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Will Fair Trade Diamonds Rise Again?

By Rob Bates, Senior Editor

Posted on October 17, 2011

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The State Department, I always assumed, typically hosts discussions about weighty matters of foreign policy—not the ins and outs of marketing a diamond brand.

Which is why it certainly seemed unusual to see members of the trade, NGO types, and fair trade jewelry sellers convene on the agency’s headquarters on Oct. 12 for a day-long brainstorm on ways to market artisanal diamonds from Central African Republic and Liberia. (I participated in the discussion, and under the day’s rules, and am allowed to say what was talked about, just not who said it.)

A quick review: An estimated 10 to 15 percent of the world’s diamonds—which means gems sold by people reading this blog—are unearthed by artisanal diggers, who work in dismal conditions, for low money, and with little concern for their health or safety. (I explain a little about how the sector works in Sierra Leone in this piece from 2006.) Ethics aside, this presents a tremendous reputational risk for our industry, and an excellent organization, the Diamond Development Initiative, has been launched to improve this sector.

And now our government has gotten involved. A State Dept. program, PRADD, has made “significant strides” in formalizing the artisanal sector in the Central African Republic, and to a lesser extent, in Liberia. So last Wednesday, attendees discussed: What can be done with the diamonds these diggers find? Would it be possible to pitch them as a “socially conscious” product, and could doing that further help the people “on the ground”? And could all this even, in a roundabout way, boost the long-suffering U.S. diamond industry?

Some good ideas did emerge, even though it is not clear if this will go anywhere. (More on that in a second.) Still, the day’s positive tone was gratifying. With the Kimberley Process on the verge of collapse, and open warfare breaking out between NGOs and some segments of the industry, it was encouraging to again see members of the trade, governments, and NGO types working together and making a sincere effort to tackle a problem cooperatively. This used to happen a bit in the Kimberley Process, as hard as that is to believe now.

Of course, fair trade diamond initiatives have been talked about for years, but not much has become of them. (One jeweler called them “the holy grail” for fair trade jewelers.) It remains a worthy idea, one that could conceivably have tremendous benefits not just for the diggers, but the image of the entire industry.

It’s no secret that many consumers have been turned off to diamonds. And yet, jewelers consistently say they rarely hear consumers mention social issues at the counter. If they did, most retailers worth their salt could probably handle any questions, either by talking about the Kimberley Process, or, failing that, calling up a supplier and ordering a Canadian diamond. 

So the problem isn’t consumers who verbalize their concerns. It’s buyers who have decided they aren’t interested in diamonds at all, because of all the issues associated with them.  Remember, consumers who care about these issues tend to be young and college-educated—which is also the core target for engagement rings. For the industry to win these consumers back, it needs to not just talk about ways the trade has mitigated the harm from its products, but offer gems that actually “do good.” And one possible way to do this would be to hook up with the fair trade organization(s), as fair trade is widely recognized brand among consumers.

Fair trade diamonds might also provide a “halo effect” for the companies that carry them. It’s well known that Starbucks carries fair trade coffee. Now, not all the java it sells is fair trade. But the company still enjoys the positive association that comes from carrying that product.

And really, what celebrity could resist fair trade diamonds? They would give them a chance to appear both glamorous and morally superior.

So “fair trade diamonds” are an eminently marketable idea. But we don’t know whether they will soon be coming to a trade show near you. There is a brutal Adam Smith-ian reason why artisanal diggers get paid so little: Quite often, they don't find much. In the presentation, it was mentioned that the 2,000 or so diggers studied produce an average of 0.2 to 1.4 cts. annually. As one person put it, “People standing in the mud for 10 hours a day to produce one carat a year, that’s not much of a business model.”

While increasing the amounts paid may boost the number of diamonds sold through formal channels, just as the Kimberley Process did, those kinds of quantities might only interest smaller, niche players, if anyone.

But that’s a discussion we need to have. The problems with artisanal miners have basically slipped off the industry and NGO radar with all the focus on Zimbabwe. And some fear that, as more companies embrace certified supply chains, these diggers—the poorest, most vulnerable segment of the industry—will be left behind. Let’s hope what happened last week at the State Department restarts this conversation.

For those of you who want more info, the report presented to attendees can be read here.

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