ETHIOPIA/UK: U.S. coffee shop giant Starbucks agrees with Ethiopia to sign licensing agreement recognizing the importance of the country's specialty coffee

Record ID: 454967

  • Title: ETHIOPIA/UK: U.S. coffee shop giant Starbucks agrees with Ethiopia to sign licensing agreement recognizing the importance of the country's specialty coffee
  • Date: 13th May 2007
  • Summary: BUSY STREET WITH TRAFFIC
  • Embargoed: 28th May 2007 13:00
  • Keywords:
  • Topics: Industry
  • Reuters ID: LVA9WPSACK8K8BSGOGS0CSCK4OA2
  • Story Text: Ethiopia, which prides itself as the birthplace of coffee, has been in dispute with Starbucks, saying the U.S. coffee shop chain had tried to block Africa's biggest producer from trademarking its best-known beans.
    The two sides have agreed in principle on a licensing, distribution and marketing deal that recognizes the importance and integrity of the nation's specialty coffee names, they said in the statement.
    Coffee drinkers in the oldest coffee shop in the country's capital, Addis Ababa, have welcomed the decision.
    "I really support the talks between Starbucks and the Ethiopians.. it will be important," said Pastor Yemanbrehan Endale, a long-time patron of the coffee shop 'Tomoco'.
    "Because of our poverty, they make business out of our natural gifts or natural resources. So, as the world already knows that Ethiopia is the owner of coffee, that the coffee plant have been seen in Ethiopia for the first time," said another patron, Ato Tesfaye Gudeta.
    In theory, trademark agreements could bolster incomes for Ethiopia's farmers by allowing the country to negotiate purchasing conditions for coffee roasters or retailers that want to use the names.
    "A study was made and the study showed that the best option for Ethiopia to secure protection for its coffee names and as well as to ensure long-term gains for the country is protection through trademarks. So the government insisted on applying for trademark registration and proposals were also made for Starbucks to agree with the proposal of Ethiopia," explained Ato Wondesen Belete, a representative of the Ethiopian Intellectual Property Office which released the joint statement with Starbucks.
    Aid agency Oxfam, which launched an campaign in October last year urging Starbucks to talk to Ethiopia directly on the issue, has welcomed the move, saying this deal could be worth some 88 million dollars to farmers.
    "Well, potentially this agreement could make a huge difference to some of the poorest farmers in Ethiopia," said Adrian Lovett, Director of Campaigns for Oxfam in Great Britain.
    "15 million people in the country rely on the coffee business for their survival, for their basic means of living and we think that this deal could be worth about 88 million dollars to those people in the way that they can increase the value of the coffee that they produce and the way it's marketed," he said.
    Poverty is dire in Ethiopia, where a quarter of its 80 million people rely on coffee. The average Ethiopian's yearly income, in purchasing power parity terms, is around $1,000.
    Starbucks has advocated a regional certification program to validate the quality and origin of the coffee beans. It has also called for a transparent system that shows the money is going back to impoverished farmers.
    Oxfam says this agreement would be consistent with the fairtrade ethic Starbucks has always promoted.
    "Well, we think a company like Starbucks has taken a lead in some important areas in the past, in some areas of ethical purchasing, encouraging a lot of fairtrade buying in its business. Now, we think that perhaps at first Starbucks took the view that this kind of step wasn't in its own interest. I think it seems pretty clear to us that in the long-term, it's in Starbuck's interest as well as Ethiopian farmers' interest, that the value of that coffee coming from that country is realised and the benefits of that value go to the people that produce it. Because if you haven't got those people producing that high quality coffee, then Starbuck's customers lose out in the end as well," said Lovett.
    The eyes of Africa will be on this agreement which could set a precedent for further deals within the continent. Oxfam says other African countries could benefit from following in Ethiopia's foot-steps by looking into trademarking.
    "It may well be that in the case of some West African countries, where cotton is a really critical commodity on which millions of people depend, that there may be something that those kinds of countries can do in looking at their own possibilities for trademarking. But, it is the kind of thing that is quite at an early stage and Ethiopia is certainly breaking new ground here", said Lovett.
    The parties are expected to formalize the details of the agreement and are due to sign it this month.
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