American Behemoth Still Lukewarm to Ethiopa's Efforts

"Shame on Starbucks, whose revenues in 2005 were $6.4 billion, for trying to strong-arm a country whose entire gross domestic product is $6 billion. That's unfortunate. Those folks could use an uplifting experience or two, not to mention a little enrichment." - Huston Chronicle Editorial

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Starbucks vs. Ethiopia

American behemoth still lukewarm to Ethiopa's efforts to secure fairer coffee bean prices.
Houston Chronicle
March 9, 2007, 8:54PM

It's a long way — both figuratively and literally — from Seattle, home of upscale coffee-shop giant Starbucks, to Ethiopia, hard-scrabble birthplace of the coffee bean. Ethiopia is one of the oldest, poorest nations in the world, and more than 80 percent of the population are engaged in agriculture, mainly subsistence farming. But that didn't stop the mighty Starbucks from reaching out and slapping the upstart African nation when it tried to secure fairer prices for its coffee beans.

Two years ago, Ethiopia filed with the U.S. Patent and Trademark Office to register some of its finest coffees, named by their regions, Sidamo, Yirgacheffe and Harar. The trademark might enable the country to capture a fairer share of the global market value associated with those names and pass on more money to small, struggling producers who receive a tiny percentage of the retail price. Last season, reported Fortune magazine, an Ethiopian farmer netted less than a dollar from a pound of coffee. That same pound of coffee, marketed in the U.S. as Starbucks' roasted Shirkina Sun-Dried Sidamo, sold for $26.

But Starbucks objected, arguing that a geographical certification (as in Idaho potatoes) would be more suitable. Starbucks Senior Vice President Dub Hay raised hackles with a remark, considered patronizing by African observers, that the trademark bid was illegal and was not the best way to improve the lot of impoverished Ethiopian coffee farmers.

International pressure mounted, and a public relations disaster was brewing for Starbucks, which prides itself on its social responsibility. The issue came to a head in February at the East Africa Fine Coffee Association's conference in Addis Ababa, the Ethiopian capital. Hay apologized for his comments. Starbucks agreed not to oppose Ethiopia's efforts to trademark its coffee names and promised to double its buying of fine coffee from East Africa by 2009. The company said it respected Ethiopia's right to establish a network of licensed distributors, but has not joined the network.

Relief agencies and African nations expressed disappointment at the tepid response. The international relief agency Oxfam said in a statement, "Starbucks now says it won't block the initiative, but what it hasn't said is how it will actively support Ethiopia's stated efforts to obtain trademarks for its coffees, which will bring added benefits to poor farmers." Said one exporter at the conference: "The question is not whether Starbucks is doubling its purchase. How much are they prepared to pay for it is what interests me." And although the 2 percent of its coffee that Starbucks sources from Ethiopia may not amount to a hill of beans in global terms, the issue of fair trade is of paramount importance to struggling African economies: As Sindiso Ngwenda, deputy secretary-general of the 20-member Common Market for Eastern and Southern Africa, told Reuters, "Make no mistake, we support Ethiopia because we are not only dealing with coffee but also with a wide range of products."

Shame on Starbucks, whose revenues in 2005 were $6.4 billion, for trying to strong-arm a country whose entire gross domestic product is $6 billion. Starbucks, in its own words, provides customers at its 13,000 global outlets "an uplifting experience that enriches people's lives one moment, one human being, one extraordinary cup of coffee at a time." But not in sub-Saharan Africa, where no outlets exist. That's unfortunate. Those folks could use an uplifting experience or two, not to mention a little enrichment.

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Copyright 2007 Houston Chronicle