Greed: Starbucks Brand

As we have all heard recently there is confrontation between Ethiopia and Starbucks about ownership of trademarks of certain specialty Ethiopian coffee beans. The Ethiopian side of the argument is that these specialty beans are grown and prepared to very high and stringent standards, and therefore trademarking them in the US is legitimate. Starbucks counters that the names only refer to place of origin and as such should not be trademarked but identified with geographic information of origin. However, it seems Starbucks did not have the same convictions when it applied to trademark the name Sidamo with the USPTO a little over a year ago.

Trademarking coffee is not something new. The Jamaican Blue Mountain Coffee has been trademarked for years now, and its farmers have been able to extract a significantly higher proportion of the final selling price. Just compare their 45% share to that of the Ethiopian farmers’ 5-10%.

Starbucks’ veiled threat that this arrangement will hurt Ethiopian farmers is very objectionable. The company is basically threatening that unless it gets its way, it could stop buying Ethiopian coffee. Outside of undue greed however, there is no economic reason why trademarking would stop Starbucks from buying these coffee beans. If the demand for gourmet Ethiopian coffee is high, then Starbucks will pay a fair price by dealing with a more consolidated supplier. If the demand is low, then Starbucks has nothing to fear because the trademark holder will still negotiate prices that the market dictates. The only aspect that is different here is that Starbucks can not depress prices by using its enormous buying power despite actual demand. In other words the supplier gets a fair degree of control.

There is another side to this story however, and that is the local issue. Getting the Trademark will enable the holder to dictate which farmers and cooperatives qualify to sell their beans under these names. The Ethiopian government has not said who will hold the trademark and administer the standards explicitly. The challenge is to avoid favoritism from the process. To this end, we would encourage the administrators in Ethiopia to keep the certification process open to public scrutiny and to ensure that production stays in the hands of small farmers. This is a local issue, one that can not be solved by letting Starbucks dictate how Ethiopia’s premium coffee is marketed.

Going back to the international dispute, Starbucks’ own defense of its position is very telling. Rather than saying why trademarking is bad for the Ethiopian farmer, its claim is centered on painting a picture of poor farmers to whose rescue it has come. It makes a point that it built a bridge and even got involved in a few irrigation projects. But that ignores the more important point that fair prices would have enabled the farmers and cooperatives to build these bridges or develop the irrigation schemes for themselves. In any case, trademarks should not dissuade the company from genuinely helping if that is in its interest. But charity certainly can not replace dealing fairly in trade.

Until Starbucks decides to stop acting like a bully, we have decided to no longer be their customers. We hope you will do the same.

Losing The Horn

These days it is easy to conclude that the US is losing the horn. This loss has many dimensions, the most important of these pertaining to influence in the political, economic and military spheres. This thesis assumes that the US supports, in its national interest, the growth of the region in order to develop viable economies that its businesses can leverage in a sustained manner*.

The vast majority of the population in the horn presently believes that US policy in the region is misguided. This political deficit translates into lost investment and development opportunities when people progressively lose hope and exert their energies away from productive activities towards finding means of escape. Finally this makes violence and suffering tolerable to those determined souls creating a security nightmare that turns into military confrontations.

This is not simple theoretical hyperbole. We are witnessing the phenomenon unravel in the horn as we write. It is not too far from the truth to say that the only full hearted supporters of US policy in the region have dwindled down to die hard TPLF supporters. This should scare the wits out of US policy makers as the quality of that support is questionable because it is based on fear of impending loss of undeserved privilege.

The rest of the people in the region are waiting to see if the US will finally side with the desires of regular folks and allow for relaxation, and maybe even resolution, of TPLF induced tensions. This affects issues ranging from internal Ethiopian persecution against political dissent to the border tension with Eritrea and the Somalia debacle. In short, the TPLF has become a liability in this project of globalization by pursuing policies that inflame populations and keep peace at bay.

At the urging of the sparkling blogger ET Wonqette we started reading the book authored by the US trained economist Berhanu Nega who is currently in an Ethiopian prison for his political views. The answer for US policy makers to the horn’s conundrum was glaring out of the first chapter. Adopting democratic systems in the region will very likely prevent the present explosive condition from recurring if the present unstable episode passes safely. Democracy starts at home however so we ventured to guess at what regular folks from the region would answer to the question of what needs to be done first to bring about democracy.

Will it come as a surprise to anyone if regular Ethiopians, Eritreans and Somalis said that the TPLF has to go before they can start negotiating with each other and amongst themselves on how to democratize their societies peacefully? If this was to be true, and it would take minimal effort on the part of policy makers to verify the validity of this assumption, then would that not signal that it is time for the US to stop supporting the TPLF?

Such gnawing questions are crying out for urgent answers. Regional collapse, destitution and intractable wars, with a religious tone at that, can not possibly be good for US driven globalization. Even the war on terror can only be useful to US interests if people of the horn believe it is directed at terrorists and not at their fundamental democratic rights. If not revised, the current path followed by US policy makers can easily create a region that is highly averse to US interests, perhaps even giving birth to African Chavismo.

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*The reader may retort that this is precisely the definition of colonialism. Being diasporas and interested in the furtherance of our host nation’s global interests, we will not acknowledge such associations and instead call the present arrangement by its proper name: Globalization. That is why we preferred the use of the term ‘leverage’ instead of ‘exploit’.