Starbucks faces criticism on Ethiopian coffee deal

Fair trade

By MIRIAM ALTMAN | April 4, 2007

While Starbucks cultivates an image of social responsibility, the ubiquitous coffee merchant is under fire for what critics describe as giving a raw deal to small Ethiopian coffee farmers.

Oxfam, the international development organization, has led this fight because Starbucks has not supported the Ethiopian government’s effort to trademark the country’s three most profitable coffee brands, Sidamo, Harar, and Yirgacheffe. A company spokesperson says Starbucks “respects the right and choice of the Government of Ethiopia to trademark its coffee brands and create a network of licensed distributors,” and “[that] Starbucks will not oppose Ethiopia’s efforts to obtain trademarks for its specialty coffees.”

Oxfam, though, which has been a leading advocate for Fair Trade coffee, demands action, “To ‘not stand in the way’ is not enough for a company that is an industry leader,” says Helen DaSilva, a spokeswoman for Boston-based Oxfam America. The fair trade advocates want Starbucks to guarantee its support for Ethiopia’s trademark efforts.

While coffee is hugely popular, most US java junkies have little idea of how the choices they make as consumers affect the lives of small growers in Latin America, Asia, and Africa (see “A jolt with a difference,” News, August 20, 2004). Fair Trade practices seek to offer a decent wage to these farmers.

Ethiopia is one of the world’s major coffee exporters, and 40 to 50 percent of the country’s export income comes from coffee. Starbucks buys the three popular brands of Ethiopian coffee, which it sells for up to $26 per pound. However, according to Oxfam, the country’s coffee farmers receive only about 10 percent of these profits. Oxfam contends that the growers would realize an additional $88 million a year if the three top Ethiopian brands were trademarked.

The Ethiopian government’s quest for coffee trademarks began about two years ago, and Canada, Japan, and most of Europe recognize trademarks on all three brands. Only the Yirgacheffe trademark is recognized in the US, though.

In a 2006 news release, Starbucks says it has not supported the Ethiopian government’s trademark initiative because “signing a trademark agreement as Oxfam suggests will not help coffee farmers. In fact, it may hurt them if roasters stop purchasing Ethiopian coffees.”

While Starbucks “is committed to paying premium prices” for coffee, the company says it fears that raising the per-pound price of Ethiopian coffee will deter other roasters from purchasing it, causing a decline in sales and increased economic woes for farmers. The company says it also wants to know how potential extra funds from the trademarks will reach farmers before supporting the initiative.

Instead of signing the agreement, Starbucks says it has taken several other measures to support Ethiopian farmers, including working to make more affordable credit available to farmers, and providing funding to humanitarian organizations there.

Oxfam, meanwhile, still encourages consumers to demand that Starbucks support a trademark for the other leading Ethiopian coffee brands.