The Ethical Pearl Consumer

[KauaiAnne]

I'm looking for a discussion on how the ethical pearl consumer should react to the crisis in Tahitian pearl production - the Perfect Storm Josh and Marama described in the quotes below:

So this time the carnage is being taken to whole other level. The big guys are in serious trouble with reports of some of the top producers throwing in the towel. This is devastating to the industry's labor force, pushing many people back to the main island of Tahiti in search of employment. No one is sheltered from this storm but there are still people making pearls. Those who have the capacity to get away from the local market and those with rock bottom production costs (read: sketchy employers with lots of family "help").

I was supposed to visit this Hong Kong Show... but the crisis is so present now in Tahiti.
My uncle (a pearl farmer) has now stopped his production... off course, he is not so big as you ( less than 60 000 oysters) but the market is now so bad.
Last month, he made a small harvest of 4000 pearls ... and some brokers in Papeete (Tahiti) offer him less than 300 cfp/pearl (something like 3.3 usd) ... this is terrible.
My uncle (like a big part of the small farmers) has decided to change his job... cutting coconut to make COPRAH (dried nut of coconut) and fishing ... to survive.
Anyway, how was the price in Hong Kong? Do I have to push my uncle to go and sell in Hong Kong? Any idea...
In my point of view, the profession is dead ... Farmers will stop one by one ... I have also some relative in the Bank of Socredo (supposed to be the super bank of the farmers) ... all the debts cumulated of the differents farmers is estimated to be around 30 millions USD ...
So bad.

What's the right thing for a Tahitian pearl lover to do? Wait to see if Tahitian pearl dumping will mean some excellent deals for the consumer? Directly patronize the farmers that are left? From the retailers?

I may never be able to afford much in the way of Tahitain pearls, and so will be tempted by the bargains that may come to pass. Yet I don't want to be a bottom-feeder and contribute to the demise of pearl farmers. What are your thoughts, farmers, consumers, designers and sellers?

 

[knotty panda]

Only you can decide how much of an impact your ethics will play into your purchasing decisions. I do think the market will be flooded with inferior quality. Black market inferior quality was out there before when the government was supposed to be supervising exports. I see no reason for that situation to improve. That's a whole 'nuther ethics discussion.

 

[Valeria101]

Not sure I see the ethical difference... between public taxes and private price-setting. Both as good or bad as the hand they're in.

Is there any reincarnation of the nacre-thickness gauge in question? 'Guess the new arrangements are too new to have had time for that. (and I am still unsure whether that is a matter of ethics - at least not as long as whatever product is accepted with disclosure, and assuming that the business buyers immediately downstream of the pearl producers' organization have a pretty good idea what they're getting. As for downstream...).

Now, how much of a market share does the agreement cover? [overall, not just out of Tahiti?] There's another 'T' word I'm thinking of, not 'Tahiti'...

 

[knotty panda]

Not sure I see the ethical difference... between public taxes and private price-setting.

Let me think about that a bit. I was thinking about the lower quality flooding the market to the unsuspecting when I wrote that. I saw the other thread on re-instituting of the governing source yesterday after I wrote the above response. That does change everything, doesn't it.

 

[pearlescence]

If not careful could become a cartel if they fix a price

 

[Josh]

It seems to me that the Tahitian industry needs to band together to set a minimum price that pearls can be sold at. I would hope that would be somewhere over the cost of production for a farm that plays by the rules (pays social security, fair wages, etc) in the fair trade sense. The chances of this happening in our industry in a short period of time are slim. In California the avocado growers did something similar years ago and founded Calavo which works as a basic co-op.
As for Marama's uncle and many like him, it's true that it's a sad state of affairs. It's the natural result of market anarchy though and the consequence of lack of structure. It sounds cold maybe but all of us farmers are responsible for not having taken the time when things were good.
KauaiAnne, there are some of us who are doing our best to provide pearls that you can feel good about and you can find us here on Pearl-Guide.

 

[KAC]

Careful Josh that sounds a lot like price fixing, which can come with a host of new issues.

 

[Josh]

Issues like people getting paid for the work they are doing? Issues like wealth (generated by a luxury industry) actually trickling down to those on the ground floor?
I didn't mean to say something that would rock the retail boat, I am simply seeing what has not worked in my industry and what has worked in others, creating stability in prices and a sustainable situation in which everyone can make a living.

 

[pearlescence]

If an industry gets together to fix a price - even a minimum price that is indeed price fixing. It would definitely be a breach of UK and EU competition law and, I expect, of US anti-trust
The EU max fine for such is 10% of all turnover And the laws would affect Tahiti because the pearls are sold in the EU.

 

[pattye]

Co-ops are used for marketing many crops in the US, negotiating a more fair price, grape juice, tree fruits, where I come from.

 

[SteveM]

Clearly what Josh has in mind is a consortium. This is an association of like-minded producers with self-governing by-laws and much higher standards than any government body could impose on an industry as a whole.

Josh, I think you could have a great time linking up not only in FP but with P. Margaritifera farmers throughout the Pacific (Cooks, Fiji, etc). The death of Tahitians might be an opportunity in disguise, the 800-pound gorilla off your backs.

 

[knotty panda]

Car mechanics! Not only do they price fix, they fix labor times. (My apologies to all you honest car mechanics out there.) Labor for an alternator is charged X hours and minutes to replace across the board, regardless of the time it actually takes to do the replacement. That completely negates any incentive to improve efficiency.

 

[KAC]

I didn't mean to say something that would rock the retail boat,

Hey you didn't rock my boat, I'm just saying that while setting a minimum price for a product might look good on paper it can come with issues down the road - some of which are legal.

I'm not sure what the solution is, we are all feeling the pinch with the current economic climate.

 

[pearlescence]

If you are setting a price which is good for you but is not a competitive price (ie you are all competing for custom in a free market)for the consumer then you could be in trouble.
For eg - one leading EU case had the manufacturers of copper piping throughout europe setting a price for copper piping. There was no point in shopping around for pipe, it cost the same from all the manufacturers in the cartel. I think the fine was in the many millions of euros.
IN the UK the bursars of some of the leading public schools exchanged emails on the lines of 'Lets all put the fees up by 10%' prosecutions follow
Virgin has turned in British Airways for price fixing.
Any time two people in the same business chat about prices and agree something there is a risk of a breach of competition law - because they are not competing any more

 

[jshepherd]

I think setting the price and controlling the price are two different things. Paspaley has had much success in controlling prices with South Sea pearls. Diamond prices are controlled by DeBeers. I think it is more about controlling production and wholesale distribution than price setting.

Back to the question about the ethical consumer, this is really not something the consumer can control or influence. Consumers are not going to be willing to pay a large premium over market price. Some might, but by and large they won't. Prices need to be stabilized on the production level. This means prices will go up for consumers, but it also means the industry will be sustainable. At current market prices, I don't see any way the industry is going to continue. There is simply too much dumping going on, and this is not strictly a dumping of low-grade commercial quality. Even fine-grade Tahitians are being dumped by desperate producers.

As a wholesale buyer, what do we do? Our purchases are controlled by market pricing. In the past, we were able to set that price based on an agreeable price - one that sustained the producer and one that was acceptable to our customers. But with the current flood of pearls pouring out of French Polynesia this is no longer the case.

 

[KauaiAnne]

Back to the question about the ethical consumer, this is really not something the consumer can control or influence....At current market prices, I don't see any way the industry is going to continue. There is simply too much dumping going on, and this is not strictly a dumping of low-grade commercial quality. Even fine-grade Tahitians are being dumped by desperate producers.

This is the dilemma I ponder - do I purchase recently dumped Tahitians of mid-to-high grade quality, knowing the industry is in its death-throes? And if I do - is there a more ethical choice as who I buy them from? Or not buy any at all in feeble protest of lousy market structures? Am interested in all points of view - from producers, retailers, designers.

 

[Josh]

Thanks Pattye and Steve for getting what I was talking about. I don't have an evil-take-over-the-world-plot-to-make-all-farmers-impossibly-rich-while-running-retailers-into-the-ground sort of thing in mind, just something that keeps people in business, that's all.
Jeremy, I wish I had an answer to your question of "what do we do?". I certainly don't blame you for being on the right side of the equation. I think it will resolve itself in due time though. Plenty of farmers are sitting on their pearls now, refusing to sell at current prices but without cash coming in they are grafting less or not at all. It's a waiting game now before the yo-yo goes back up.
Kauai Anne, to answer your question of what to do, as a producer this is my opinion: buy from someone who buys from a farmer who is working in a sustainable way. The masses are arguably interested in that but if you are, put your $'s where your beliefs are.

 

[PearlA]

josh wrote:
>put your $'s where your beliefs are

I agree completely. That, to me, *is* the definition of "ethical consumer". I am perfectly willing to fore-go a bargain (and often do), and pay more for any product that I believe is better and more sustainably produced. Dairy, meat, vegetables, pearls, it's the same principle. It does *not* mean you have to be rich .. far from it. I'm certainly not rich, and even when I falter (which I admit is often), I still know that 'I'm not rich' is not a faultless excuse. All it *does* mean is that you might have less beef on your plate or fewer pearls on your strand.

I'm also certainly *not* saying it's the only way ... it's a purely personal decision, and people decide yay or nay on every purchase, every day, day in and day out. But I do agree 1000% with josh's definition.

 

[gravityalwayswins]

I also agree with John & PearlA. I have had family members lose jobs b/c of the loss of manufacturing jobs here to overseas companies... so we try to shop where I know they are using locally-made or locally-grown. We NEVER shop at Walmart b/c we believe they had a big hand in putting a lot of small mom-and-pop shops out of business in this country, we frequent family-owned businesses that are stable and who do things we believe in. It is NOT cheap, but we still feel like we get what we pay for. We keep our neighbors working, they keep us working, and so what if we give up a little bit here and there in order to at least TRY to do the right thing... However, many people either A) just don't give a darn, or B) struggle to even put food on the table, so they don't have the luxury of choosing with their conscience.

On the other hand, we're talking pearls here, not groceries... I certainly hope to see Josh and his colleagues and competitors make it.

 

[Valeria101]

I think setting the price and controlling the price are two different things. Paspaley has had much success in controlling prices with South Sea pearls. Diamond prices are controlled by DeBeers.

The difference is market share and exposure to legislator's wrath, at least... I'm not too aware of what exempts Paspaley or the new black pearl venture? (DeBeers did get pinched, pleaded guilty upon loosing market share to history, with some long story hence). The difference between the economics and the legaleze of anti-trust is one dark pit I don't dare staring into (blessed who can!)

Back to the question about the ethical consumer, this is really not something the consumer can control or influence.

Glad to hear this for once, amid all the grass-beating! Phew...