Ethiopia: Starbucks' Effort to Silence the "Big Noise"

By Kaleyesus Bekele

Addis Ababa, February 24, 2007 - More than 200 coffee farmers from different parts of Ethiopia recently came to Addis Ababa to sign a petition asking Starbucks to honor its commitment to Ethiopian coffee farmers by recognizing the country's ownership of its coffee names.

Tadesse Terro is one of them. "Just because I am a farmer, don't think that I don't understand what is happening in the global market," says Tadesse, who traveled from Yirgacheffe, 395 km south of Addis Ababa, to speak out. "I do listen to the radio and I know how much my coffee retails for overseas. The money I earn for my hard work does not come close," he added. Yirgacheffe zone, found in the Southern Nations Nationalities and Peoples Regional State, is known for its high quality coffee bean which the Ethiopian government is trying to trademark.

Coffee makes up to 40-50 percent of Ethiopia's export income. In the 2005/2006 fiscal year, Ethiopia exported 153,155 tonnes of coffee valued at 365,835,000 dollars. Fifteen million Ethiopians are dependent on the coffee trade.

The US global coffee chain Starbucks has been buying Ethiopian coffee for the past 35 years. Established in 1971 in Seattle, Starbucks operates 13,000 stores in 39 countries. Some 44 million customers visit its stores every week. Every year, the company buys over 290 million pounds of coffee from different countries valued at seven billion dollars. Last year, it purchased 295 million pounds of coffee, six percent of the total purchase was made in East Africa. Starbucks buys three percent of the coffee produced in Ethiopia. Out of the eight high quality coffee products the company sells in its stores, three belong to Ethiopia.

Starbucks has been trading Ethiopian coffee for over three decades and its business with Ethiopia has been going smoothly until Oxfam, international development agency, blew the whistle. When Oxfam launched a strong campaign for fair trade dubbed "Big Noise" it accused Starbucks of exploiting Ethiopian coffee farmers by offering least prices for their products. While Starbucks charges as much 26 dollars a pound for Ethiopian specialty coffees, Ethiopian farmers get only five to ten percent of that price. The company offers 1.42 dollars for one pound of coffee.

Last year, the Ethiopian government filed applications to trademark its most famous coffee names, Yirgacheffe, Sidamo and Harar. The government succeeded in getting recognition for its coffee names in many countries in Europe. It encountered a strong resistance in the US. Starbucks and the US National Coffee Association have opposed Ethiopia's request for trademark. Starbucks is a member of the US National Coffee Association and it reportedly lobbied against Ethiopian government request. Although it denies being behind coffee-industry lobbying against the Ethiopian government, Starbucks argues that trademarking coffee beans might introduce legal complexities that will deter firms from buying trade marked beans, thereby hurting farmers instead of helping them. The company favours a regional certification scheme.

The Ethiopian government has asked Starbucks to sign a trademark agreement that would give Ethiopia the ability to control the use of its coffee names, occupy a stronger negotiating position with foreign buyers, and capture a larger share of the market. The company did not accept the proposal.

Getachew Mengistie, head of the Ethiopian Intellectual Property Office, believes that securing the rights to these names would enable Ethiopia to capture more value from the trade. "By controlling the use of the names in the market, the country would be able bring more benefit to the farmers," Getachew said.

" Ethiopia is the origin of the coffee plant. Because of the climate and the nature of the terrain we harvest different coffees in different localities," says Birhanu Deyasso, manager of the Yirgacheffe Coffee Farmers Cooperatives Union. "The coffee produced in Yirgacheffee, Sidamo, Harrar and Limu have their own distinctive quality. Recognition should be given to these names," Birhanu argues. Tsegaye Annebo, manager of the Sidamo Coffee Farmers Cooperatives Union, shares Birhanu's view. "The names of the coffee beans should be registered and our ownership right should be recognized. We are supporting the government's effort. We hope that Starbucks will eventually accept the proposal," Tsegaye said.

Oxfam says Starbucks is depriving Ethiopian coffee farmers of 90 million dollars a year by opposing the Ethiopian government's effort to trademark the local coffee beans. To force Starbucks to sign the trade mark agreement Oxfam waged a strong campaign. More than 90,000 people in 70 countries have joined the campaign by signing a petition.

The campaign compelled officials of Starbucks to start talks with Ethiopian authorities. Last December, Starbucks' chief executive, Jim Donald met Prime Minister Meles Zenawi in Addis Ababa and discussed the issue. But no deal was reached. Another Starbucks' delegation last week came to Addis Ababa to participate at the fourth African Fine Coffee Conference. Addressing the Conference, Dub Hay, senior vice president for coffee and global procurement, said that Starbucks allocated one million dollars to help coffee farmers in east Africa. Starbucks has provided 500,000 dollars to Care Ethiopia to support its adult literacy programme. The company will open a farmer support center in East Africa, which will provide training and agronomy assistance directly to coffee farmers. Mr. Hay said his company has increased the price it offers for a pound of coffee from 1.28 dollars to 1.42 dollars adding it will double its coffee purchase in the next two years.

Starbucks has hired a private consulting firm, Whitaker Group, founded by Rosa Whitaker, the former assistant US trade representative for Africa. Whitaker, who served the Clinton administration, was one of the persons who drafted the AGOA bill. Now she is helping Starbucks in resolving the tussel with Ethiopia.

Starbucks delegation, which comprises three senior executives, met Ethiopian officials of the ministries of agriculture and rural development, trade and industry, finance and economic development as well as the Intellectual Property office. Upon the request made by Whitaker, officials of Starbucks for the first time met the press. At the press conference held last Friday at the Sheraton Addis representatives of Starbucks announced that they will not oppose Ethiopia's effort to trademark regional names for its coffee beans.

The representatives stated that they had agreed to work with the Ethiopian government to promote Ethiopian value added products like tea and textile and to continue the ongoing dialogue. Representatives of Starbucks did not agree to recognize the regional names. "We have not agreed on that. What we have agreed to is not to oppose the Ethiopian government's right to pursue trademarking for its regional names," Dub Hay told the press conference. "We agreed how we can help to promote Ethiopian products in our stores and to continue the dialogue. Nothing has been signed. We did not come with the mission to reach an agreement," Hay told local and foreign journalists. "It is Ethiopia's absolute right to take the course they think is best for Ethiopia and we will not oppose that," he affirmed his company's current position."

Anne Saundres, senior vice president for global brand strategy, said that Starbucks does not want to fight, adding that the company wanted to work together in spurring economic development. Asked what would happen if Ethiopia succeeded in trademarking its regional names for its coffee beans, representatives of the company said they did not know the implications, adding that speculations could harm the ongoing dialogue. Concerning Oxfam's claims which stated that Starbucks was depriving Ethiopian farmers of 90 million dollars, representatives of the company utterly denied the statement. "I never heard the Ethiopian government filing such claims. This has been said by another party. I don't know where that number is coming from," Hay said. "We are concerned how much trickles down to the farmers. The auction system in Ethiopia has some problems. In many cases there are people in the middle who have kept too much of the pie. We would like to see more of that to get down to the farmer," Hay added.

Source: The Reporter