Ethiopia’s coffee trademarking initiative and Starbucks’ refusal to acknowledge the country’s ownership of the names Sidamo and Harar stirred up both scholarly and jingoistic dialogue. So far, the taboo surrounding intellectual property as a matter of rights has been unveiled. This has left some corporations, such as Starbucks, shocked while the public, whose trust in Capitalism obstructed their views through Corporate Social Responsibility, is angered.
The government in Ethiopia and Starbucks proved to be making a bad blend. Starbucks’ damage control measures have electrified the majority of consumers to campaign against unethical business practices.
Critics of the government in Ethiopia, on the other hand, suspect that the project is the government’s plan to control the coffee industry. The confusion left some people disillusioned and cynical.
Situations in Ethiopia substantiate the claim by those who are convinced that the government’s dictatorship, abusive practices, and widespread corruption do not leave any room for initiatives aimed at benefiting farmers. But, the trademark issue is too big and complex to be confined within this argument. The long journey of utilizing intellectual property for development should not be impaired by short term obstacles by the EPRDF government.
In simple terms, what is at stake in the dispute between Starbucks and Ethiopia is broader than what would come out of today’s Ethiopia vs. Starbucks’ market power analogy. If Starbucks’ attempt to impose a plan of its choice on Ethiopia is too much of an abuse of market power, then short sighting the benefits of owning the trademarks is underestimating the root causes of underdevelopment in the third world.
The trademark dispute is better served within the context of global coffee market and international politics. The current standoff between Starbucks and Ethiopia, aided by Oxfam, ought to be scrutinized for what it is. It is never wise to trade strategic advantages for short term political or economic tactics.
It is said time and again that over 90% of the retail price of Ethiopia’s fine coffees is captured by big corporations, such as Starbucks. Despite the high retail value of the crop, the farmers are getting poorer by the day while the retail chains get richer. The issue at hand is a matter of reversing this trend of exploitation by the global market – something greater than local politics.
Governments in Ethiopia, as is true with most countries, depend on export earnings, thus monopolizing the foreign exchange (FOREX). The government’s stock of foreign currency definitely increases with a rise in the price of a pound of coffee. At an exchange rate of 1USD:8.75 Ethiopian Birr, an increase in the price of a pound of coffee from $1.28 to $2, will fetch the government an additional foreign currency of $0.72. In addition, the Ethiopian government makes a net income from various fees including inspection fees assessed whether or not the trademarks are registered. Despite, coffee exporters will realize a net income of 6.30 Birr as the price for a pound of coffee increases, in local currency, from 11.20 Birr to 17.50 Birr.
So, the critical point is in striking a delicate balance between the FOREX, which is controlled by government banks and the 6.30 Birr net profit realized by exporters. This leaves the question of whether the government controls the hypothetical $88 million on shaky grounds.
Of course, Ethiopia’s coffee marketing system is not efficient enough to translate the added market share to directly benefiting the farmers and this should be the main concern. Ideally, farmers’ cooperatives would sell their coffee produce directly to licensed importers there by controlling most of the profit. Until that time when the local and international marketing system becomes fairer, the best way to benefit farmers directly is to help them organize in coops. That way, the poor farmers will have leverage when bargaining with external and internal exploiters, including the government.
It goes without saying that development programs, democratic processes, and human rights protection are inseparable. However, as the blogger, Redeem Ethiopia, said, “Democratizing the Ethiopian government is a separate initiative. It should be pursued with equal vigor by lobbying companies like Starbucks to convince the US government to stop supporting the EPRDF.”
For an independent analysis of the trademark dispute, please read this.
The government in Ethiopia and Starbucks proved to be making a bad blend. Starbucks’ damage control measures have electrified the majority of consumers to campaign against unethical business practices.
Critics of the government in Ethiopia, on the other hand, suspect that the project is the government’s plan to control the coffee industry. The confusion left some people disillusioned and cynical.
Situations in Ethiopia substantiate the claim by those who are convinced that the government’s dictatorship, abusive practices, and widespread corruption do not leave any room for initiatives aimed at benefiting farmers. But, the trademark issue is too big and complex to be confined within this argument. The long journey of utilizing intellectual property for development should not be impaired by short term obstacles by the EPRDF government.
In simple terms, what is at stake in the dispute between Starbucks and Ethiopia is broader than what would come out of today’s Ethiopia vs. Starbucks’ market power analogy. If Starbucks’ attempt to impose a plan of its choice on Ethiopia is too much of an abuse of market power, then short sighting the benefits of owning the trademarks is underestimating the root causes of underdevelopment in the third world.
The trademark dispute is better served within the context of global coffee market and international politics. The current standoff between Starbucks and Ethiopia, aided by Oxfam, ought to be scrutinized for what it is. It is never wise to trade strategic advantages for short term political or economic tactics.
It is said time and again that over 90% of the retail price of Ethiopia’s fine coffees is captured by big corporations, such as Starbucks. Despite the high retail value of the crop, the farmers are getting poorer by the day while the retail chains get richer. The issue at hand is a matter of reversing this trend of exploitation by the global market – something greater than local politics.
Governments in Ethiopia, as is true with most countries, depend on export earnings, thus monopolizing the foreign exchange (FOREX). The government’s stock of foreign currency definitely increases with a rise in the price of a pound of coffee. At an exchange rate of 1USD:8.75 Ethiopian Birr, an increase in the price of a pound of coffee from $1.28 to $2, will fetch the government an additional foreign currency of $0.72. In addition, the Ethiopian government makes a net income from various fees including inspection fees assessed whether or not the trademarks are registered. Despite, coffee exporters will realize a net income of 6.30 Birr as the price for a pound of coffee increases, in local currency, from 11.20 Birr to 17.50 Birr.
So, the critical point is in striking a delicate balance between the FOREX, which is controlled by government banks and the 6.30 Birr net profit realized by exporters. This leaves the question of whether the government controls the hypothetical $88 million on shaky grounds.
Of course, Ethiopia’s coffee marketing system is not efficient enough to translate the added market share to directly benefiting the farmers and this should be the main concern. Ideally, farmers’ cooperatives would sell their coffee produce directly to licensed importers there by controlling most of the profit. Until that time when the local and international marketing system becomes fairer, the best way to benefit farmers directly is to help them organize in coops. That way, the poor farmers will have leverage when bargaining with external and internal exploiters, including the government.
It goes without saying that development programs, democratic processes, and human rights protection are inseparable. However, as the blogger, Redeem Ethiopia, said, “Democratizing the Ethiopian government is a separate initiative. It should be pursued with equal vigor by lobbying companies like Starbucks to convince the US government to stop supporting the EPRDF.”
For an independent analysis of the trademark dispute, please read this.
I've read your blog and most all of the articles it links to. I'm still confused how trademarking region names helps farmers or changes market conditions for farmers. The arguments are vague and some of them are sounding blatently disingenuous. Its hard not to come away thinking that Oxfam is more concerned with bashing the big green brand than changing anything for the farmers on the ground.
ReplyDeleteI'd urge Oxfam to speak to some of the people that have been doing scholarly work on inequities in the coffee trade and figure out how to establish a meaningful dialogue with companies (like starbucks) that are in a position to make a real difference. Acting as a shill for this trademarking snake oil that isn't doing diddly for growers dumbs down the public discourse about the important issues of poverty and global trade.
Just because there is controversy doesn't mean there is truth. Just because there is a convenient bad guy doesn't mean the crime has been solved.
"trademarking region names" is the same disingenuous argument Sbux puts forward.
ReplyDeleteThe point isn't that these are region names, but that they have recognizable brand value in the consumer market. So far Sbux has been tapping into that value, and it also has helped in building that value. Now producers want to tap into that market potential. The rest works just like any other trademark works.
This is not a Starbucks bashing contest. Starbucks should not even be involved in this trademark application if it weren't for its belligerent intervention in the trademarking process. Somehow that has been rearticulated into EPRDF shaking down Sbux. If there is anyone that is responsible for the controversy, it is Starbucks.
By now we know that trademarking benefits the holder. Shirkina Sun-Dried Sidamo Coffee is sold at $26/lp; I don't see why it will hurt when the trademark is owned by someone else other than SBUX. It would be helpful to hear the counter argument as to why this is not the case.
ReplyDeleteWhether or not trademarketed, the specialty coffees should fetch a better price for producers because they do command a higher retail price. By paying $1.28/lp for these coffees, SBUX is not making a difference in the farmers lives. The farmers are able to manage their money and are also capable of drilling water wells if they are given the chance; they do not need any custodian.
Most people agree that the dialogue over trademark and regional names is down. The discussion now is on how to make individual farmers (not organized in coops) the primary beneficiaries of the trademarks.
Annon's point on whether the farmers would really benefit out of all this fuss is legitimate. Though I am not yet convinced that there is a system to benefit individual farmers, I can see how coops are in a better position. If the coops featured in the movie, Black Gold, negotiate directly with importers, such as SBUX and thereby sell their coffees for a better price, they will put a few more pennies into the farmers' pockets.
Finally, we should bear in mind, when discussing this issue, that talks over a Fair Trade system are separate from the debate over rights to own trademark names. Also, the government's role in this trademark issue should be scrutinized separately. This should not be an excuse for SBUX to dictate coffee producers on what they need to do.
Oxfam's press releases repeatedly state that the trademarking will benefit farmers, yet there has been no explanation of how that would be accomplished beyond some possible trickle down from future licensing fees collected by the corrupt ethiopian government.
ReplyDeleteIf I were an importer of coffee from Tadesse Meskela's Oromia cooperative in Ethiopia, should I be beholden to the Ethiopian government to be able to identify to my customers the plain truth that said coffee was grown in the Yirgacheffe region? Must I have Jeb Bush's permission to identify the oranges in my supermarket as having originated in Florida?
A trademark does little to create appellation control which could actually benefit producers. Nobody is out there selling Brazilian coffee labeled as originating in Sidamo. The handwringing about trademarks seems to serve no genuine purpose beyond attempting to manufacture potential (but highly unlikely) ancillary litigation revenues from terms already in common usage among hundreds of specialty coffee roasters.
The idea that any of these roasters are somehow charging extra because of the names and not the intrinsic quality of the product is wrong. Each of ethiopia's "name" regions exports tens of millions of pounds of coffee of varying degrees of quality. A $26/lb extraordinary microlot does not represent all of Sidamo coffee anymore than David Beckham represents the soccer playing abilities of all Brits.
If the trademarks were to benefit anyone it would seems to benefit lawyers far more than coffee farmers.
Why Oxfam chose to be wrapped up in this at all remains unfathomable. Its either a naive understanding of the Ethiopian coffee trade or crass opportunism to stir up a cartoon controversy.
I don't mean to sound harsh but there is so much noise being made on this story with very little signal, and a lot of well-meaning people getting worked up over something that really has almost nothing to do with the plight of struggling coffee farmers.
Anon,
ReplyDeleteThese interesting points on identifying the coffees based on their origin would have made an appropriate argument if the initiative were to not register the names as trademarks but as geographic indications. In fact, that was SBUX' suggestion: for Ethiopia to adopt GI or certification and not trademark.
You've pointed to the important difference between Certification (GI) and trademark. I disagreed with SBUX' suggestion based on the same reasoning you outlined here.
Ethiopia's approach is to trademark the "$26/lb extraordinary microlot" coffees you highlighted - not to trademark all of the coffees produced in Sidamo or Harar.
You see, the point is that the farmers that grow the gourmet coffee should be paid a price better than $1.28/lp. This will be made possible through taking the ownership of the trademark names.
The coffees that command a higher price in the market earn their qualities not because they are grown in Sidamo but because the people who grow the crop are using their skills they inherited through generations of coffee farmers in that region (and of course supported by the agro-ecological factors). Sidamo's specialty coffees are distinct in their qualities as is Harar's.
Jamaica's Blue Mountain Coffee is benefiting the farmers. Why would not Harar™?
Maybe Anonymous is not as aware of the state of Coffee producers in Ethiopia. In any case, for some people salvation for Africa is going to come from large corporations. This business school mindset is good when you are actually the one running the corporation; it is however like shooting yourself in the foot when you are letting your own resources be siphoned under terms set by the corporation alone. What this deal asks is for something to level the playing field; nothing more.
ReplyDeleteI see Anonymous #1's frustrations and one of her/his points in that there are other necessities that the farmer needs, such as freedom of speech, respect for human rights, health care, peace, etc, in addition to food.
ReplyDeleteIn my view, for a country like Ethiopia where the problems are multi-dimensional and complex, there needs to be a multi-faceted, concerted effort along with complex and creative approachs to untangle the poverty trap. There is no single most imprtant solution to any of the problems which would solve all others.
We ought to use every opportunity, no matter how small a benefit it may bring, towards the betterment of the lives of the people. Multi-tasking is what is needed for efficient use of the limited resources. And that is exactly what is being done here.