Welcoming Starbucks to the Birthplace of Coffee

As appeard on the Ethiopian Weekly, Addis Fortune

By Wondwossen Mezlekia
Seattle, Washington

The world’s giant specialty coffee roaster and retailer, Starbucks, comes to Ethiopia, for a second time, amid growing pressure it faces in a number of countries, where it is accused of obstinately opposing Ethiopia’s US trademark efforts in order to maintain its market power. Last year, Starbucks CEO Jim Donald visited Prime Minister Meles Zenawi hoping in vain to convince the country to accept the company’s advice. Company representatives will be in Addis Ababa again this week to attend the East Africa Fine Coffee Association (EAFCA) annual meeting. It will continue to promote Starbucks’ interests while continuing its effort to prevent Ethiopia from taking control of its coffee trademarks in the US. Trademark ownership, as Starbucks knows because it aggressively protects its own trademarks, can help improve coffee prices for Ethiopia’s farmers.

The Ethiopian coffee sector launched an innovative initiative to exploit the country’s intellectual property rights potential by trademarking three of its most valuable coffee marks – Harar, Sidamo, and Yirgacheffe - in major international markets. The trademark initiative will be complemented by marketing programs to increase the commercial value of these brands. By doing so, the coffee stakeholders group hopes to significantly raise the incomes of many of the 15 million Ethiopians who are dependent on coffee.

The impact of this unique private sector initiative on the Ethiopian economy is significant. Ethiopia ranks amongst the poorest countries in the world with some 80% of its citizens living on less than $2 a day. About half of the country’s foreign exchange earnings come from the export of coffee. The country produces some of the world’s finest coffees, which Starbucks and others sell for as high as $26 per pound. According to Light Years IP, a Washington based non-profit organization, the Ethiopian coffee sector currently captures only around 6%-10% of the fine coffees' retail price, barely covering the production cost. Through trademarks, Ethiopia hopes to develop the market leverage that will secure for its farmers some of that value that consumers are paying for.

Starbucks is working, through their lobbying group, National Coffee Association (NCA), to block Ethiopia’s efforts to secure the trademarks in the US. Starbucks wants to prevent Ethiopia from pursuing the initiative because the status-quo allows Starbucks to keep most of the profit from the high quality of Ethiopia’s coffee for itself. In addition, Starbucks fears that if Ethiopia succeeds with its trademarks, other coffee producers might also demand a fair price for their premium coffees.

All over the world, people are outraged at Starbucks’ actions against Ethiopia. Consumer and rights groups, fair trade and global justice activists, and customers are mounting pressure on the company to let Ethiopia own its own marks. The call on Starbucks to do its business ethically and honor its touted commitment to champion the economic interests of coffee farmers in Africa is growing.

Starbucks continues to dodge the real question of why Starbucks would not acknowledge Ethiopia’s ownership of her own coffee marks and sign the licensing agreement the government offered. Starbucks hopes to defuse the criticism and avoid public attention by issuing misleading information in its press releases.

Trademarks are illegal
Starbucks Vice President Dub Hay said in a video released on YouTube that Ethiopia’s claim to trademark its coffee marks is illegal. Robert Winter, a partner at the Washington DC-based law firm Arnold & Porter LLP which has been advising Ethiopia in these efforts says this is “flat wrong”. Winter stated: “There is nothing illegal or unlawful about Ethiopia's program to obtain trademark protection for its coffee marks.” True, Yirgacheffe is already registered in the US because the United States Patent and Trademark Office (USPTO) clearly believed that such a trademark was legal and viable.

Winter, in a direct response to the claims by Dub Hay, Starbucks’ VP for coffee procurement went on, “there is nothing unlawful about Starbucks entering into a license agreement that acknowledges Ethiopia's trademark rights. To make this claim is flat wrong. Indeed, we believe that Ethiopia already enjoys effective trademark rights in its marks through widespread use of those marks for more than 75 years.”

Dub Hay is also a senior official in the lobbying organization, National Coffee Association. The reason that Sidamo and Harrar trademarks have not been registered is because Starbucks asked the NCA to lobby against Ethiopia.

Geographic Indication is better for Ethiopian farmers
Starbucks wants Ethiopia to believe that they support the recognition of Ethiopia’s coffee marks but insists that Geographic Indications (Certification) would benefit the farmers more. This is a patronizing and disingenuous position. Ethiopian coffee producers are able to look after their own best interests, and to decide what form of intellectual property protection to use. Trademarking - not certification - is what Ethiopia chose as a viable protection of its brands. And that is a matter of right!

Starbucks pays premium prices
Starbucks continually misleads by asserting that the company pays premium prices for the coffee they buy. They neglect to state that they are comparing the price they pay for the premium coffees with the market price for ordinary quality coffees. It should be noted that even the “premium” prices that Starbucks and others pay do not provide a living wage for farmers and their families.

Starbucks honors its commitments for coffee farmers
Sandra Taylor, Senior Vice President, Corporate Social Responsibility, recently stated that Starbucks’ investments in social development projects to help African coffee farmers improve their communities are evidence that the company honors its commitments to coffee farmers. Ms. Taylor misses the fact that their role in benefiting the farmers should be primarily reflected in a fair price Starbucks pays for the coffee. First and foremost, Starbucks’ relationship with the coffee farmers has to stem from an equitable business relationship: buyer vs. seller. Starbucks as a buyer has to pay the farmers a fair price for their coffee.

Starbucks’ proud affirmation that the company’s help and contribution towards investments in social development is part of the price it pays for the coffee is patronizing and outrageous. Coffee farmers do not need custodians. The farmers lack only a fair return for their labor, not charity. They are intelligent, capable, courageous, and proud people who are capable of managing their resources as well as anyone, and would be able to build the social infrastructures they need, including clinics & hospitals, clean water, roads, etc.

Starbucks is taking advantage of the farmers and is not paying them what their coffee is worth, even including that little bit of charity. What the farmers want is for Starbucks to pay what their coffee is worth.

Ethiopia is proceeding with its plan to trademark its coffees, and many companies -- including Starbucks’ competitors -- are signing licensing agreements. Some major industry players have expressed their determination to help the Ethiopian farmers benefit from their hard earned quality of coffees.

This week, Ethiopia, the birthplace of coffee, proudly hosts the 4th EAFCA conference, which attracts exporters of high quality coffees from East and Southern Africa and roasters, buyers, and retailers specializing in specialty coffees from all over the world.

The trademark standoff between Ethiopia and Starbucks is expected to dominate informal conversations within the coffee industry. One only hopes that Starbucks will hear the public’s negative reactions to the company’s assertions and reconsider its position.