Credibility and Accessibility of Labelling Schemes: The Case of Global Coffee Supply Chains

Labelling schemes, such as Fairtrade or Rainforest Alliance, already are indispensable to making global coffee supply chains sustainable. These private initiatives internalize negative externalities into the market and allow economic actor to protect natural and social environments not as a normatively regulated action but as a pursuit of added values or a risk management. From a sociological perspective, this is a shift from Parsons’ “normative system” to Luhmann’s “self-reference system,” whether control of economic system depend not on moral commitment but on rationality of economic system itself. Because these market-based schemes included numerous stakeholders with diverse interests and values, they go beyond the limits of the social movements or governmental regulations.

However, global coffee supply chains face new difficulties, especially regarding credibility and accessibility. The Fairtrade Label Organization(FLO) is a typical case. Some coffee retailers and consumers believed that the FLO certification process was not transparent enough, so FLO needed to enhance its credibility by implementing ISO 65. However, the ISO standards were too high for many poor coffee farmers to maintain. In other words, added values like “eco” and “ethical” caused farmers additional costs. FLO’s strategy for enhancing credibility, as a result, diminished the farmers’ accessibility to fair trade.

In this presentation, I will consider such cases not as a problem of moral commitment but as a problem of rationality of economic system. Then, credibility and accessibility will be regarded as the new externalities, and governance will be to create a platform for promoting internalization it into the market.