, if you pay manufacturers more for their current offerings, manufacturers are less likely to look for alternative forms of revenue generation. Essentially, the surcharge for certified commodities is a form of subsidy rather than a wealth-creating factor, and given that labeling is associated with helping small farmers, it is in the interest of certifiers to keep farms small.

Fair trade limits opportunities for innovation and entrepreneurship for those who need it most.