The Manufacturing Group Considers Standards for Transparency: Part II
Introduction:
This is an ongoing documentation of a series of dialogs between members of our Manufacturing Group, charged with the task of developing exceptional standards for jewelry manufacturing. Follow this link, https://fairjewelry.org/madison-dialogue-manufacturing-committee for full review of past discussions.
In Part II, we continue our discussion regarding how to implement standards for transparency. Part I (previously published) ended with my proposal to drop the Transparency Standard all together. Patrick Schein begins this by offering an idea which would be considered radical: applying transparency not only to producers but also, the merchants that use the Fairmade label.
Even after a few weeks of discussion, the issue of a transparency standard has yet to be decided.
~ Marc Choyt, Publisher
Patrick Schein Wrote:
On the transparency issue, you know my recommendations but there is something that could be interesting to implement for the fairmade standards on the economic transparency.
The consumer, and the manufacture/producer even more, should know the split of the value of the product. In this view, we could ask the companies using the Fairmade label to disclose the value (in % of the consumer price) that goes to the Fairmade manufacturers and how many FAIRMADE workers have been impacted. This economic transparency would,
I believe, be useful for both the consumer and the artisan and a marketing argument for the jewelry companies. I think that Martin’s remarks should be assessed with that “economic transparency” because as a consumer, I will not buy a product in silver if only let’s say 5% of the final value has been paid to the artisan who made it.
What do you think of the concept? If OK (hope martin be fan of the proposal) , we could deepen it further.
Flavia Aarden-Kilger wrote:
I don’t see that kind of economic transparency working. At least not conventional jewellery companies. Even in the handicraft fair trade world we don’t like to show mark ups. No one likes to show others what their margin is. Some will think it’s too much, others might think it’s not enough.
FLO, Transfair, Fair Trade Foundation, Max Havelaar and WTO all audit their members, they make sure that producers and workers are getting a fair price. Would something this not work for jewellery?
Stephen Metcalf wrote:
I agree with Flavia that this wouldn’t work.
Rigorous certification that the primary producers are receiving a fair price seems like the only way. The certification system—the whole product chain, including primary producers–has to negotiate what is “fair” in fair trade.
Martin Rizzi wrote:
I agree with Ms. Flavia that the commercial people will not like the idea of revealing their profit margins. In the conventional fair trade industry no jewelry maker receives as much as five percent of the price the public pays, convinced one is “helping” the producer.
I must correct a mis-perception that WFTO, or any of the other fair trade licensing agencies that were mentioned, audit their members. There is no performance of an authentic or rigorous audit as these licensing agencies are, in effect, an arm of the commercial dealers.
Did you notice where Greg said that the FLO is owned by the Producers, who are defined as “holding companies, plantations, and factories”? Understandably, these holding companies and plantations are not owned by the producers, even when the holding company is styled for legal fiscal and/or labor reasons as, a cooperative. The fair trade licensing agencies are hardly independent. They are financed by the commercial interests who are the real ownership of the Holding Companies, Plantations, and Factories styled as Producers.
It is a myth or an assumption that the WFTO audits its members to see that they are complying with the principles of fair trade in respect of paying artisans a decent price and treating artisans with dignity or providing any health or pension benefits whatsoever WFTO is mainly concerned with collecting membership dues from everyone who will pay and no mercy is shown to artisan groups in the Third World who have gotten the idea that if they pay FTO for a membership this will lead to getting some orders from overseas buyers.
I do still agree with Ms Flavia that expressing transparency in the form of a declaration of the component of the price of the price that has gone to the artisan (this value should not include expenses for materials and overhead etc. only the money that the silversmith or artisan gets) is too much, since the public will NOT understand why this is only 2 or 3 percent of the price.
I really do appreciate Patrick’s making this suggestion though since it shows good intentions.
Martin Rizzi wrote:
There is the old legend about the king presiding naked in a parade when a foolish little kid exclaims: “he doesn’t have any clothes on!”
1. the tiny percentage of the retail sales volume received by the artisan as distinguished from FLO’s Small Holder Plantation Producer is the last thing commercial dealers are ever going to want to publicize
2. there is a general belief among people in North America and Europe that the fair trade organizations and fair trade companies are on the job when it comes to enforcing high minded standards in dealing with producers
(When, in fact, the fair trade agencies systematically work against the artisans by excluding them and relegating them to having to sell to the licensed dealers.)
There is NO meaningful regulation of fair trade practices, however the idea that there is, has been subtly pushed by Ten Thousand Villages, in connection with FTF and WFTO.
3. This comes back to the question of Transparency; can one afford to say the truth? or, is the truth a hungry horse that is supposed to pull a cart for a manger full of oats?
I am a supporter of Marc’s Circle Manifesto approach and to distinguish one selves’ from the forms of tree trade practice that are familiar now. Best wishes from Mexico
Greg Valerio wrote:
One point of correction.
The regional producer networks in South America, Africa and Asia sit on the board of FLO, not the commercial companies. It would be wrong to suggest that plantation owners, holding companies & factories sit on the FLO Board as they do not.
As to WFTO, I cannot comment as I do not know that much about them.
Stephen Metcalf wrote:
Dear Martin,
It might be that looking at wages as a percentage of retail prices in high cost of living countries confuses the analysis:
It may help to look at manufacturing wages in general, contextualizing the wages paid to jewelry artisans.
A quick (and non-rigorous!) internet search shows that in the US automobile sector, workers receive direct wages of only around 2-3% of the retail cost of a new car (with total benefits, this % increases to 5-8%). According to Wikipedia, “ $70/hr sounds like a ton of money, but starting wage for laborers is only about $14/hr….barely enough to pay the bills in the US. The top earners make $29/hr. Health care and pensions cost equivalent of about $15/hr, vacation time, overtime, sick leave are the equivalent of roughly $10 per hour.”
A few years ago, I operated a colored glass foundry that employed 15 people, manufacturing primary materials for the “stained” glass trade. I recall that our wages represented a similarly low percentage of the final retail price, after the product flowed through the distribution chain.
I think we need to think about what is achievable. Is it possible to double the wage of the artisans (ie 4% instead of 2%)? As with ARM, relatively small percentage changes at the primary level make a big difference in real wages, without changing things much for the retail trade.
I don’t see why it would not be possible to implement wage standards that can be checked and certified.
Martin Rizzi wrote:
Buenos Dias Greg
Are you saying that the “regional producer network” organization representatives who are on the board of directors of the Fair Trade Labeling organization are artisans and small farmers themselves?
Martin Rizzi wrote:
Steve et al, thank you for your observations they are apt and useful in the context of this dialog. Yes the world has gone to a low wage economy, as even the autoworker doesn’t get a good wage
Please notice I have never made this argument that the producer should get a higher percentage To be able to support one’s family, it is necessary for the jewelry maker to have work all year. Otherwise this person is forced to consider migration to the United States as a necessary evil (Almost 300 persons from Tecalpulco, mostly artisans and miners, live illegally in the USA)
What I am saying, is that percentage of retail price, is not a meaningful gauge of artisan welfare. I agree with the comment that one will one confuse potential customers with such a percentage. Still it is good that present company is aware of this issue for the reason I am now going to explain.
To the ordinary .925 silver jewelry industry of Taxco, let us compare an equivalent fair trade transaction. As the mark-up of the jewelry is not so much, the artisan gets a multiple of the percentage fair trade pays. What does it mean then when the artisan receives a much greater percentage when the buyer is not fair trade?
Greg Valerio wrote:
I am happy to go with Marc’s recommendation if it is the will of the group.
I do however wish to note that not having it listed as a standard allows traders and other operators more wriggle room as a principle cannot be measured, whereas a standard can.
To my mind transparency does not mean disclosure of profit margins etc, it means a clearly defined criteria against which a trader, operator etc is measured for compliance during audit.
Social compliance criteria of this mature has not been attempted before within the jewellery sector (outside of what RJC are attempting).
It is needed bit as Martin rightly points out it must benefit the artisanal manufacturers and be workable. As we discovered with ARM and gold, the process, systems, rules and regulations can become very bureaucratic, very quickly, which needs to be balanced against a system that is measurable, transparent and provides consumer confidence.
Vivien Johnston Wrote:
I am for including it as a standard, in line with Greg’s comments about achieving a balance between the bureaucracy and not being about profit margins. To my mind, transparency is the fundamental issue which the jewellery industry lacks and the one which allows creative interpretations to be made, often not in favor of the producer ; thus artisans and miners and those who should benefit from fair principles still lose out. As Greg puts it – wriggle room.
Without transparency, which is measurable and quantifiable, I feel the whole process may be undermined. If it can be achieved it should protect the artisan, not hinder them.
Therefore I propose we retain the 8th standard but revise it to perhaps put less emphasis on the financial aspect, simply about equitable trade to protect each link of the supply chain and workers.
*Transparency*
*Principle:*
High standards of financial, social, manufacturing, delivery transparency and accountability principles will be observed.
*Standards: *
*Minimum Requirements:*
*8.1: *Companies will be transparent in regard to finances and delivery to their workers and trading partners.
Focus more on standards for; Transparent management practices and equitable, accountable trading relationships
Martin Rizzi wrote:
Greg, I find it doubtful that these are “stakeholders” are really producers.
FLO (purposely?) causes confusion by defining Producers as Holding Companies and Plantations, whereas To my mind, a Producer is a person who creates, fabricates, or otherwise makes a product. Just because somebody is heading up an organization that represents or manages actual producers, does not convince me that this person is a producer himself or herself , or that this person has the interests of the producers at heart. I think in most cases these so-called producer representatives are cut-outs and/or fundamentally beholden to the commercial buyers and, often, they may be involved in buying and selling themselves, and be systematically complicit in an arrangement designed to keep producer prices, and, especially, producer expectations, down.
Marc Choyt wrote:
First, in terms of the bureaucracy, wiggle room, creative interpretation, this is something that we are hypersensitive to.
We still have two distinct approaches here. We could, as Vivien suggested previously (below), keep this principle. Or, we could put the standards that she suggested in other parts of the document– specifically, Human and Worker Rights, and make transparency a foundational part of the document. My sense is that so far, up until now, there is a still leaning toward not putting transparency in as a numbered standard.
In light of Vivien’s proposal, I would like to hear from others. Do we keep 8th or drop it?
Martin Rizzi wrote:
Anna Karenina by Tolstoy, Leo
It seemed to her that such principles could only be a hindrance in farm management.
