Denverappraiser on how to avoid ''Conflict Diamonds''

[denverappraiser]

Ira,

I''ve heard of free trade coffee but I''ve never encountered it. Do you understand the money flow? In particular, do you have any idea how much of that ''premium'' flows through to the growers and other intended beneficiaries and how much is absorbed by the distribution system?

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[strmrdr]

What I find interesting in this area and many others is how fragmented and conflicted the trade is itself.
If they cant at least get in the same book or better yet on the same page on this issue they are going to be in the same boat heading for the bottom.

As I said above right now its not a huge issue with me but if and more likely when given the history things get nasty again I will move towards diamonds that can offer me the best guarantee of being conflict and terrorist free.
Right now that is Canadian diamonds but im open to other approaches also.
Why are Canadian diamonds capable of being traded at a premium?
Canada is a fairly trusted and known authority to certify the diamonds.
It will be a ton harder for anyone else to get that level of trust quickly so the industry better move on it now not just talk about it.

 

[RockDoc]

RE: The Upcoming Movie.

Seems the industry is very concerned over the release of this movie.

While we don''t know how this will be interpreted by the general public, I am not sure, it will have as much affect.

There already was a recent movie with Nicholas Cage as an Arms Dealer that had a pretty significant amount of violence in it, that showed selling arms beiing sold in exchange for diamonds, and NO ONE made a big deal of that. Didn''t hear a "peep" from any one in the industry, about that movie.

I guess a lot of this will depend on how well the movie is publicized, as both actors have a pretty good box office draw of movie going fans.

Perhaps Leonardo Di Caprio has a better draw than Nicholas Cage, and perhaps the movie will be a lot more graphic and pointing the finger at the industry.

Global Witness is certainly accusing those "in charge" of origin disclosure of the sytem being susbstandard, and is calling for improvement.

I guess we''ll all have to sit back and see what happens when the movie is released, and what backlash it creates with consumers.

Thanks Neil, DiaGem and others for what opinions you''ve expressed.

Rockdoc

 

[Regular Guy]

Date: 6/10/2006 10:22:33 AM
Author: denverappraiser
Ira,

I''ve heard of free trade coffee but I''ve never encountered it. Do you understand the money flow? In particular, do you have any idea how much of that ''premium'' flows through to the growers and other intended beneficiaries and how much is absorbed by the distribution system?

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

Neil, frankly your question prompted me to want to look into this further. Understand, part of the motivation to do a fundraiser at our synagogue was to see an alternative to selling Joe Corbi Pizza & cookie dough, so I claim no praise for having instituted it. But there was more. And there is more to it.

Note first, if you go to Google, and type in "fair trade coffee," you''ll see a lot of action. I think Equal Exchange, who we might have gone with as a vendor of choice (but we didn''t, for now, choosing Dean''s Beans instead), is perhaps the largest among these, and do offer a good amount of educational support. Having gone to their site now, I am directed here, and I''ve done a cursory scan of their 41 page report on this subject, analyzing the effect on the growers of the fair trade movement.

The study is not done by business people, but sociologists from I think Colorado state. Also, although in my mind I might have framed the question as you suggest (if you have the association to Ram Das'' Be Here Now...how a dollar is divided from one scheme vs another), and it''s possible the socilologists were predisposed to come out with a good outcome, I am inclinced to agree with the conclusions...that farmers who are associated with producers operating under a "fair trade schema" have a better quality of life as a result of this association, and that this impact is multifaceted.

Before trying to do a new query of exactly how the distribution of a dollar is different under a regular vs fair trade scenario, I would be motivated to read this report more closely, as it seems to represent a good effort at getting at the substance of your question. Besides, there can be no doubt about the fundamentals....which is that if good and positive attention is brought to bear on a population living in substandard conditions, an improved outcome is the outcome I would expect. Such is the direction, clearly, of the fair trade movement. One will reasonably, always, want to question what kind of bang for your buck you''re going to get. But interpreting the data there, in a qualitative way, probably will be challenging as well.

Regards,

 

[Capitol Bill]

Ira,

I attended Martin Rapaport''s breakfast presentation in Las Vegas at which he spoke about the things I mentioned. All of these initiatives are in the beginning stages. It appears that it will be a while before Fair Trade Diamonds or Fair Trade Jewelry are widely available. If you want more information, I would recommend sending an email to the folks at Rapaport. I''m sure they would appreciate your interest.

Kind regards,
Bill

 

[denverappraiser]

Ira,

Thanks for the comments. Not surprisingly, it’s a terribly complicated and convoluted business and my question begs a very simplistic explanation. It is a curiously similar situation.

It looks to me like the right to call something ‘fair trade’ is administered by a group of 17 private companies that call themselves Fair Trade Labeling Organizations International (FLO). Coffee exporters apply for FLO certification on beans that meet or exceed the agreed standards that include wages, financing, environmental and other such things. I haven’t been able to figure out who these people are, how they gained membership into this group or what they must do to maintain their membership. It’s curious how they get so little scrutiny since this sort of issue is the primary criticism of Kimberley.

The fair trade people seem to be committed to a different distribution method from the mainstream. Most (reportedly 60%) of the coffee in the US is sold through grocery stores and restaurants under the brand names of 3 companies (P&G, Nestle and Phillip Morris), none of whom seem to buy into the program. They all buy beans in enormous volume based on a commodities market auction system used for setting prices, either hire or employ roasters, and distribute through a network of wholesalers, shippers and retailers that’s shared with a large number of other food and related products. It’s a pretty efficient system and the result is relatively low prices, which consumers like.

The alternative distributors seem to prefer café’s, organic and specialty grocers and charities like your synagogue, all of whom have significantly higher costs for things like shipping, packaging, advertising etc. This alternative distribution system seems to be where the majority of the ‘premium’ money goes, not to the farmers. I’m not sure this is such a bad thing but the fair trade promoters sure seem interested in avoiding this subject.

It looks to me like a good program but it’s surprisingly difficult to tell who the beneficiaries are. Consumers would like to see farmers better paid, they would like to be able to attach restrictions about labor and environmental issues and they are willing to accept higher prices to fund these things. Fair Trade facilitates this, and most others don’t, but the cost/benefit ratio does seem a little high to me.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[Paul-Antwerp]

Crisises are challenges, and some are positioning themselves to take advantage of a possible outcoming crisis.

First, there were the initiatives of the Canadian North-Western province and that of BHP-Billiton, in which they track and guarantee the origin of a part of their diamonds. Note this, we are talking only about a part of their diamond mining, since it costs extra to be part of this program, and not everyone is allowed to participate.

Now, there is the initiative of De Beers'', which also offers a third party tracking and guarantee to their sightholders. If this works, it might mean an expansion of the market-share of De Beers'', if it does not work, it did not hurt.

Then, there is the ''Fair Trade Jewelry''-program, initiated by Martin Rapaport, who also, as a journalist, seems to be a fierce voice on the existence of conflict diamonds.

Looking from a distance, I see a number of forces, some of them strong, seeing a benefit in talking about the horrors of conflict diamonds, while trying to offer an alternative to it. Good business thinking, I might add.

Personally, last year, we were part of the Canadamark-program. It offered us a great alternative to the upcoming conflict-diamond-craze. But, we are not in the program anymore, because we think it is stupid, to pay 10% for the rough at the beginning, and then pay another 5% when you want to add a Canadamark-certificate to the stone. Also, because the product as such does not change, and either the customer or we have to take this hit of 15%. In reality, it seemed to be us taking that hit, and this is truly bad business.

Therefore, we are now cutting rough from unknown sources, but from our experience, we can see that it is mainly a mixture of Canadian and Russian origin. There is no other guarantee but the limited one of the Kimberley Process. And probably, for what it is worth, our personal guarantee that we have seen sufficient parcels of rough to recognize most origins, that we know our suppliers of rough, and would not want to deal with dodgy ones, and that we basically know our business.

We truly hope that this suffices to consumers, since the alternative might be to join the big group of Canadamark, De Beers'' or to join up with Rapaport, and all of these programs just seem to add costs to the product, which the consumer will have to bear in the end. And that is, if we are allowed into their clubs, since they all like the big players, but not the small.

Live long,

 

[Paul-Antwerp]

Crisises create challenges, and some in the industry are using a crisis to improve their position in the market.

First, there was the initiative of the North-Western Province in Canada and that of BHP-Billiton with its Canadamark on part of their diamonds. Note, this does not cover the entire Canadian mined production, only those that want to participate in the programs and pay for it.

Now, there is the initiative of De Beers'', which offers third party-tracking of their diamonds throughout the cutting-process to their sightholders, and in this way, these stones can obtain an extra certificate indicating their origin.

Also, there is the ''Fair-Trade-Jewelry''-initiative of Martin Rapaport, who, as a journalist, seems to be one of the fierce conveyors of the conflict-diamond-message, while setting up a business-initiative to offer an alternative to consumers.

Having been part of the Canadamark-program last year, I can tell you that I got sick and tired of paying 10% more for the rough, and then another 5%, if we wanted to have a Canadamark-certificate on a stone. After all, either we or the consumer had to cough up the extra 15%, and since we regarded the product to be exactly the same as another, it was basically us who had to take that extra 15% of expenses.

We prefer to work, like we do now, on rough, which, because of our experience, we can recognize as a mixture of Canadian and Russian origin, and the only guarantee that we have is the small one of the Kimberley Process.

We do hope that this suffices to consumers. All we offer as a guarantee is the Kimberley Process, our experience in judging rough of various origins, and our dedication to our brand, which would be harmed seriously, if connected in any way to conflict diamonds. In this, I have to add, that where most players in the industry are afraid to be connected to conflict diamonds, most are a hundred times more scared to be connected to terrorist financing. In this field, there is a serious risk of European and/or American authorities taking this seriously, and that is why we only work with suppliers whom we have known for a long time, and who are reputable. After all, no windfall-profit whatsoever weighs up against the risk of Guantanamo.

If this does not suffice, we will have to join one of the above initiatives, and the question is whether a small player like ours will be allowed in.

Live long,

 

[Paul-Antwerp]

Sorry, double post with some differences. My server cut me out the first time, and I had to rewrite. Now, you can check how well I am at re-writing the same line of thought.

 

[strmrdr]

Hi Paul nice to hear from you on this.
I see where your coming from.
At this time your system is good enough for me but as Iv said earlier if things get worse again it might not be in the future if things go hot in the diamond producing areas again.
There may be others that feel that way also so leave yourself some options.
It is hard being a small fish in a big pond but being small also allows you to change quickly as conditions change.
Im sure you will be keeping an eye on things :}

 

[denverappraiser]

A 15% premium to be certified by DeBeers as morally sound! Good grief, what a world. There are customers who would pay a premium for a stone that could be certified DeBeers-free.

By all means the consumer, not the supplier, should fund the premium and if they are unwilling to pay it then it’s entirely appropriate for you not to participate. I would even go so far as to suggest that you should get MORE than the 15%. Charge 16% so that you are being fairly compensated for the additional administrative costs associated with your participation. Fair trade isn’t just about miners.

As a consumer, I would count the personal assurance of a small manufacturing service like yours to be extremely valuable. I presume that the stones you buy are KP compliant, that based on your experience you are reasonably confident that they are of Canadian, Russian or whatever origin, that you treat your workers and your environment fairly and that you could issue some sort of statement to this effect for your dealers. This is much more powerful in the US market than you think and the cost is approximately zero.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[RockDoc]

Premiums for origin.....

Interesting that all the big players seem to want to hike up the prices, for what is probably a very minor amount of diamonds.

GCAL, Rapaport,IGI, De Beers and the Candanian sources, plus any others that seem to want join in, may or may not have something consumers will want to pay for.

As competitive as diamond pricing is, I am not sure that all those rushing to offer origin reports will do nothing more than just ramp up fees.

It will be interesting to see just how many consumers see the extra charges as something that they want to pay for, especially when those stones will be priced higher.

I think the largest cross section of consumers buying diamonds are still buying with size and price consdierations made as the overwhelming "standard" of preference.

I thought of the name of the Nicholas Cage movie that I mentioned above. It was Lord of War. Have you seen this movie?

Rockdoc

 

[strmrdr]

I wouldn''t pay anymore for a De Beers cert dont trust them, but think its kewl because it will help me avoid their diamonds when possible.
Their hands are plenty bloody still from WW2 not to mention a century of exploitation.
Id pay to see a movie on that.

 

[diagem]

Date: 6/11/2006 11:52:06 AM
Author: Paul-Antwerp
Crisises are challenges, and some are positioning themselves to take advantage of a possible outcoming crisis.

First, there were the initiatives of the Canadian North-Western province and that of BHP-Billiton, in which they track and guarantee the origin of a part of their diamonds. Note this, we are talking only about a part of their diamond mining, since it costs extra to be part of this program, and not everyone is allowed to participate.

Now, there is the initiative of De Beers'', which also offers a third party tracking and guarantee to their sightholders. If this works, it might mean an expansion of the market-share of De Beers'', if it does not work, it did not hurt.

Then, there is the ''Fair Trade Jewelry''-program, initiated by Martin Rapaport, who also, as a journalist, seems to be a fierce voice on the existence of conflict diamonds.

Looking from a distance, I see a number of forces, some of them strong, seeing a benefit in talking about the horrors of conflict diamonds, while trying to offer an alternative to it. Good business thinking, I might add.

Personally, last year, we were part of the Canadamark-program. It offered us a great alternative to the upcoming conflict-diamond-craze. But, we are not in the program anymore, because we think it is stupid, to pay 10% for the rough at the beginning, and then pay another 5% when you want to add a Canadamark-certificate to the stone. Also, because the product as such does not change, and either the customer or we have to take this hit of 15%. In reality, it seemed to be us taking that hit, and this is truly bad business.

Therefore, we are now cutting rough from unknown sources, but from our experience, we can see that it is mainly a mixture of Canadian and Russian origin. There is no other guarantee but the limited one of the Kimberley Process. And probably, for what it is worth, our personal guarantee that we have seen sufficient parcels of rough to recognize most origins, that we know our suppliers of rough, and would not want to deal with dodgy ones, and that we basically know our business.

We truly hope that this suffices to consumers, since the alternative might be to join the big group of Canadamark, De Beers'' or to join up with Rapaport, and all of these programs just seem to add costs to the product, which the consumer will have to bear in the end. And that is, if we are allowed into their clubs, since they all like the big players, but not the small.

Live long,

Well said..., I ve been trying to get that message accross for quite a few posts...
There is no reason whatsoever for either manufacturers or consumers to pay that "Canadian Marketing Premium"
There''s plenty of Canadian Rough being manufactured that does not command any premiums...

Paul, I fully agree with you...

 

[Regular Guy]

Date: 6/11/2006 11:46:14 AM
Author: denverappraiser

This alternative distribution system seems to be where the majority of the ‘premium’ money goes, not to the farmers.

Neil, thanks for fact checking for me, if that''s what you''ve done. Did you see this from the report I pointed you to, or other resources? Meanwhile, I''ll need to review more closely the article I did find.

In a quick review, I do read the following, for example:

"Field observations in several case studies found the revenues for Fair Trade coffee to be
twice the street price for conventional coffee, even after deductions were made for cooperative
management and other expenses.7 For example, Majomut cooperative members harvest an
average of 1,500 pounds, for which farmers earned US $1,700 for organic Fair Trade certifi ed
coffee, compared to the local “street” price8 of US $550 (Perezgrovas and Cervantes, 2002:16;
19). With coffee production representing roughly 80 percent of Majomut family incomes, Fair
Trade certifi cation represents a dramatic increase in their livelihoods."

So...I ask because, your conclusions are reasonable...I''d just like to know if they are established, or contested.

As you say, even in a worst case, there may be good to analyze. But, one would hope, frankly, for a better than worst case, and an understanding that the majority of the premium consumers pay do not go to agents other than the farmer the program is ostensibly going to benefit.

 

[denverappraiser]

Ira,

I read the report you linked and I read through what the fairtrade guys have to say on their own. As you point out, there is quite a bit of material available. I have done some extrapolation and no they are not particular reliable or well researched. Here’s how I came to my conclusions:

The fair trade price is currently fixed at $1.26/lb. or $0.05 over the NY ‘C’ commodities market price, whichever is greater. The ‘C’ price is currently $0.96 according to Bloomberg. This means the premium to the farmers is a minimum of $0.05/lb up to about $0.50/lb depending on the status of the commodities market plus an additional $0.15 for ‘organic’, which they pretty much seem to all do. The relationship between a pound of green coffee and a pound of the ground Folgers is unclear to me but surely it’s not one to one. I’ll guess at 1.5:1 but I’m happy to admit that I made this number up.

Folgers costs me $3.62/lb in their biggest package (54 oz).
Deans Beans wants $6.50/lb plus $1.35 shipping if you buy in their biggest package (5 lb).
This means that at current prices, I would be paying a ‘premium’ of $4.27 to efficiently buy a pound of Deans Beans over a pound of Folgers – A whopping 117% premium. Using the current commodity market, $0.68 of that goes to the producing farm or co-op (some of which goes to administrative overhead) so 84% of my premium goes to other players. Like I said, I don’t have all that big a problem with this because some of these other participants are worthwhile in their own right and I’m sure Dean’s makes a fine product but it seems like a lot if Fair Trade is the primary objective. People above are quite reasonably grumbling about 15% for Canadamark.

This is not incompatable with the figures you've posted. $0.68/lb is a pretty big bonus for someone who's otherwise planning on selling 1500 pounds for $550. Your example shows a premium to the farm of $0.76/lb. and this difference is surely accounted for by the fluctuations of the commototies market.

By the way, I agree that a 15% premium for provenance on diamonds seems awfully high. This leaves room for competitors who can offer a similar or better service for a lower price.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

(edited to correct some math errors).

 

[denverappraiser]

Now you got me shopping.

Folgers at Sam’s Club costs $2.42/lb. This makes the premium for Deans 222% and reduces the farmers’ $0.68 share to 12.6% of the premium.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[JohnQuixote]

Catching up on PS tonight.

Martin Rapaport''s JCK address discussed economics, distribution and ethical issues in the diamond and jewelry trade. Here is a summary of his comments on the Conflict Diamond issue:
Conflict Diamonds

A first order problem meets 4 criteria: Intensity; it is a matter of life or death. Scope; it influences many people. Complexity; it is a developmental problem. Impact; there is high level industry damage.

The plight of artisanal diamond miners in West Africa is a first order problem. There are 1,000,000 artisanal diggers in Sierra Leone, Congo, Angola and West Africa. These are the world’s poorest people. The diamonds there are alluvial and hard to control. There is no alternative employment. Wars are a way of life. Sierra Leone is the world’s poorest country. Life expectancy is 40 and they have the world’s highest infant mortality rate. 70% of the people live on less than $1 per day. 94% of Sierra Leone’s exports are diamonds.

The industry is aware of the plight of these people. Our leaders are doing the right things. The Kimberly Process stems the flow of diamonds from these countries. This is a corporate approach that is designed to protect the industry. Similar protectionist approaches promote “Canada” products or call for a complete boycott of diamonds from such counties.

None of these things address the root problem: These philosophies are all product-based, not people-based. A boycott would actually hurt the people who need our help the most. Remember that 94% of Sierra Leone’s exports are diamonds. A boycott would take away the $1 per day those people have now.

How is it possible that Sierra Leone exports hundreds of millions of dollars in diamonds per year but people are still starving? The political obstacles to creating free, fair and competitive markets in these countries are historically considerable. Many are created by governments, not industry, but as an industry we must face them.

Ethical issues are dangerous because we ignore them until they cause us pain; like waiting until a tooth hurts to go to the dentist. Doing "the right thing" can be difficult, especially when you don’t know what to do. But remember: A decision not to do something is also a decision.

The forthcoming "Blood Diamond” movie may cause us pain. We will be asked questions. The toughest questions will not come from our customers, but from our friends and families. We have been shielded because the Kimberly Process and the Council for Responsible Jewelry Practices work to stop these diamonds from reaching American markets. We protect our clients from “blood diamonds” and point to Botswana and the wonderful public education system the diamond trade has created there as a positive example. We point to "Canada" diamonds as an alternative. But in some areas of Africa people are still suffering.

So, is our problem really a movie? Or is it the fact that 1,000,000 people are suffering?

What can the diamond industry do about this? We need a people-based solution, not a product-based one. Can we open the markets of these renounced countries? Can we employ a labeling organization for ‘fair trade jewelry’ that will ensure that a portion of monies is put directly back into humanitarian solutions? Can we create fair and competitive diamond markets in the poorest areas of Africa? Such a proposal would address the root cause of the problem: The poverty of those who dig diamonds. Governments could realize increased value and legitimized trade by agreeing to terms whereby money is directed back into relief efforts; ensuring the product did no harm, only good.

Imagine buyers able to present a token of love; the purchase of which possibly saved lives? Such ‘spiritual sparkle’ is beyond price.

If we as an industry can use our economic purchasing power to create market forces which drive out exploitation and poverty, such ‘fair trade jewelry’ has the potential to be the jewelry product of the century.

 

[JohnQuixote]

My own comments:

Our industry works for legitimate, conflict-free sourcing and has been successful in stemming the flow, but there are pockets of illicit trade outside our purview. Watchdogs monitor smuggling and counsel avoidance, but this does nothing about the bad guys. As long as one child suffers, it’s too much. A people-centered solution is needed. The sentiments from Rapaport strike a chord, especially for those with ties to Africa. His proposal for a labeling organization to open closed trade doors, with assurances of putting money directly back into humanitarian efforts is a bold prospect. Meanwhile, creating awareness and funding relief are possible now.

 

[denverappraiser]

John,

Thanks for your comments. You are always a wealth of information.

The question of what to do to help the people of Africa and elsewhere is much larger than the question of how to avoid a buying conflict diamond and I agree that it’s much more important.

In general I agree with Mr. Rapaport that Fair Trade Jewelry will be a good thing but the Fair Trade movement has several economic problems that make me a bit nervous. Any purchase ranging from diamonds to coffee to medical services involves a complex web of participants including producers, shippers, financers, tax collectors, retailers and many many others. Most of these participants are invisible to the final consumer and the value of their participation is sometimes difficult to determine at first glance. Fair Trade is an attempt to bolster the interests of one group without consideration of the others. If most diamond customers were to be asked how they would like to see the proceeds of their diamond purchase disbursed, the answer would both be wildly different from the current approach, and entirely unsustainable. Mine and retail workers would be relatively well compensated. Mining companies, banks and landlords would not. ‘Middlemen’, meaning the people who assume the risks of inventory and transport would get nothing at all. The end result would be collapse.

The coffee business looks like a pretty good model to study and I’m sure there are some smart people doing just that. It’s quite a bit larger than diamonds and Fair Trade is well entrenched there. The premium at the consumer level seems to be on the order of 100% and there is a growing base of consumers who are willing to pay it. That’s good for coffee but I’m not convinced that this will be easy to translate to diamonds. Based on the comments above and general observation of the trade, there is considerable resistance to the existing premium for ‘certified Canadian’ of about 15%. If the prices are to be shaved and the benefits to producers to be increased, who will be reduced or eliminated? In the case of coffee, the answer is no one. Everyone gets more, all the way from the farmer to the retailer. That’s why the price is so high. I can’t see diamond buyers standing for this solution.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[WinkHPD]

Speaking of "conflict" diamonds, here is the headline from an Idex article that ran yesterday. You can find the whole article at www.idexonline.com by doing a search.

Ekati Union''s "Dirty Diamonds" Campaign

(June 13, ''06, 3:48 IDEX Online Staff Reporter)

In an attempt to increase public awareness of the ongoing strike at the Ekati diamond mine in Canada, the Public Service Alliance of Canada (PSAC), has launched a "Dirty Diamonds" campaign against mine owners BHP Billiton in The New York Times and The Wall Street Journal today.
PSAC is asking consumers not to buy Ekati diamonds being produced by strikebreakers under the Aurias and CanadaMark trademarks behind union picket lines as the union fights to win a fair first collective agreement for nearly 400 Ekati workers on strike since April 7.

..snip..

As you can see, not all is well in the land of "Conflict Free" diamonds...
Wink

 

[gambit293]

Hi all,

Sorry to revive a dead or dying thread, but the issues discussed here are precisely the things I am grappling with in my ring-shopping experience.

I am trying to find a trustworthy retailer to work with, one who will accomodate my particular priorities in finding a diamond. To this end, I have been cold-calling jewelry retailers out of the phone book and asking them about where their diamonds come from and whether or not their products are Kimberly Certified. Many awkward conversation ensued, but I am trying to be realistic about this, but here is what I was looking for:

-General awareness of the issues. Granted, I was merely picking businesses out of a phone book; many of them are very small jewelers, and it might be unfair to expect them to be fully informed. But it was clear that many retailers are still in the dark. The vast majority of diamonds sold here in the states, I assume, are "by default" Kimberley Certified, but it seemed that many of the people I talked to on the phone knew nothing about it either way.

-Recognition that this is a valid concern and a willingness to accomodate me. I was very turned off by one particular retailer who immediately got defensive and said, "Oh this is about that movie" and something along the lines of "people are getting all upset for crazy reasons." Needless to say, I won''t be shopping there. (For the record, the movie actually has very little to do with my shopping preference; I had never even heard of the movie until a few weeks ago. I have been following the diamond industry, the conflict diamond issues, and De Beers since about 2000, and I had long ago made up my mind where my priorities would lay in buying a diamond).

I did talk to several retailers who were both frank and helpful. A few of them said that honestly they get their diamonds from a number of suppliers and do not know the specifics on where the diamond comes from beyond that, but that they could accomodate me by ordering from specific markets and trying to dig out more information on the source of the diamond. A few of them acknowledged that they had serviced similar customers before.

That is all I am looking for at this point: awareness and willingness. I honestly don''t care so much about a bulletproof GUARANTEE that the diamond is actually from where it claims to come from. That''s largely because it''s pretty much out of my hands: as others have pointed out here, there really is no such thing as a 100% guarantee. All you can do as a consumer is raise the issue and let them accomodate you at the retail end. Whatever deception or negligence or foul play or ineffectiveness that occurs in the supply line beyond that is beyond my control.

At this stage in the diamond market, where the vast majority people still know nothing about conflict diamonds or how the industry came to be, I feel the best I can do is to voice my perspective to the retailer as a consumer. If enough people do that, it will affect the market and gradually trickle down through the supply line. Hopefully, in the process, the fidelity of the process begins to improve as well.

(By the way, I believe the Ekati mine strike is over).

Thanks for reading! Wish me luck in diamond shopping.

Btw, thanks, Dave, for the guide you wrote. And I am one of those people who would be willing to pay a premium for a non-De-Beers diamond!
-Gambit

 

[denverappraiser]

Gambit,

You’re on the right track. I agree that Kimberley is poorly marketed. Heck, it’s not marketed at all! People who work in retail stores are often poorly trained and are only geared to answer the questions that get asked frequently. KP is all about the trade in rough diamonds and retailers generally deal exclusively in polished goods. The connection may seem obvious but there are some important differences. Training generally improves somewhat as you move up the management chain. As this question gets asked more and more often, like you have done, they will be motivated to look into it and learn the answers. As you observed, it’s often a special request and the simple act of asking about it increases the store’s awareness. It is NOT difficult for them to do the research and it is not difficult for their suppliers to provide them with stones that come from KP compliant sources.

One of the funny things about the internet and the age of Google. No thread is dead unless the admin decides to kill it.
Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[Regular Guy]

Date: 6/10/2006 9:51:44 PM
Author: Capitol Bill
Ira,

I attended Martin Rapaport's breakfast presentation in Las Vegas at which he spoke about the things I mentioned. All of these initiatives are in the beginning stages. It appears that it will be a while before Fair Trade Diamonds or Fair Trade Jewelry are widely available. If you want more information, I would recommend sending an email to the folks at Rapaport. I'm sure they would appreciate your interest.

Kind regards,
Bill

Though I neglected to pursue the follow up at the time, a related similar post today, and the recent mention about Rapaport's discussion of this at GIA meeting just concluded motivate this post...

I did follow the link Capitol Bill presented back in June, and landed with an e-mail failure message. Anyone know of methods the general public might follow to be more current on the trends of fair trade diamonds...including reaching Rapaport and his report?

(edited to add...)...though a renewed effort did give some instant access, and a new publication to check out...

 

[Joane]

http://www.psac.com/news/releases/2006/28-0606-e.shtml

It does appear the mine strike was over at the end of June.

 

[JohnQuixote]

Date: 9/3/2006 10:05:56 PM
Author: Regular Guy

Though I neglected to pursue the follow up at the time, a related similar post today, and the recent mention about Rapaport's discussion of this at GIA meeting just concluded motivate this post...

I did follow the link Capitol Bill presented back in June, and landed with an e-mail failure message. Anyone know of methods the general public might follow to be more current on the trends of fair trade diamonds...including reaching Rapaport and his report?

Ira, I commented on Rapaport's JCK address audience in this thread in June. Three things to follow-up here:

1. Several of us had the opportunity to speak to Rapaport at the symposium. His current initiative is development of a 'Fair Trade Diamonds and Jewelry Association,' and is based on the last 3 paragraphs of my post from 6/14, above.

2. The World Diamond Council has launched www.diamondfacts.org. This website is intended to assist jewelers in the education of employees and consumers on the issue of conflict diamonds and the Kimberly Process. Stating "Conflict Diamonds are one of the hardest issues our industry will ever face. Here's what you can do about it", the site offers multiple downloads including printable handouts for consumers and training guides for employees. DiamondFacts also reports that 99% of diamonds are conflict free and touches on the positive impact the diamond trade has had on many countries where they are sourced. The World Diamond Council urges jewelers to require written warranties from all diamond suppliers stating that diamonds invoiced have been purchased from legitimate sources not involved in funding conflict and recommends that staff assures consumers that warranties from suppliers are required.

3. 'Conflict-Free' diamonds are a nice protectionist strategy for consumers, but selling diamonds which are simply conflict-free does nothing to address the suffering of people still in conflicted regions. No matter how few 'conflict diamonds' remain today, that's the problem we should concern ourselves with. It is why Rapaport's initiative and similar people-centered solutions are appealing and logical.

 

[Regular Guy]

John,

I appreciate the helpful link. It seems it would be actually hard to purchase a "conflict diamond" if one wanted to, though ethically one would not.

Drilling into the link you''ve provided here, nonetheless, I read the following re the fall out with respect to the Kimberly Process:

"System of Warranties

Under this system, which has been endorsed by all Kimberley Process participants, all buyers and sellers of both rough and polished diamonds must make the following affirmative statement on all invoices:

"The diamonds herein invoiced have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations Resolutions. The undersigned hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.""

John, do I misread this, with respect to diamond vendors? Should each purchase come with this statement, indicating some due diligence the vendor would have gone through to attest to the veracity in the statement?

When I purchased from DCD, they did uniquely provide a similar statement at their website...not sure if it is still there under JA. I do not think any materials that came with my diamond purchase repeated anything about this. Does WF provide this statement to purchasers, routinely, when they buy their diamonds?

Thanks in advance.

 

[JohnQuixote]

Date: 9/3/2006 11:56:49 PM
Author: Regular Guy

John,

I appreciate the helpful link. It seems it would be actually hard to purchase a 'conflict diamond' if one wanted to, though ethically one would not.

Drilling into the link you've provided here, nonetheless, I read the following re the fall out with respect to the Kimberly Process:

'System of Warranties

Under this system, which has been endorsed by all Kimberley Process participants, all buyers and sellers of both rough and polished diamonds must make the following affirmative statement on all invoices:

'The diamonds herein invoiced have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations Resolutions. The undersigned hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.'

John, do I misread this, with respect to diamond vendors? Should each purchase come with this statement, indicating some due diligence the vendor would have gone through to attest to the veracity in the statement?

When I purchased from DCD, they did uniquely provide a similar statement at their website...not sure if it is still there under JA. I do not think any materials that came with my diamond purchase repeated anything about this. Does WF provide this statement to purchasers, routinely, when they buy their diamonds?

Thanks in advance.

We provide abundant information on the site and will gladly provide the statement if requested to do so. Our sightholder provides it with each shipment and jewelers should only buy from suppliers who give this guarantee.

Remember that industry and governments have been working on this for years. Thanks to the diamond industry's strong participation in setting up a process of verification with the UN and 45 other governments it's estimated that conflict diamonds have been reduced from 4% of the world's total diamond rough output (1999) to less than a quarter of a percent to date. The diamond industry doesn’t want to be involved with creating a beautiful product at the expense of lives any more than consumers do.

Only a tiny portion of the public has been aware in prior years. The forthcoming movie is creating a stir so more consumers are learning. We believe this is positive for the situation.

To answer your question about my company specifically: We’ve provided notice of the italicized statement on our website as well as input and advice to consumers... I don’t directly link back to WF, to avoid the appearance of self-promotion, but if you’re interested in our perspective, some outside links and coverage of our present initiatives go into our site, click on ‘Knowledge Base,’ then ‘Whiteflash Product Information’ and you’ll see articles on the right side of the page, including our Conflict Diamond guarantee and suggestions.

Brian Gavin grew up in South Africa and has been sensitive to the situation for a long time. He and Debi Wexler, our co-founders, visited Africa together last year.

 

[Regular Guy]

I see the link, thanks John.

Also, I read there, as Wink pointed out (I think in this thread), that all vendors must comply to do business, or go to the hoos gow, so although JA does not visibly carry this disclaimer anymore that I can see, I suppose I can assume he is in compliance, as much as you are.

Of course, if this is not the case (that I shouldn't assume the same about vendors who don't report the same)...the question remains about compliance. No one is really raising this question, per se, and yet, people remain interested in conflict free diamonds, for some reason. I don't know that I would seek to promote any more paperwork than anyone is already generating. I only made the post above to inquire about the possible disconnect...the ostensible requirement noted with respect to the Kimberly Process, including some notation on an invoice (no request for same is mentioned) being specifically mentioned.

As I said...it seems like you'd actually have to work to get a conflict diamond. Alternately, if much of this is about generating awareness....you could easily buy a diamond from WF, never go to the Knowledgebase, I guarantee you, and never know the good diamond bought from you was conflict free. At the end of the day, does this matter? I suppose, since maintaining compliance is the main point, I doubt it. But...since you linked the web site, and I read it...my comments and observations have come forward as a result. I'm guessing none of your competitors currently include this on their receipts, without a request for same, either. And, if one of them did, good for them...though I doubt it will sway a sale. Probably.

 

[Regular Guy]

adding on...or is it figuring out...

I did point to a page on WF''s site that was relevant, but may not have been the page you meant. You probably meant to point to this page, which links to this site, which provides this text:

"Retailers are responsible for ensuring that the diamonds they stock and sell carry a warranty that they are conflict free. Retailers are required to audit these Systems of Warranties statements on their invoices as part of their annual audit process and to keep records for 5 years. The System of Warranties does not require the warranty to appear on the consumer''s receipt. But by implementing measures for greater supervision, compliance and accountability, through the System of Warranties, within the diamond trade, consumers can be assured that the diamonds they buy are from areas that are free from conflict. Consumers can ask for assurances from their retailers that their diamond is from sources free from conflict."

Apparently, lower in the text, the phrasing was captured correctly above, but this text I failed to notice earlier clarifies compliance issues.

Sorry for any confusion on my part, unnecessarily extended here...

Regards,