A Subject Close To My Heart...

Starbucks, the coffee beans and the copyright row that cost Ethiopia £47m

Ashley Seager

Thursday October 26, 2006 The Guardian

Starbucks, the giant US coffee chain, has used its muscle to block an attempt by Ethiopia's farmers to copyright their most famous coffee bean types, denying them potential earnings of up to £47m a year, said Oxfam.The development agency said the Ethiopian government last year filed copyright applications to trademark its most famous coffee names - Sidamo, Harar and Yirgacheffe. Securing the rights to these names would enable the impoverished African country to control their use in the market and allow farmers to receive a greater share of the retail price.

The move would have increased its annual export earnings from coffee by 25%.But Oxfam said Starbucks, which enjoyed a 22% rise in annual global turnover to £7.8bn in the year to October, has acted to block Ethiopia's application to the US patent and trademark office. The USPTO has denied Ethiopia's applications for Sidamo and Harar, creating serious obstacles for its project.

Oxfam had a one-year cooperation agreement in 2004 with Starbucks which saw both provide support to coffee farmers in Ethiopia as part of wider attempts to reduce poverty in the country. But Oxfam now feels that the Seattle-based company's attitude is questionable. Phil Bloomer, Oxfam's policy director, said: "Starbucks has made some progress towards helping poor farmers in recent years, but their behaviour on this occasion is a huge backwards step, and raises serious questions about the depth of their commitment to the welfare of their suppliers. By acting responsibly, they could set an example for others by supporting Ethiopia's plan to help the 15 million struggling Ethiopian farmers who depend on coffee for their survival."

Fitsum Hailu, of the Ethiopian embassy in the US, added: "Struggling Ethiopian farmers should be able to realise a greater portion of the value our coffee commands on the international market. This project is innovative- and a unique opportunity for our farmers to be empowered in the arena of international trade."

Starbucks, whose annual turnover is equivalent to about three quarters of Ethiopia's entire gross domestic product, said in a statement it had never "filed an opposition to the Ethiopian government's trademark application". However, Ron Layton, head of Light Years IP, a Washington-based intellectual property rights organisation that is advising the Ethiopian government, said that in 2004 Starbucks had filed a trademark application with the word "Sidamo" to the USPTO. The USPTO then judged that Ethiopia's application a year later had to be rejected because the word was already the subject of Starbucks' application. When Starbucks' application lapsed this June, the US National Coffee Association, of which Starbucks is a leading member, objected to the Ethiopian application. NCA representatives admitted to the Ethiopians and Mr Layton that Starbucks had prompted their opposition.

"Intellectual property ownership now makes up a huge proportion of the total value of world trade but rich countries and businesses capture most of this. Ethiopia, the birthplace of coffee, and one of the poorest countries in the world, is trying to assert its rights and capture more value from its product. It should be helped, not hindered," said Mr Layton. Starbucks insisted, however, that it was committed to paying premium prices to producers in more than 27 countries and its purchases of Ethiopian coffee had grown by more than 400% in the past four years. It said it paid an average of $1.23 (65p) per pound last year, 23% above average market prices. Tadesse Meskela, head of the Oromia coffee farmers cooperative union in Ethiopia, was unimpressed, however. "Coffee shops can sell Sidamo and Harar coffees for up to £14 a pound because of the beans' specialty status. But Ethiopian coffee farmers only earn between 30p and 59p for their crop, barely enough to cover the cost of production.

"We sell organic coffee for less than £1 a pound but that pound can make 52 specials in coffee shops selling for £2 each, meaning the retailer is selling it for £104. The people who are producing this in Ethiopia don't have enough food, clean water or health centres. "Farmers are losing out while others in the chain are making huge amounts of money. That is hugely unfair." Ethiopia is continuing to pursue its trademark applications in the US. It is also asking Starbucks and other companies to sign voluntary licensing agreements that immediately acknowledge the country's ownership of the coffee names, regardless of whether they have been issued with a trademark.