The Global Coffee Crisis, the Current Starbucks/Ethiopia

"Patent & Trademark" Controversy and the absence of the Ethiopian Diaspora from the Discourse

Global Coffee Market and Coffee Crisis

Coffee is one of the most highly traded commodities in the world, second only to oil. The trade of coffee generates $80 billion every year in the global market, and that amount is growing.

In 2001, coffee prices on the global market hit a 30-year low, and a humanitarian crisis ensued for the 25 million coffee farmers and families around the world, including many in Ethiopia. The fall in revenue has affected the income small farmers earned for the 'fruit of their labor" As a result, the farmer are unable to send their children to school and could not afford to pay for their basic needs. However, from the retail sides demand for coffee has risen and the coffee industry has shown remarkable profit. For example, Starbucks, an 8 billion dollar a year company, was able to sell Ethiopian Harar coffee for $26.00 per pound, whereas the farmer only received between $0.60 and $1.10 per pound and only 3 cents goes to coffee farmers for every cup cappuccino Starbucks coffee sales for $3.00. Coffee prices have risen a little recently, but hard working coffee farmers continue to work relentlessly, receiving minimal profits for their crop, while coffee companies and corporations are bathing in earnings.

International Development Discourse and Movement.

The coffee crisis is only one fragment of the many crises including political conditions that have crippled economic growth in developing nations, especially in Africa, trapping them in alarming poverty. Compounding the problems is the rising brain-drain of African professionals (skilled and non-skilled) to the Middle East, Europe, and North America in search for a better opportunity.

This escalating trend is depleting the human resources of the developing nations at a startling rate, According to the International Organization for Migration (IOM), Africa has already lost one third of its human capital and is continuing to lose its skilled personnel. There are over 300,000 highly qualified Africans in the Diaspora, 30,000 of them with PhDs. Ethiopia ranked first in the continent in terms of rate of loss of human capital and have lost about 74.6% of its human capitol between 1980 and 1991 alone and since then the trend has continued. 

International and regional government and nongovernmental development organizations have recognized the intricate impact of the many crisis and calamity of the situations and have put forward several programs and proposals to tackle global poverty. The UN instituted the Millennium Development Goals (MDG) which proposes total cancellations of debt owed by these developing nations, plus a $160 billion annual aid package to alleviate the crises and eradicate poverty by 2025. The World Bank, IMF, and other international lending institution have agreed to cancel some debt as well, and are making new aid packages and fresh loans available.

From the private sector, prominent world leaders such as President Mandela and President Clinton contributed greatly in bringing attention to the global poverty. Major philanthropic organizations, such as the Bill Gates Foundation, have funds available in billions to help research and build programs engaged in alleviating and eradicating poverty and related calamities. Rock star Bono and many other celebrities have begun a high profile world wide campaign, NOW.org, to create massive public awareness and galvanize support for efforts to eliminate poverty.

Current Starbucks/Ethiopia "Patent & Trademark" Controversy

In 2001, in response to the coffee crisis, Oxfam International, Global Exchange, and other advocacy NGOs, initiated a multi-national campaign to bring global awareness to the problem of the coffee crisis. The campaign has created a massive global public awareness and international support to the "Fair Trade" market and put forward a set of recommendations to government officials, the coffee market and coffee consumers to expand the Fair Trade market. In response to this campaign, the US Senate and the House of Representatives have recognized the severity of this crisis, naming it "Silent Mitch" after the Hurricane that wrecked havoc in Latin America and have subsequently passed resolutions to tackle this predicament.

Black Gold, an internationally acclaimed documentary film about coffee, featured in the Sundance and Human Rights film festivals in 2005, examines the workings of the World Trade Organization (WTO) and connects the dots of global coffee market and makes a profound statements that if Africa's share in world trade could increase by just one percentage point, it would generate $70 billion a year, five times the amount the whole continent receives in aid.

Light Years IP (LYIP) is an NGO established to assist developing countries by urging producers to gain ownership of their Intellectual Property (IP) and to use IP to increase export income. In 2005, LYIP assisted Ethiopia in registering trademarks for the coffee names Harar, Yirgacheffe and Sidamo in 40 countries. The trademark has been secured in 30 of those countries.

Unfortunately, the U.S. is not one of these 30 countries. The U.S. Patent and Trademark Office (USPTO) have informed Ethiopia that Starbucks has already registered a product title that conflicts with the names Ethiopia sought to trademark. In February 2006, Ethiopia offered Starbucks a royalty-free license to use the names in exchange for giving Ethiopia ownership over the names. Starbucks rejected the offer. In June 2006, the National Coffee Association of USA (NCA), on behalf of Starbucks, filed a letter of protest to the USPTO to stop Ethiopia's trademark application from being further processed. What needs to be understood is that Sidamo, Yirgacheffe, and Harar beyond being a place of origin for the finest coffee in the world, are also regions with populations that have vast social, cultural, and economic resources, engaged in multiple ways of life in Ethiopia.

In order to be successful in today's global market, developing countries have to add value to the raw, unfinished, agricultural products that they export, and can further maximize earning by securing IP rights for their products. The coffee that comes from Ethiopia is so highly recognized around the world that having ownership over the names Sidamo, Yirgacheffe and Harar would greatly increase the revenue generated by Ethiopia. According to LYIP, currently, the Ethiopian coffee sector captures only 6% to 10% of the fine coffees' retail price, barely covering the cost of production. Compare that to Jamaica, whose Jamaican Blue Mountain Coffee is able to win 45% of the retail price for the country. Oxfam has made the claim that if Starbucks would sign the agreement to give Ethiopia its rightful ownership over the names, an additional $88 million would flow into the Ethiopian economy.

The role of the African Diaspora in the International Discourse

While all the campaigns, efforts, and the financial resources currently being dedicated to tackle poverty and alleviate the crisis are important and can make a significant contribution, it is the very people from these developing nations, including those living in the Diaspora that should play a critical role in the international development discourse and campaigns. Ultimately, long lasting sustainable rehabilitation and development can only come about if the resources of the African Diaspora are galvanized and invested to help businesses from developing countries to compete in global fair trade. "Fair Trade not Aid" is a viable solution that has not yet been given the support it needs by the African Diaspora, who has the most vested interest, financial resources, and knowledge. It is high time for the African Diaspora not to join the international development discourse, but to assume the leadership role. 

For example, if 10% of the five-million Ethiopians living abroad were to spend $10,000 a year for two years consuming Ethiopian made products and investing in Ethiopian businesses, that amount of money directed towards Ethiopia would amount to $10 billion dollars. This is equivalent to the sum of the earnings that the 74 million people in Ethiopia make from the global market, for the next 20 years, assuming all things remain the same and the crisis does not worsen.

In the case of the Starbucks vs. Ethiopia patent and trademark controversy, the billion dollar question is not only what Starbucks decides to do, but also when the Ethiopian Diaspora, the sleeping giant, will rise to overcome the challenges that we are currently facing by making business investments to increase the number of shares of Ethiopian coffee in the world market.

Abol Coffee serves to give the Diaspora this opportunity by connecting Africans directly to the global market. Abol believes that the real solution to the current crisis lies in channeling the purchasing and investment power of the Diaspora in the right direction. If, for example, we presume that 3% of the Ethiopian Diaspora frequents Starbucks four times a month and spends $2.50 per visit, the total amount of sales equals $1.5 million a month, and $18 million a year. This is a huge amount of resource going to the Starbucks Corporation, and a step backwards in our fight. As Africans, we ought to recognize the massive opportunity to redirect our purchasing power and invest in those African businesses that compete with corporations like Starbucks in the global market. With companies such as Abol, Africans are able to directly contribute to the rehabilitation and development of their countries.

Abol Coffee, from the farm to the cup & back to the farm

Abol Coffee Inc. is the result of three years of market research with the support of a diverse team of prominent scholars and experts in international finance, economics, trade, and marketing. The research method included face-to-face interviews with Ethiopian coffee farmers and cooperative unions, community leaders in Ethiopia and in the Diaspora, US Congress, US food retailers and distributors, and other trade related governmental and NGO officials.  It is a socially responsible business concept, summed-up by the phrase "from the farm to the cup… from the cup to the farm", which resonates at multiple levels. By working in partnership with three Ethiopian coffee cooperative unions with approximately 300,000 small coffee farming members who will be stakeholders, Abol Coffee Inc. seeks to advance business as a solution for the Global Coffee crisis. To bring light to the rich Ethiopian coffee tradition and culture, Abol Coffee Inc. plans to open its first cottage coffee shop in the Washington DC area and bring the Ethiopian coffee culture directly to consumers.

Abol Coffee Inc. recognizes that the global coffee crisis is only one of the many problems that our world currently faces. However, the partnership of the Ethiopian Diaspora with Abol Coffee Inc. to help this crisis in Ethiopia can serve as a model of the power of social responsibility to the rest of the world.

Tebabu Assefa and Tamiru Degefa

Founders of Abol Coffee Inc.