Saturday, February 18, 2012

The good mark or a million bits of information?

My Phone number as a QR code
Ecolabels such as organic marks have many different functions, and different functions for different actors. One main function is that it can communicate a rather complex reality in a very simple way. To talk with economists, an organic mark reduces transaction costs and information costs. Hundreds of different rules as well as a whole system of verification are communicated through just one symbol, a mark.

This encapsulates both the strength and a weakness of the system. It is an enormous strength to be able to convey so much meaning with just one symbol. Producers and companies can get simple access to this meaning, this value, just by adhering to the requirements and by paying a modest fee. Compare that with the costs and efforts involved in building up your own trade mark and it is easy to understand why they are attractive for many, in particular for smaller producers who have not the muscle to create such an image through advertising. But the same is also a weakness. Initially, it is in the interest of all actors to increase the use of an ecolabel. For the labelling system itself the benefits are obvious; they are both judged as successful and earn more money with a greater uptake. For companies, it means that more consumers will be aware of it. So it is a win for all companies having products with the mark. And consumers will have more to chose from. 

But after that initial coherence, things are less harmonious. In a competitive market place there is diminishing return of the use of an eco label, for a company, the more products that carry it. Even consumers seem to react the same, or at least parts of them. Once an alternative mark, such as organic, become common and widespread it inevitably loses some of its hip factor, or its character of being “alternative” or a challenge to the prevailing.
Farmers and food processors that have had direct consumer relationship have mostly seen less added value in the use of an organic mark and being certified; direct contact with consumers serve more or less the same trust-building purpose. New technologies are rapidly filling similar functions. With QR codes a lot of information can be carried to the consumers, and through mobile phones they can get a wealth of information directly from the producer. 

Even smaller producers can in this way communicate directly with consumers and give their products a distinctive face. Through webcams mounted in the stable of dairy farmers, people can see how farmers are managing their cows and their off spring. Through internet services, consumers can rapidly compare products against set criteria. And such rankings can also be compiled in services comparable to Tripadvisor. Finally, social communities on the web are increasingly “helping” people with similar preferences to find matching products. Algorithms of the kinds used by Google and Facebook know more about your preferences than yourself! 

Quite soon we might have an increase both in producer-own and consumer-own standards, i.e. each can specify their criteria according to hundreds of parameters, and they can be matched against each other. In this way there is no need to develop special schemes for vegans who wants halal, organic, climate-friendly and fairly traded products, or those who wants organic products to also be totally free from additives. In a way, it represents more consumer power and more choice. This development is a threat for standard setters and mark owners. It also diminishes the relevance of organic regulations. For sure, it is too early to count out the organic marks and organic regulations. They are likely to continue to exist, but gradually be moved from the front of the pack to the back. For certification bodies, there might still be a future in the verification of claims or in the provision of systems for such verification. However, it is perhaps more likely that novel solutions will be developed by other parties than certification bodies stuck in old paradigms. 
Published as the Leader # 130 of The Organic Standard

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