Thursday, December 07, 2006
Revisiting Starbucks
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.
// posted by Redeem Ethiopia @ 12:36 AM 
