Tension Treatises - Corporate Lies or Charity Biases and the Governments That Suffer

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Corporate Lies or Charity Biases and the Governments That Suffer

10/26/06 - 11:09:26 am
Categories: Africa, Economics

What a long title to say that Oxfam and Starbucks are at odds over coffee trademarking and the Ethiopian government is stuck in the middle.

BBC news reports that Starbucks, with the help of the National Coffee Association has shot down Ethiopia's request to trademark its coffees. The NCA claims that it is not an economically viable option for the Ethiopian government, because trademarking their coffee will boost the price outside of the competetive market. Oxfam disagrees.

Likely the NCA knows more about the coffee market than Oxfam, however corporations are also typically looking out for their best interest.

I don't know if I agree with the tactics, but it is likely that a trademarked coffee will force the hand of Starbucks and other major coffee purchasers to find coffee elsewhere.

At this point in time, Ethiopia is fearing war on multiple fronts. This alone could drive buyers out of the market, especially as fears of reduced crops surmount. I do not want to support Starbucks in this, but I am not sure Oxfam's suggestion was very sound.

And here we have a government trapped between a corporation and a charity.

UPDATE: Please see my comments as DW posted a challenge to an underlying assumption that I had and he was absolutely correct.

2 comments |

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Comment from: DW [Visitor]

A couple things on your post. The thing about trademarking coffee is that it does not at all automatically boost the price of coffee. It just gives Ethiopia the negotiating position to do so. Like you can see with Jamaica Blue Mountain, it is absolutely possible to get more money back to the producers while still having perfectly good retail margins. The best way to do this is to boost the reputation of the brand so more people know about it and want to buy it, but before you can do that you have to actually have a brand.

Finally, think about it. The NCA is saying this move is going to hurt Ethiopia because it will "make" the coffee cost more. But the whole coffee crisis Ethiopia's been having is because the price of coffee had fallen. This guy is trying to say that letting Ethiopia have the power to set the price of gourmet coffee higher than the NY "C" price (meaning commodity price, like what they pay for the folgers you pay $6 for) is going to hurt Ethiopia, while saying that Starbucks is happy to pay higher than the going rate for coffee. Put them together and they don't make much sense.

Permalink 10/26/06 @ 17:08

Comment from: Kevin [Member]

DW, thanks for your comment. I see your position and agree with you. I made an assumption that based upon the fact that if Ethiopia had the power to raise its coffee costs, it would inevitably do so. That may not be the case.

Thanks for pointing that out.

Permalink 10/26/06 @ 17:16

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