Potential Shortcomings of Ethiopia’s Coffee IP Project

Recommendations on empowering individual coffee farmers as stakeholders

Looking ahead, the success of the coffee Intellectual Property (IP) protection project as a development tool highly depends on the effectiveness of the project's implementation. Unless the project, which is striving to go through the phases of building and capturing values associated with Ethiopia’s coffee brands, directly benefits individual coffee farmers , it bears the risk of perpetuating the unfair trade practices where only the middlemen take the lion’s share of the higher prices to be realized over time.

On paper, the stated objective of the government’s trade marking and licensing project is to enhance and manage the rights associated with the country’s coffee marks “for the benefit of, and in collaboration with, up to 4 million Ethiopians engaged in the production and supply of coffees covered by the marks as represented by farmer cooperatives and other organized stakeholders in the Ethiopian coffee sector.”

The stakeholders group is reportedly charged with the management and establishment of terms and conditions of licenses, decisions on promotion and brand use, and decisions on pricing associated with use of the marks. From what is known so far, this stakeholder group includes representatives from farmer marketing cooperatives, the Ethiopian Coffee Exporters’ Association (ECEA), and government ministries

Member farmers of cooperatives have a better chance of benefiting from the shift in ownership of the higher retail value of the coffees by virtue of their representation in the stakeholders group. In the case of individual farmers unorganized in cooperatives, however, there is a risk that they will still be left out. In Ethiopia, over 85 percent of the coffee is produced by small scale household farms that are not organized in any form of cooperative. In a country where the marketing system is most backward, it will be feeble to assume that higher prices paid for coffees at export will be reflected in prices paid to producers.

Members of the ECEA are mostly private enterprises with a significant power to maneuver the market. Some of these enterprises enjoy an incomparable influence than others owing to either their affiliation to the political party in government power or their ownership by transnational conglomerates. One such enterprise that falls under the latter category is Ethio-Coffee and Tea Plantation and Marketing, PLC (a company that owns, among others, the Gemadro Estate.)

Ethio-Coffee and Tea Plantation and Marketing, PLC (ECTPM) is a division of MIDROC Ethiopia, a MIDROC International Group company. MIDROC, owned by Ethiopian-born Saudi Sheik Mohammed Hussien Al-Amoudi with a net worth of $6.9 billion, is a multinational company that owns gold mines, hotels, construction and real estate companies, multiple oil companies, cement factories, and other interests.

The role and influence of ECTPM as a member of the ECEA is comparable to that of Starbucks in the Specialy Coffee Association of America (SCAA) and the National Coffee Association (NCA). In an uncorrelated but simple comparison, expecting a stakeholders group made up of ECTPM and others to speak for the individual coffee farmers is no different from expecting the SCAA and NCA to protect Pura Vida’s interests as it does for Starbucks. It is inconceivable to leave the interests of farmers at the mercy of ECTPM and other members of the ECEA.

The government, the most influential member of the stakeholders group, too is not free enough to protect the interests of individual farmers as long as it continues to have a vested interest in the coffee industry. The party holding government power, Tigray Peoples Liberation Front (TPLF), has its invisible hand in the coffee industry, through its companies, such as Guna Trading House PLC. So, there is imminent conflict of interest by the government and its representatives as well.

Ethiopian coffee farmers remain vulnerable due to the strong leverage by both exporters and global buyers. The trademarking and licensing initiative is an important first step in helping shift the market balance in the global coffee trade but it will be futile unless the initiative ensures that higher export prices will be transmitted to the farm level. Until the farmers develop the capacity to act in an organized manner to sell their products, they will continue to gamble with multinational businesses, forget their sharing of the increase in the coffee prices.

Light Years IP says “raising awareness among coffee workers is critical to the success of this project. It will ensure that coffee farmers and coffee sector workers understand the initiative and effectively participate to gain their full increase in export income reaching Ethiopia.” After the awareness stage, however, the incentive rewarded for the farmers’ continued maintenance of their coffee qualities and their contribution towards protecting the brands will be the driving force.

Creation of a robust cooperative sector is a matter of urgency if the trademarking and licensing project is to live up to its promises. The first step that needs to be taken to empower the farmers is to help them organize in marketing cooperatives. And this task can – and should – be undertaken concurrently with the efforts to educate the coffee sector, secure the patent rights, and promote the brand names.


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Coming up, state of cooperatives in Ethiopia and their future roles in relation to coffee IP initiative and a Fair Trade system