Trade: Starbucks delays Ethiopian bid to trademark coffee

If approved, the trademarks on Ethiopia's fine coffees could generate billions of dollars for the country's poor farmers.

Ethiopia exports significant amounts of coffee, yet its coffee farmers still live in abject poverty. In regions such as Sidamo, Harar and Yirgacheffe -- familiar names to coffee fans around the world -- many Ethiopians earn less than $2 dollars a day.

Why? Because farmers receive only a fraction of the price that their prestigious coffee fetches in cafés and shops in the developed world.

The Ethiopian government filed applications in 2005 to trademark Sidamo, Harar and Yirgacheffe as coffee brands in the European Union, Canada, Japan and the U.S.

"Ethiopia wants more control over the distribution of fine coffee. Ultimately prices will get better," said Gail Warden, press secretary at Ethiopia's embassy in London.

During the next two years, European companies will be invited to become part of a network of distributors and promoters.

"We think the potential for this type of strategy is huge," said Ron Layton, founder and executive director of Light Years IP, a Washington-based nongovernmental organization that has been assisting Ethiopia with its applications.

The organization is preparing a report for the British government, due this autumn, that will show that impoverished African countries have a lot to earn from innovative ways of selling everything from agricultural products to batik designs.

"The report indicates that the potential is in tens of billions of dollars in the future. Other African countries may need other strategies than Ethiopia, but the goal is the same," Layton said.

In Ethiopia, the proposed trademarks provide the country with exclusive rights to identify coffees as Sidamo, Harar or Yirgacheffe.

This should give Ethiopia's fine coffee stakeholders some control over use of the brands in consumer markets, strengthening their position in negotiations with buyers and marketers. And it reduces control by multinationals that often want to pay as little as possible.

"Fine coffee pricing doesn't mean life or death to these companies, but it does to the farmers," Layton said.

"Ethiopia needed to move as quickly as possible in trademarking the names as a certain company wanted to take control of one of them," he added.

That company is Starbucks, a multinational coffee chain with 13,000 stores and a self- made image as a champion of poor farmers.

One of Starbucks' Sidamo coffees sold for almost 58 dollars per kilo last year in the U.S. However, the farmers that grow it received only 1.30 dollars per kilo, or 2.2 percent of the retail price, according to a member of a Starbucks workers union who went to Ethiopia to investigate.

Ethiopia's applications received a green light in the EU, Canada and Japan in 2006, but in the U.S. they have resulted in a high-profile battle due to opposition from Starbucks.

Last October the nongovernmental group Oxfam accused Starbucks of pushing a U.S. lobby group called the National Coffee Association to issue objections to the body responsible for trademark applications.

This has resulted in delays for the Sidamo and Harar applications as the complaints are considered. Yirgacheffe was accepted last June, allegedly before Starbucks had a chance to act.

Starbucks responded to the Oxfam allegations by insisting that trademarks would damage Ethiopian farmers. It suggested that Geographical Indication certificates, or GIs, would be more useful.

GIs are names or signs used on products that refer to a certain geographical location, and have a long history in places such as France, where Roquefort cheese was regulated by a parliamentary decree in the 15th century.

Official GI certificates protect products as long as its characteristics are a result of the particular qualities of that region, such as agricultural conditions.

While GI certificates and geographical trademarks have steadily expanded on the European scene since the mid-1990s, developing countries are also getting in on the act.

Colombia, Costa Rica, Indonesia and Guatemala have all registered coffee GI certificates or trademarks. Ethiopia is the first African country to do so.

Starbucks' claim has highlighted differences between GI certificates and geographical trademarks, which are often confused, raising questions as to which approach might be most useful to farmers in developing countries.

A trademark is a sign used by an enterprise to distinguish its goods and services from those of other enterprises. The owner can exclude others from using the trademark. GI certificates are different in that they allow anyone to make the product as long as it is being produced in the geographical region and has the same qualities.

On his Web site, marketing professor Douglas Holt of Oxford Saïd Business School points out that this means that GI certificates do not give Ethiopia's coffee coalition control over coffee prices by having exclusive rights to the names, but only protect them from being used by copycats or counterfeiters.

Western companies such as Starbucks would still be able to negotiate prices with individual farmers. With trademarks, Ethiopia can prevent this, giving it a stronger negotiating position.

Ethiopia decided that trademarking is in the farmers' best interests, Layton said.

"The GI certificate route would not change their rather unfavorable economic position, and would take a lot longer. In fact it would be almost impossible as Ethiopia does not have plantations," Layton told IPS.

With trademarks the Ethiopian fine coffee sector can join forces and exert commercial control over distributions and licensing, potentially coffee producers to increase prices over time in cooperation with licensed marketers.

Yirgacheffe, the coffee that Ethiopia managed to get past the U.S. trade marking authorities, has already been licensed to several companies.

Green Mountain, the second largest fine-coffee distributor in the country after Starbucks, enthuses on its Web site, "A cafetiere of Yirgacheffe is a treat for the soul."