UK: Starbucks stirred by fair trade film
A campaign by Ethiopia to get a fair price for its coffee - some of the world's finest - kicks off in London today as a spokesman for the east African country's impoverished coffee growers meets Tony Blair.
The meeting will be accompanied by a screening of the film Black Gold - a movie on the global coffee industry - to MPs at Westminster, who will also be addressed by the Ethiopian ambassador to Britain.
The spokesman, Tadesse Meskela, who is the subject of Black Gold, together with the film's English makers, brothers Nick and Marc Francis, are a serious irritant to some of the world's coffee giants - in particular Seattle-based Starbucks, whose annual turnover of $7.8bn (Â£4bn) is not much lower than Ethiopia's entire gross domestic product.
Mr Meskela runs the Oromia Coffee Farmers Cooperative Union in Ethiopia, representing about 105,000 coffee growers, and struggles to get the best price - although it is nowhere near high enough to earn them a decent living.
He says the country's premium coffees - Yirgacheffe, Sidamo and Harar - can sell for fair trade export at about $1.60 a pound. After deducting costs, the growers get about $1.10. Roasters can sell the coffee on at $20-26 per pound. Coffee retailers make about 52 espressos from a pound of coffee, worth up to $160 a pound.
"This ratio needs to change," Mr Meskela told the Guardian during a visit to London. "Our people are barefoot, have no school, no clean water or health centre. They are living hand to mouth. We need $4 a pound minimum, that's only fair."
Black Gold shows malnourished coffee growers depending on handouts of food from the United States to stave off starvation. The documentary has already been released in the US and goes on general release here in April.
But what of Starbucks, who are opening about 2,000 cafes a year and have put messages on their website saying Black Gold "incompletely represents the work Starbucks is doing"?
"Starbucks may help bring clear water for one community but this does not solve the problem. In 2005, Starbucks' aid to the third world was $1.5m. We don't want this kind of support, we just want a better price. They make huge profits; giving us just one payment of money does not help," said Mr Meskela.
Mr Meskela already has the backing of Ed Balls, economic secretary to the Treasury. Mr Balls said: "Delivering trade justice is not just morally right, it is an economic necessity for Tadesse and the farmers.
"We urgently need the WTO talks to start again so that we can make good our promise to deliver trade justice for Tadesse and millions of others in the world's poorest countries."
Starbucks told the Guardian it is paying premium prices to farmers in poor countries, well above the average market price. The pictures of smiling Ethiopians in its cafes, however, belie the reality shown in Black Gold.
The Ethiopian government, keen to get a much better price for a commodity that makes up the bulk of its exports, has been trying to trademark its three prized coffee brands. And this is where Starbucks' benevolence turns sour.
Although Starbucks only buys about 2% of its coffee from Ethiopia - accounting for only $6-8m of the country's $400m annual exports - it has used its muscle within the National Coffee Association of America to block Addis Ababa's trademarking attempts, as revealed by the Guardian in October.
Ron Layton, a Washington-based lawyer with Light Years IP who is advising the Ethiopians, says successful trademarking could add $88m a year to Ethiopia's export earnings. He says Europe, Japan and Canada have already registered the trademarks and the US trademark office could do so were it not for Starbucks' opposition. "Starbucks clearly fears that if Ethiopia succeeds, other countries will try and follow and it will cost them money. They have even threatened to stop buying Ethiopian coffee, but that would not matter since they buy so little anyway."
He added that other coffee giants, including Green Mountain, the US's second biggest speciality coffee distributor after Starbucks, have been willing to engage with Addis Ababa to discuss a voluntary licensing scheme which recognises their ownership of the coffee brands.
Marc and Nick Francis told the Guardian they were surprised at the opposition their film had provoked from Starbucks, especially as they had not set out to attack the coffee giant. They contacted Starbucks repeatedly during the making of the film but were rebuffed each time.
"The key point of our film is that what is required is that people like the coffee farmers in Ethiopia capture more of the value chain of their product," says Marc.
Starbucks, meanwhile, has gone on a charm offensive, telling its customers "you can feel good about drinking Starbucks coffee", taking its message to YouTube and sending its chief executive to Addis Ababa.
But Douglas Holt, a professor of marketing at Said Business School at Oxford University, says the company may be committing brand suicide by continuing to resist the Ethiopian move. "If Starbucks were to live up to its 'Coffee that Cares' values, the company would be championing the Ethiopian trademark project," he argues in a new paper.
The company built its brand on a commitment to economic justice for its poor coffee farmers, but now risks losing millions of customers if they perceive it as a hypocrite, he says. "Starbucks must now walk the walk even if it means occasionally making economic sacrifices."
$1.10: Amount per pound of coffee that growers receive after deducting costs
$160: Amount that retailers can make on a pound of coffee
- 181 Food and Agriculture