Starbucks tries to appease African coffee growers

The Ethiopian government has been making well-publicized efforts to internationally license the names of three of the country's best coffees so that poor farmer farmers could get more of the final selling price of the coffee they grow. Major international purchaser and retailer of coffee, the US company Starbucks, has resisted these efforts in US courts.

The East African Coffee Association recently held its fourth annual conference in Addis Ababa, Ethiopia in early February. Over 500 coffee growers, exporters, buyers and others involved in the coffee chain from across the world attended. Starbucks was represented at the conference by senior company officials.

Observers were eager to see if there would be a break in the impasse between the company and the Ethiopian government. Willard Haye, senior vice president of Starbucks delivered a keynote address to the conference, despite protests from activists advocating on behalf of poor coffee farmers in Africa.

Unimpressed Ethiopian commentators Shimelis Meressa and Tamrat G. Giorgis said Hayes "made no mention of the very subject that puts his company into a controversy with the host country. His company’s efforts in blocking Ethiopia from registering its coffee of Sidama and Yirgachefe was a glaring absence from his speech that focused on how much Starbucks is a company that cares for its employees and the farmers who are producing the commodity it markets in its 13,000 coffee shops around the world."

At a separate press conference, Hayes said although he would have no objections to Ethiopia’s bid to brand its coffee, Starbucks would not recognize an “Ethiopian trademarked coffee.” The company has decided not to oppose Ethiopia’s bid to register, but would not recognize it either. The best it could offer Ethiopia is to “help promote its coffee” and “create more demand.” The company's position has been that geographical indicators were better for Ethiopia than trademarks.


Despite the company's intransigence on this issue, Starbucks officials seemed eager to appease Ethiopian and other East African coffee growers, who constitute a small but growing proportion of world coffee production. Starbucks' international image has undergone a battering amongst consumers in important coffee-consuming countries over what some consider an unfair wielding of its market power to the detriment of small coffee farmers. The company has been eager to counter the damage, but without making any concessions on the issue that has brought about its public relations problems.

During the Addis Ababa conference, Starbucks announced that it planned to double the amount of coffee it purchases from East Africa. It now buys a little more than eight million kilogrammes of coffee from the region each year. “We have witnessed a rise in the quality of coffee produced in the region and this is why have decided to double the quantity purchased," said a senior company official. He said the region currently supplied less than 10 per cent of the total coffee purchased by the company in the world. He added that Starbucks was interested in projects that had a direct impact on the coffee farming communities, and would embark on farmer support centers as well as loan schemes.

Specialty coffee exporters are not impressed by these promises. Meressa and Giorgis write that the prices mentioned by Haye are not even half of the four dollars per pound that Ethiopians exporting to Japan are getting, according to an exporter who has his own farm in southern Ethiopia. “The question is not whether Starbucks is doubling its purchase,” said the exporter. “How much they are prepared to pay for it is what interests me.”

Ethiopia has won the support of its trademark claim from Africa’s top growers. “Make no mistake, [we] support Ethiopia because we are not only dealing with coffee but also with a wide range of products,” said Sindiso Ngwenya, deputy secretary-general of the 20-member Common Market for Eastern and Southern Africa (COMESA.)

The dispute is a classic example of the difficulty farmers face in getting a fair deal in a brutally competitive world environment in which market power disproportionately rests with a few dominant multinational companies.