Since our last posting on this issue, there has been a welcome explosion of debate about the Starbucks-Ethiopia confrontation over trademarking Ethiopian specialty coffee brands. In line with modern trends, the economic, political and business aspects of this confrontation have been mixed in various combinations to articulate arguments for and against Starbucks. The role of Oxfam, the main speaker on behalf of the Ethiopian government, has also been denounced or lauded in various writings.
Our position on this issue has been formulated by separating the various players and analyzing their motivations and likely future path under various scenarios. These players are the EPRDF representing the Ethiopian government, Oxfam on behalf of the Ethiopian government, Starbucks, Ethiopian coffee farmers and the affluent consumers of this coffee, among whom are many of the debating bloggers.
Some have argued that EPRDF is in this battle, not for the good of the country, but as a business for the benefit of the party leaders. We agree with this assessment as there is ample evidence of corruption within the party businesses. It is to be noted that Ethiopia, one of the poorest nations in the world, is presently one of the leading African depositors of personal and business assets in the London banking system. This brings much support from western financial interests in protection of the existing system of rule in Ethiopia and this has much to do with EPRDF’s illegitimate survival.
Starbucks, like all businesses, will maximize its profits by expanding its market and reducing cost. Reducing cost implies finding ways to cut production and distribution expenses. Part of this expense is paying royalties to owners of intellectual property [IP]. Our position is that the specialty coffee brands are IP of the Ethiopian farmers. The fact that their government has been hijacked by EPRDF thugs does not mean that the IP doesn't belong to them. Thus, we separate the issue of finding ways to make sure that they are paid royalties from the issue of who owns it. In essence Starbucks can argue that there is no mechanism to pay them but can not argue that they can not have rights to the IP.
The struggle over harmonizing IP laws around the world has been led by the World Trade Organization [WTO]. Most African countries have been left on the raw end of the IP deal by giving away all their rights to western corporations. Even Teff, a grain grown by people in the horn for millennia, is granted breeders’ rights protection as the property of Teff Corporation of America. Under conditions of power parity African societies would reject WTO proposed IP laws until they can get appropriate returns on their property. With the present reality however, they have accepted the skewed arrangement specifically because most are led by governments whose leaders are only marginally more legitimate than the EPRDF.
This brings us to Oxfam. Powerful NGOs have turned into the only force that fights western corporate power in Africa. The struggle over production of Aids medication in South Africa is one good example of this. Most NGOs have operations that would normally be carried out by governments or businesses in African societies. In other words, rather than temporary organizations for the purpose of alleviating poverty, they have become fixtures in the political and economic domains of most poor countries. It is easy to see how this pits them against large businesses who are potential competitors in most NGO ventures and Oxfam is no different.
The marriage of convenience between EPRDF and Oxfam, one for profit and the other for influence, can potentially secure the trademark of the specialty coffee brands in the name of the Ethiopian government. This will irritate Starbucks and allow a greater flow of funds into London banks after it is robbed by EPRDF leaders. But the trademark will stay with the Ethiopian government for when farmers can get their own representatives into power. Ethiopian farmers could care less if $80 million dollars goes to Starbucks or London banks in the mean time. All they care about is that they secure rights to their property for when they can exercise that right.
As for Starbucks’ reaction to such PR negotiations fear has been expressed that it will retaliate by dropping Ethiopian coffee from its product selection. This is a highly unlikely scenario. An important component of Coffee brand marketing is showing how poor farmers are helped by the western company selling the coffee. The possibility of Starbucks dropping the promotion of the specialty brands is very low because such a decision would expose the company to severe competition from others who will claim to be helping poor farmers even more by paying royalties, utilizing brand names that Starbucks has spent millions promoting.
The logical conclusion is thus for consumers to threaten Starbucks with boycotts until it allows for the trademarking of Ethiopian specialty brands even by the illegitimate representative of Ethiopian farmers. This is consistent with the intent to promote ethical world trade where product quality and not power has the ultimate say on who profits and who starves. People in the US have an economic, political and moral obligation to level the playing field for the millions of coffee farmers who are on the verge of starvation due to the workings of a consortium of powerful corporations, NGOs and corrupt local African elites.
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. In that case we promise to drink more coffee to support the company.
Our position on this issue has been formulated by separating the various players and analyzing their motivations and likely future path under various scenarios. These players are the EPRDF representing the Ethiopian government, Oxfam on behalf of the Ethiopian government, Starbucks, Ethiopian coffee farmers and the affluent consumers of this coffee, among whom are many of the debating bloggers.
Some have argued that EPRDF is in this battle, not for the good of the country, but as a business for the benefit of the party leaders. We agree with this assessment as there is ample evidence of corruption within the party businesses. It is to be noted that Ethiopia, one of the poorest nations in the world, is presently one of the leading African depositors of personal and business assets in the London banking system. This brings much support from western financial interests in protection of the existing system of rule in Ethiopia and this has much to do with EPRDF’s illegitimate survival.
Starbucks, like all businesses, will maximize its profits by expanding its market and reducing cost. Reducing cost implies finding ways to cut production and distribution expenses. Part of this expense is paying royalties to owners of intellectual property [IP]. Our position is that the specialty coffee brands are IP of the Ethiopian farmers. The fact that their government has been hijacked by EPRDF thugs does not mean that the IP doesn't belong to them. Thus, we separate the issue of finding ways to make sure that they are paid royalties from the issue of who owns it. In essence Starbucks can argue that there is no mechanism to pay them but can not argue that they can not have rights to the IP.
The struggle over harmonizing IP laws around the world has been led by the World Trade Organization [WTO]. Most African countries have been left on the raw end of the IP deal by giving away all their rights to western corporations. Even Teff, a grain grown by people in the horn for millennia, is granted breeders’ rights protection as the property of Teff Corporation of America. Under conditions of power parity African societies would reject WTO proposed IP laws until they can get appropriate returns on their property. With the present reality however, they have accepted the skewed arrangement specifically because most are led by governments whose leaders are only marginally more legitimate than the EPRDF.
This brings us to Oxfam. Powerful NGOs have turned into the only force that fights western corporate power in Africa. The struggle over production of Aids medication in South Africa is one good example of this. Most NGOs have operations that would normally be carried out by governments or businesses in African societies. In other words, rather than temporary organizations for the purpose of alleviating poverty, they have become fixtures in the political and economic domains of most poor countries. It is easy to see how this pits them against large businesses who are potential competitors in most NGO ventures and Oxfam is no different.
The marriage of convenience between EPRDF and Oxfam, one for profit and the other for influence, can potentially secure the trademark of the specialty coffee brands in the name of the Ethiopian government. This will irritate Starbucks and allow a greater flow of funds into London banks after it is robbed by EPRDF leaders. But the trademark will stay with the Ethiopian government for when farmers can get their own representatives into power. Ethiopian farmers could care less if $80 million dollars goes to Starbucks or London banks in the mean time. All they care about is that they secure rights to their property for when they can exercise that right.
As for Starbucks’ reaction to such PR negotiations fear has been expressed that it will retaliate by dropping Ethiopian coffee from its product selection. This is a highly unlikely scenario. An important component of Coffee brand marketing is showing how poor farmers are helped by the western company selling the coffee. The possibility of Starbucks dropping the promotion of the specialty brands is very low because such a decision would expose the company to severe competition from others who will claim to be helping poor farmers even more by paying royalties, utilizing brand names that Starbucks has spent millions promoting.
The logical conclusion is thus for consumers to threaten Starbucks with boycotts until it allows for the trademarking of Ethiopian specialty brands even by the illegitimate representative of Ethiopian farmers. This is consistent with the intent to promote ethical world trade where product quality and not power has the ultimate say on who profits and who starves. People in the US have an economic, political and moral obligation to level the playing field for the millions of coffee farmers who are on the verge of starvation due to the workings of a consortium of powerful corporations, NGOs and corrupt local African elites.
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. In that case we promise to drink more coffee to support the company.
4 comments:
Hello Redeem Ethiopia,
I thought your article is very informative and well done.
I am a coffee professional who actually changed some blend components of a big US based coffee roaster to use Ethiopian coffee. As a result, direct export of Ethiopian Djimmah coffee to US, specifically NE part of US has increased in the last two years by more than 90%. Actually, replacing other origin components by Ethiopian coffee gave the company an advantage of better quality and reduced the cost.
Keep the good work,
Cheers!
aleex@comcast.net
Well put. But it seems like we are all too quick to jump to conclusions when it comes to corruptions. As it is the case around the world, there are corrupt people in every facet of gevernemnt and business. That goes for all countries as well. But I do not see people arguing against trademarking of China, Israel, US, Saudi Arabia products. Depending on who you talk to, all these countries have corrupt leaders.
Westerns have exploited Africa under the guise of blaming corrupt leaders. It is about time we stop playing a part in it.
Good article.
I still wonder how the proposed geographical stamping factors in, and why it isn't thought of to be a good solution to the trademarking issue.
It seems that it would still allow for Ethiopian IP and insure absolute control of the product - but would fall more in line with other geographical specific known products, like 'Florida OJ' and 'Champagne'.
I also wonder where you heard that Starbucks would stop buying African Coffees, as I'd love to read that article!
Keep up the great work!
Ethiopia is pursuing a novel proposal created by Lightyears IP (http://www.lightyearsip.net/ethiopiacoffee.shtml ) in which the government of Ethiopia would trademark geographic names. These being the Sidamo, Harar, and Yirgacheffe coffee growing regions. After doing so, the government of Ethiopia would set up a global network of licensed distributors. The licensed distributors working with the government would then help determine the retail price of Ethiopian coffee and direct some portion of their proceeds to advertise and market the superiority of Ethiopian coffee versus say Colombian coffee. The goal of all of this being higher prices for coffee and happier, healthier coffee farmers.
I believe this novel approach, which is strongly supported by OxFam, is unworkable and that it will have the unintended consequence of harming the Ethiopian coffee industry, reducing demand for Ethiopian coffee, and thus hurt already poor coffee farmers and their families. The road to hell is paved with good intentions.
Geographic names are not trademarked. In fact it is not typically even possible to do so. We squeeze Florida oranges not Florida™ oranges and drink Burgundy not Burgundy™. NYC Mayor Bloomberg should move quickly to trademark “Brooklyn” to prevent Domino’s from further disparaging its fine history with their horrid new pizza. But, he won’t because the idea is absurd. Alas, the whole world is free to make New York cheesecake.
The government of Ethiopia has not succeeded at providing running water in more than 50% of its villages nor at paving many roads nor at much of anything actually. The country is a basket case, a disaster. It is laughable to suggest that this government is now ready to take on the task of setting up and managing a worldwide network of anything. In any event, it has more pressing issues that it should be focused on.
The government of Ethiopia is good at buying weapons including tanks and fighter jets.
http://en.wikipedia.org/wiki/Military_of_Ethiopia
It is also good at jailing, torturing and killing its opponents. It is corrupt and perhaps very, very corrupt.
http://www.amnestyusa.org/countries/ethiopia/document.do?id=ENGUSA20061116001
http://news.independent.co.uk/world/africa/article2251351.ece
http://en.wikipedia.org/wiki/Ethiopian_police_massacre
This corrupt government will now be managing coffee export and distribution. It is not hard to imagine that some of these coffee earnings could then be converted into more tanks, bullets, and bombs. Given the long history of corruption and theft in Ethiopia and most of Africa (see Nigeria), it is much harder to imagine any of the additional coffee earnings actually making their way to poor farmers. It would be extremely naïve to believe this.
OxFam and LightyearsIP must have this all figured out? Well, call me a pessimist but I don’t see a bunch of well armed military guys taking orders from some grad students at OxFam, 5,000 miles away. Does OxFam have a Mig or tanks?
The Lightyears/Oxfam scheme also injects another layer of cost and overhead into Ethiopia’s coffee sales. Costs that will need to be recouped before farmers even have the potential to benefit.
From a coffee buyer’s perspective, the plan makes Ethiopian coffee more difficult to purchase and sell than other coffees. Buyers are asked to sign a lengthy, onerous trademark licensing agreement. This makes buying other coffee easier and more attractive. This places Ethiopia at a disadvantage in the marketplace which is likely to lead to lower demand and lower prices. Not a good outcome for farmers.
Instead of the complex, unworkable and potentially lethal Oxfam/Lightyears scheme, I think Ethiopia should follow the tested and traditional approach of geographic certification. Florida oranges, Burgundy wines, Napa Valley wines, and Colombian coffee all have producers’ co-operatives that insure these products actually are grown and produced in their stated geographies. The co-operatives then pool some of their resources to promote their products to try and increase demand and thus prices. Juan Valdez, the Colombian coffee dude, and his burro are the creation of one of these co-operatives. Oxfam is essentially saying that all of these large, well established, proven co-operatives are wrong. I say their sales and the demand for these products prove they are right. The livelihood of Ethiopian farmers will hang on the outcome of this bet.
Creating new customers for Ethiopian coffee rather than attacking existing customers is likely to generate incremental demand and higher prices. Neither McDonald’s, Proctor and Gamble, Dunkin Donuts nor Kraft purchase any coffee from Ethiopia. They could. However, if you are the CEO of McDonald’s and you see the no win situation that Starbucks now has with Ethiopia are you really going to want to leap into the fray? This dispute is repelling demand. That is not good for farmers.
But hey Bush and Cheney are lovin’ it. OxFam is promoting a scheme that will in effect funnel money to a Bush ally in the horn of Africa with the funds coming from well intentioned liberal do-gooders while simultaneously attacking one of the most liberal companies in America and harming a major contributor to the Democrats.
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