Ethiopia Pushes Plan to Boost Coffee-Farmer Profits

Oxfam says Starbucks is hurting Ethiopia's coffee farmers. The country hopes to make more money for its coffee farmers by trademarking the area's legendary coffee beans. Many in the U.S. coffee industry, including Starbucks, say the Ethiopian plan is naive and will hurt the farmers.

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MADELEINE BRAND, host:

This is DAY TO DAY. I'm Madeleine Brand.

Coming up: A dispute over who wrote a classic pop song that may go all the way back to Bach. First, a dispute over coffee.

The Ethiopian government along with several advocacy groups has called for changes in the global coffee market. They want poor coffee growers to be paid more money.

Starbucks doesn't agree, saying the Ethiopian plan is naïve and will hurt farmers. NPR's Adam Davidson reports.

ADAM DAVIDSON: There is one thing, maybe only one thing, that everyone involved agrees on: Ethiopian coffee is among the best in the world. Coffee was first domesticated in Ethiopia thousands of years ago and beans there have a distinct smell and taste. There is just about no agreement on anything else. Take the fundamental issue: Are Ethiopian coffee farmers in desperate straights?

The man in charge of buying coffee for Starbucks, Dub Hay, says no. Starbucks has made sure they're happy.

Mr. DUB HAY (Senior Vice President for Coffee, Starbucks): We need them to stay in business; we can't sell high quality coffee that doesn't exist.

DAVIDSON: And you feel it I went and visited the Ethiopian coffee farmer they'd say Starbucks doesn't need to change anything.

Mr. HAY: I have no doubt, none at all. In fact, it is the farmers who love us most.

DAVIDSON: Hay points out that Starbucks has donated about $200,000 in aide to Ethiopian farmers over the past few years. He says the marketplace for Ethiopian coffee is about right. Gatacha Mongstay(ph) says he's wrong.

Mr. GATACHA MONGSTAY (Ethiopian Government Official): The Ethiopian farmer, I would say he is leading a miserable life. He may have no penny to buy food.

DAVIDSON: Mongstay is the Ethiopian government official in charge of a new project to improve the lives of Ethiopia's 15 million coffee workers. He says they and their families are hungry much of the year. They can't send their kids to school or buy shoes.

Now it's hard to argue that their poverty is Starbucks' fault. Mongstay acknowledges that much of Ethiopia has a famously corrupt and incompetent government. It's still recovering from a brutal civil war.

Starbucks and other coffee buyers are doing what every company does - buying a product at whatever price the market determines. And that is what Mongstay wants to change. He wants to transform the coffee marketplace to increase prices, at least for Ethiopian beans. He got the idea from Ron Layton, who founded Light Years IP, an activist group.

Mr. MONGSTAY: When Ron brought this idea and we discuss it, think it is a very brilliant which will really make an impact in changing the lives of millions of improvised Ethiopian farmers.

DAVIDSON: Layton's idea is this. Ethiopian coffees are worth a lot in rich countries. They sell for $10, $15, even $25 a pound. But wholesale coffee is sold in Ethiopia at low commodity prices, around a $1.25 on average.

Layton and Mongstay decided that Ethiopia needs to find a way to capture their coffees' intangible value. That brand identity that makes a can of coke worth a lot more than a can of RC Cola. Ron Layton says they decided to start with Ethiopia's' best coffee, Yirgacheffe.

Mr. RON LAYTON: Whereas all of the benefits of the intangible value of Yirgacheffe disappearing to the foreigners.

DAVIDSON: Ethiopia recently trademarked the name Yirgacheffe, so now no coffee retailer can legally mention that that are selling Yirgacheffe without a license from the Ethiopian government. That license carries some responsibilities. They have to promote the coffee. One day the license might require retailers to pay more for the bean. This is a radical change. No other coffee region name is trademarked. No country tries to control the retail sale of its raw product. Robert Nelson, who runs the industry group The National Coffee Association, says the idea is nuts.

Mr. ROBERT NELSON (President, National Coffee Association): Trademarking will hurt the Ethiopian coffee farmer because it will reduce the value of the coffee, it will reduce the demand for the coffee.

DAVIDSON: Nelson says retailers will just avoid Yirgacheffe. They can just as easily buy coffees from Kenya or Yemen or somewhere else. In fact, they can buy Ethiopia's other great coffees - Sidamo and Harar - without any sort of license. Ethiopia tried to trademark those names, but Nelson's group blocked the trademark request.

Mr. NELSON: And I should point out the consumer recognizes the region Harar and they recognize the region Sidamo, because U.S. roasters actually use those words and educated the public and created value in those words.

DAVIDSON: Ethiopia says it's trying to shift the balance of power just a little bit from corporate America to the world's poor. If it works with coffee, they say, then they'll use the trademark model to increase prices on lots of other commodities.

Adam Davidson NPR News.

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