Decaffeinated Agreement - Starbucks and Ethiopia

Wondwossen Mezlekia

Wondwossen Mezlekia is the Seattle-based publisher of www.CoffeeMonitor.com

The trademark dispute between Ethiopia and Starbucks is deemed “resolved” to the satisfaction of both Starbucks’ executives and the Ethiopian Government. In November 2006, Oxfam, the international development and relief agency, launched the unprecedented global campaign in support of Ethiopia’s coffee trademark initiative against Starbucks, the specialty coffee giant. “For every cup of Ethiopian coffee Starbucks sells, Ethiopian farmers earn 3¢. Tell Starbucks: Honor your commitments to coffee farmers.” goes the campaign’s leading caption.

In June 2007, the parties announced that they have signed a confidential agreement and, in November 2007, they “turned the page of the misunderstandings, for a new beginning,” as put by Starbucks’ Chairman Howard Schultz, after his meeting with Prime Minister Meles Zenawi in Addis Ababa.

However, some questions still remain unanswered to the satisfaction of Ethiopian coffee farmers and their supporters, those activists around the globe who have been instrumental in forcing the multinational giant to par with one of the poorest nations in the world. Whether the reported agreement benefits the poor coffee farmers still remains an unanswered question. Whether or not Ethiopia has made the best out of Oxfam’s campaign also remains open to question.

Missed Opportunities

The catchphrase “For every cup of Ethiopian coffee Starbucks sells, Ethiopian farmers earn 3¢” contrasts the power and wealth of multinational coffee companies and the plight of poor coffee farmers across the globe.

Oxfam, a co-sponsor of the award winning documentary Black Gold, sought for years to create awareness of the injustices that exist in the global coffee trade. The organization has always been calling for a coffee market structure that will work for the poor as well as the rich. “Oxfam seeks to correct the imbalances of power at the root of unfair trade,” says Seth Petchers, Oxfam America’s coffee program manager. By highlighting the disparity that exists between coffee farmers’ struggle for barely hand-to-mouth living standards and multinationals’ huge profits, Oxfam hopes to create awareness among consumers. The Starbucks-Ethiopia dispute was one such opportunity for Oxfam but a threat for Starbucks.

Starbucks buys only less than 2 percent of the world’s coffee but it was targeted as a symbol of globalization along the lines of the world’s largest coffee companies Kraft, Nestle, Procter and Gamble, Sara Lee, and German’s giant Tchibo. The ubiquitous brand, which was generally perceived by the public, until the much publicized trademark campaign, as a new breed of socially responsible multinational was depicted as arrogant, exploitative, and insensitive to societal issues.

This left Starbucks rapt with quagmires opening ample opportunities for Ethiopia to negotiate a deal worth its forgone benefits.

Oxfam succeeded in bringing company executives to the table to negotiate with the Ethiopian Government towards terms that may be acceptable to both. Starbucks had no other choice but to give in. This is not surprising considering the gravity of the charges against the company. Unfortunately, Ethiopia’s Government has failed to see these opportunities.

Unfair Settlement

The age long exploitation of the farmers and the fact that Starbucks had worked to block Ethiopia’s efforts to register Sidamo as a trademark in the United States merit a meaningful compensation. But, the Government of Ethiopia and Starbucks’ executives have settled short of expectation even at standards of ordinary trademark disputes.

Ethiopia’s advisors managed to protest USPTO’s (United States Patent and Trademark Office) decision against the Sidamo trademark and the application has once again been pending as of October, 2007. It is not clear whether Starbucks’ agreement to sign a marketing and distribution partnership has so far played anything more than a public relations role. For instance, there is no sign of Starbucks promoting the coffee marks anywhere in its stores. Ten months after the hype, the farmers are still anxiously waiting to see what the agreement would bring for them.

During the 2007 Annual Meeting of Starbucks Shareholders that was held in Seattle on March 21, 2007, Chairman Howard Schultz said: “…I can only tell you that as we stand here before you, we are highly conscious and sensitive of the issues, and we will do the right thing that most importantly, at the end of the day, that will be pro-farmer....” Schultz’s message soothed investors who have been expressing their concerns over the company’s handling of Ethiopia’s trademark issues although whether that meant a change of heart or not remains to be seen. Schultz repeated his promise when he announced that Starbucks will open a farmers’ support center in Addis Ababa but details, including whether the center would be auxiliary to the one that is going to be built in Rwanda or a standalone regional center, are not disclosed.

As part of the negotiated settlement, and perhaps the only tangible outcome of the dispute, Starbucks also promised to cooperate in the country’s economic development efforts. Interestingly, the first of such economic cooperation benefits neither the coffee sector nor the impoverished coffee farmers: Starbucks is currently in talks with an Ethiopian apparel factory to manufacture the black apron worn by its coffee experts.

Lacking the competence or the resolve to stand up to the multinationals’ business acumen and public relations machinery is one thing; selling out the farmers’ interests is, however, unacceptable. Ethiopia could – and should - use any market based support to its development efforts. But, trading the coffee farmers’ interests for promises to benefit a non-coffee sector is unfair. The farmers have every right to ask whether the coffee trademark dispute was worth the fight in their name and what, if anything, has been achieved. And, all actors that have taken part in the coffee trademark conundrum ought to account for the burden of proof of an equitable settlement of the dispute.
_______________
Source: Washington Post, US