Ethiopia and Starbucks reach licensing agreement

One of my friends once said, "Starbucks is evil." Well... they're far from the worst company around, although they could improve their purchasing practices significantly.

Ethiopia had been seeking to trademark Ethiopian coffee, arguing that this would enable their farmers to charge higher prices - and mind you, coffee farmers are not exactly gouging the rest of the world by charging high prices. Starbucks was earlier reported to have opposed that deal, and for some reason I didn't post this on my blog.

Now, however, Ethiopia and Starbucks have reportedly reached an agreement of some sort. BBC has a brief report dated May 3.

The two sides agreed in principle to sign a licensing and marketing deal which recognises the importance of Ethiopia's speciality coffee beans.

Cultivation of the coffee bean first began in Ethiopia, and the country has been seeking to trademark its best-known coffee beans.

However, US officials have argued that the plan is not economically viable.

Ethiopia and UK charity Oxfam claimed Starbucks was attempting to block plans by the African nation to trademark its Sidamo, Harar and Yirgacheffe coffee beans.

But the coffee chain giant denied initiating opposition to the trademark application, insisting the decision to do so was taken by the US National Coffee Association (NCA).

The NCA had warned that if Ethiopia succeeded in obtaining the trademarks, it may price its coffee beans uncompetitively high.

'Positive change'

Ethiopia hopes to substantially lift the income of its coffee farmers through the trademarking plan.


"The eyes of Africa will be on this agreement, which could even set a precedent for further deals beyond Ethiopia in the future."
Oxfam

The poverty stricken country is heavily reliant on coffee bean exports, and about a quarter of its 80 million people are involved in the industry.

Oxfam welcomed news of the licensing agreement between Ethiopia and Starbucks, adding it could add momentum to the country's trademarking project.

"This action by Starbucks could represent a huge step towards a real positive change for the 15 million Ethiopians who depend on coffee for their livelihood," the charity said.

"The eyes of Africa will be on this agreement, which could even set a precedent for further deals beyond Ethiopia in the future."

Some trade groups argue that this new agreement will force them to raise coffee prices to an uncompetitive level. Of course they would say that. But, perhaps they have a point. Businesses are smart, and will no doubt find other areas to reduce costs, but if coffee prices went up significantly, would we in the West, who are used to cheap coffee, still pay? Or, what if it meant that the wages paid to baristas went down?

For me the answer is clear. Pay the coffee farmers a fair price that enables them to provide for their families, and which will enrich their local economies. After that, we can work the rest of the details out.