2006/06/09

Black Gold

I can't wait to see Black Gold, a movie about fair trade and coffee. But, in an effort to keep myself honest, let me state my opinion before seeing it, since it will surely change. So here we go..

Fair trade? Fair schmair! In trade, the only thing that's fair is the price you can get. Guilt about grower's poverty is only going to work on a minority of global buyers and therefore have a limited effect on the overall price. What is needed is an appeal to consumers desires, not their guilt. Desire is a very powerful thing that influences price dramatically. Just look at Starbucks. Here's something I wrote about this a while ago Digital Coffee (I don't feel bad about being too self-referential -- this is a blog isn't it? All about me).

What coffee growers need is brand marketing or something like that. Decommoditize the commodity. Then instead of the retailer getting 90% of the value, the source would get 90% of the value. The day rich consumers insist on House of Jimma Ethiopian Coffee, just like they do Godiva Belgian chocolate, or Emmentaler Swiss cheese, that will be the day of the rich coffee farmer.

8 comments:

  1. Ethiopian response

    Ethiopian coffees are not generic

    Mr. Rob Stephen
    President
    Board of Directors
    Specialty Coffee Association of America
    Long Beach, CA
    USA

    Dear Mr. Stephen,

    The Ethiopian coffee sector and its representatives abroad appreciate the Specialty Coffee Association of America (SCAA) taking an interest in Ethiopia’s efforts to improve the livelihoods of millions of coffee farming families and coffee sector workers. The Ethiopian Fine Coffee Trademarking and Licensing initiative, implemented by the Ethiopian Intellectual Property Office (EIPO), is an integral part of these efforts. Thus the purpose of this letter is to clarify the Ethiopian point of view on securing fine coffee trademarks in Ethiopia’s major export markets, and particularly our efforts in the U.S. I request that you provide copies of this letter to your members and other interested parties in the coffee industry to allow them to hear the Ethiopian coffee sector’s point of view on the dialogue initiated by your recent communication on this matter.

    On August 8th, 2006, SCAA issued a statement, Geographic Indications for the Origin of Coffee, on the Government of Ethiopia’s applications filed with the United States Patent and Trademark Office (USPTO) to obtain federal protection for the trademarks Sidamo, Yirgacheffe, and Harrar/Harar to identify coffee. The statement suggests that the terms Sidamo, Yirgacheffe, and Harrar/Harar are generic designations. This statement, we regret to say, did not fairly represent Ethiopia’s position, which is known to you but was not mentioned in the SCM statement.

    Before going into specifics, I would like to acknowledge and highlight SCAA’ s belief that all coffee has a story but that “the specialty coffee industry has stories worth telling.” The statement goes on to say that “while each story culminates in the experience of the cup, they all begin where the coffee was born. The names of these birthplaces of coffee have value, and should be properly protected.” I wholeheartedly agree. Moreover, every specialty coffee story begins with people in these birthplaces who perfect their crop and build reputations for their cherished beans. It is precisely their story that SCAA, I would respectfully point out, omit to tell in the statement.

    In moral terms and in business terms, Ethiopia firmly claims the right to own its coffee names and marks-including Sidamo, Yirgacheffe, and Harrar/Harar­which reflect the excellent reputations of Ethiopian fine coffees. These reputations for high quality and unique flavor are the result of hard work of generations of Ethiopian coffee farmers. Future generations of Ethiopians have a vital stake in Ethiopia’s valuable Intellectual Property. Misappropriation of these names and opposition to our efforts directly damage the prospects of Ethiopian coffee farmers, traders, and exporters receiving higher prices for their unique and high quality products.

    In your statement, SCAA bases the objections to Ethiopia’s efforts on the following:

    • “The World Trade Organization recommends using ‘certification marks’ for the protection of geographic indications of origin as a means of protecting the intellectual property rights of agricultural producers. This is also the position adopted by SCAA.”

    • “SCAA filed a permitted Letter of Protest with the US Patent and Trademark Office, requesting the application be given further review, and the mark be refused as generic under the appropriate sections of the Trademark Act.’”

    • As an example of a generic coffee name, SCAA refers to the name Java: “…mislabeling of coffees as originating from Java, in particular, was epidemic. More Java was sold to consumers than was ever grown and exported from that region of the world. This contributed to the word “Java” becoming one of the many synonyms for coffee. When a brand is so ubiquitous that it becomes generic, it is no longer a brand.”

    Considering the increased farmer income goal of EIPO’s initiative -which is being carried out with the participation of a wide range of Ethiopian coffee stakeholders including the unions of coffee cooperatives, coffee exporters, and the Government (representing the many farmers and workers who are not members of cooperatives) -Ethiopia’s position regarding SCAA’s objections is the following:

    1. Ethiopia filed applications for trademark registration with the USPTO in February 2005 for the Sidamo, Yirgacheffe, and Harrar/Harar marks.

    2. Trademark registrations for these coffee marks will confirm Ethiopia’s ownership rights in the marks and the goodwill associated with the marks as used by Ethiopia in connection with coffee. The u.s. trademark for Yirgacheffe has been granted, an important step forward that is highly valued by the whole Ethiopian coffee sector.

    3. In uniting the Ethiopian coffee sector through the trademarks and licensing the use of the marks, better terms can be secured from foreign distribution chains, providing farmers and workers with higher and more secure incomes; trademarks assist stakeholders secure a more level playing field with foreign buyers by increasing their negotiating strength;

    4. Trademark registration confers rights that go beyond the scope of rights associated with certification marks -the two do not accomplish the same goals;

    5. With all due respect, it is for Ethiopia to determine which form of ownership -trademark or certification mark -it wishes to pursue.

    6. The use of the names Sidamo, Yirgacheffe, and Harrar/Harar in the U.S. is very different from the use of the name Java. Kenneth Davids, the renowned U.S. coffee expert, author, and co-founder of The Coffee Review explains:

    As anyone with even the most rudimentary grasp of the cultural history of coffee in the United States must know, “Java” by the early 20th century became synonymous with “coffee” -any coffee. If a character in a mid-20th-century film asked for “A cuppa Java” every viewer knew that this character was asking for a cup of coffee generally, not for a cup of coffee from Java specifically. On the other hand, the Harar, Sidamo and Yirgacheffe have never come close to such general use. If someone entered a coffee house today and asked for a “Cup of Harar,” or Yirgacheffe or Sidamo, it would never enter anyone’s head to assume that the customer was asking for a cup of coffee generally.

    7. Through improvements in farmers’ incomes and the resulting increased investment, trademarks will help enhance and maintain the quality of the specialty coffees, protect the reputations and raise the awareness and profile of these coffees, thereby creating a win-win situation for farmers, importers and consumers. This will also meet the needs of coffee blenders and distributors in import destinations and above all the needs of consumers for high quality fine coffees.

    None of these positions were rushed or taken lightly; they are a product of extensive consultations with stakeholders and Ethiopia’s international partners. With legal support from the respected firm Arnold and Porter, the Government of Ethiopia has filed trademark applications in over 30 countries, including the U.S.

    As Ethiopia secures trademarks for the names of its fine coffees, the Ethiopian Intellectual Property Office has initiated a program to license the use of the coffee names to individual coffee companies around the world. These licenses, issued free of charge to coffee companies, will allow Ethiopia to work with the industry to build the value of its coffee brands. Several companies have been quick to confirm that they agree with our claim to ownership and they welcome greater brand security and brand management. To oppose an improved negotiating position by Ethiopia’s coffee sector is unnecessary and short-sighted, as an improved future for the sector will benefit specialty coffee importers and retailers in the U.S. and elsewhere.

    Moreover, it is important for SCAA to remember that having more income reach the producers leads to more investment in better production methods, which leads to a larger and even higher quality output of Ethiopian fine coffee.

    Other issues involved in the initiative:

    Having not had the opportunity to engage in dialogue on the issues raised in the SCAA communication before it was released, I would like to address a number of the points raised in the document, as well as some that were omitted, and offer Ethiopia’s perspective.

    The generic label

    We object to claims that Ethiopia’s trademark applications should be refused because the names Harar and Sidamo are generic terms. The Ethiopian position is that reference to any of these coffees, such as Harar or Sidamo, is still closely, associated with Ethiopia as the source of the coffee. International coffee distributors and consumers buy these coffees due to their unique flavors, aroma, high quality, and excellent reputations. The coffee names distinguish one coffee from another. This goodwill is the result of generations of Ethiopian coffee farmers perfecting their crop. Ethiopians claim the right to own this reputation the same way producers of many other products do.

    SCAA’s position on the generic nature of Ethiopian fine coffee names seems contradictory, against common sense. While it is urging Ethiopia to apply for certification marks, a form of ownership, SCAA is at the same time claiming that these names are generic and, similar to the term Java, unsuitable to be anyone’s property.

    Competition

    One of the factors that encouraged Ethiopia to pursue this initiative was the application by Starbucks Brands Inc. to trademark “Shirkina Sun Dried Sidamo”. While Starbucks made no attempt to claim exclusive use of the Sidamo name, had this application been granted, it would have been inconsistent with Ethiopia’s intellectual property rights. (Starbucks subsequently withdrew their application.) Ethiopia wishes to maintain ownership and control of coffee names which have been in use for many decades and which are associated with Ethiopia by those who enjoy specialty coffee.

    The role of the cooperatives

    The Ethiopian coffee farmer cooperatives represent many coffee farmers. This initiative has been supported by the unions of cooperatives since its inception, and that support continues. The film Black Gold focuses on the plight of Ethiopian coffee farmers and on the efforts that the unions of cooperatives are making to improve conditions. The Trademark and Licensing project is viewed by the Ethiopian Government as complementary to these efforts.

    Government takes no royalties

    The Government is not seeking to derive any license fees or royalties from the licensing programme and has made a clear policy commitment to that effect. This strategy is consistent with the Government’s investment at least $15m a year in the coffee industry, which is made without receiving any revenue other than modest inspection fees and export license fees paid by exporters. The brand management policies associated with the coffee names will be set by a stakeholder grouping similar to that which decided on the original trademarks to be secured. At every juncture in the evolution of this initiative the cooperatives were consulted.

    Finally, it is worth noting that Ethiopia has always seen the specialty coffee industry and the SCAA, as collaborators and partners in our Trade marking and Licensing Initiative. Ethiopia, due to its significant role in the history of coffee and coffee culture, has had a unique relationship with the international coffee industry. This should provide us with a solid platform for dialogue and exchange of advice and opinion. Ethiopian coffee farmers and workers themselves believe that Ethiopia, SCAA, and the specialty coffee industry as a whole, have too much in common to forgo an open dialogue on protecting Ethiopia’s valuable IP and empowering coffee farmers to grow and prosper with the rest of the industry.

    I greatly appreciate your interest in our initiative and welcome further communication on this very important issue.

    by EIPO and Ethiopian Embassy in Washington DC

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  2. This just in:

    The Government of the Federal Democratic Republic of Ethiopia and The Starbucks Coffee Company Joint Statement

    Feb 19, 2007
    The Government of the Federal Democratic Republic of Ethiopia and The Starbucks Coffee Company recognize their shared interests and responsibility in the sustainability and growth of the Ethiopian coffee sector. Strong partnerships between the Government, coffee companies, donors and other stakeholders are critical to the growth of the sector.


    The Government of Ethiopia and Starbucks have agreed to work together in their shared vision to increase Ethiopian farmer incomes and enhance the sustainable production of fine coffee. Both the Government of Ethiopia and Starbucks recognize that there may be differences in approach to achieving this shared vision. Starbucks respects the right and choice of the Government of Ethiopia to trademark its coffee brands and create a network of licensed distributors. Starbucks will not oppose Ethiopia's efforts to obtain trademarks for its specialty coffees--Sidamo, Harar/Harrar and Yirgacheffe--and its efforts to create a network of licensed distributors.


    Further, Starbucks has agreed to double its purchases from East Africa and will increase its purchases from Ethiopia. Starbucks will also provide technical support and capacity building to Ethiopian farmers through a Farmer Support Center that it will open in East Africa. The Farmer Support Center will be staffed with agronomists who will work with farmers to improve quality, yields and prices received. Starbucks will also expand its micro-credit facilities in East Africa to help farmers invest in their farms.
    Both the Government of the Ethiopia and Starbucks will continue to strengthen their partnership and engage in consultations on strategies to improve the lives of Ethiopian coffee farmers and their families.
    SOURCE: The Starbucks Coffee Company


    The Starbucks Coffee Company Christy Salcido, +1 206 318-7100 csalcido@starbucks.com http://www.businesswire.com/cnn/sbux.shtml or Ethiopian Intellectual Property Office Getachew Mengistie, +251 11 553 4969 Director General gmengistie@yahoo.com Copyright Business Wire 2007

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  3. Starbucks Reaches Truce With Ethiopia Over Coffee Licensing
    Dow Jones
    June 20, 2007: 04:43 PM EST

    SEATTLE (AP)--Starbucks Corp. (SBUX) and the Ethiopian government said Wednesday they will work together to promote three of the African nation's prized specialty coffees under a deal that supports the country's bid to win trademarks it believes will benefit farmers.

    The world's largest coffeehouse chain and Ethiopia's intellectual property office said their licensing, distribution and marketing agreement acknowledges the country's ownership of three coffee names - Yirgacheffe, Harar and Sidamo - regardless of whether they are trademarked.

    The deal will not reap Ethiopia any royalty payments, officials said.

    Last year, Starbucks refused Ethiopia's request that the company sign a voluntary licensing agreement saying the country owns rights to those coffee names even in countries where they are not trademarked.

    Instead, Starbucks said it wanted to help Ethiopia establish geographic certification for the coffee bean names, similar to the designations assigned to Washington apples or Hawaii's Kona coffee.

    Starbucks did not acknowledge to reversing course with the deal announced Wednesday.

    "This agreement is broader than agreements that have been proposed in the past," Sandra Taylor, Starbucks' senior vice president of corporate social responsibility told The Associated Press. "We are very excited about the opportunity to work cooperatively with Ethiopia in support of its coffee farmers."

    Ethiopian officials hailed the agreement as a win for coffee farmers, the companies that do business with them and consumers.

    "This agreement marks an important milestone in our efforts to promote and protect Ethiopia's specialty coffee designations," Getachew Mengistie, director general of Ethiopia's Intellectual Property Office, said in a statement released by Starbucks and Ethiopia. "Having the commitment and support of Starbucks will help enhance the quality of Ethiopian fine coffees and improve the income of farmers and traders."

    Ethiopia has won trademark rights for all three of its specialty coffees in some countries. In the United States, it has gotten Yirgacheffe trademarked, but trademark applications for Harar and Sidamo are still pending.

    U.S. consumers often pay top dollar for exotic coffees from Africa and other coffee-producing nations in the developing world, but many impoverished farmers struggle to make a living growing the beans that are eventually sold at Starbucks and other stores.

    The international aid group Oxfam has cited estimates that Ethiopian coffee farmers make between 60 cents and $1.10 per pound.

    Starbucks has not disclosed how much it pays for Ethiopian coffee beans, only that it paid $1.42 per pound on average for all the beans it bought during fiscal 2006, more than one-third higher than average commodities market price during the same period.

    Starbucks declined to speculate how much of a financial boost its deal with Ethiopia might give the country's farmers.

    "We believe, and Ethiopia believes, that having a greater ability to control distribution of the coffee and having these kinds of licensing agreements will over time lead to stronger demand and better pricing for their specialty coffees," Taylor said. "And that, of course, is going to be good for coffee farmers and their communities."

    Taylor said no other governments have approached Starbucks about lining up similar licensing deals. "Clearly, countries have different options available to them," she said, "and we'll address them on a case-by-case basis."

    In recent late trading Starbucks shares rose to $27.35 from the Wednesday close of $27.32, down 1%.

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