Video on Ethiopian Coffee TMs

For those of our visitors who have been following the evolution of the Ethiopian coffee trademarking intervention, I recently came across a very interesting documentary on the subject that looks at the history of coffee and its cultural significance in Ethiopia.  It contains interviews with many of the stakeholders in the TM project, including the Director of the Ethiopian Intellectual Property Office (EIPO). 

Scroll to the bottom of the page at: http://www.lightyearsip.net/projects/ethiopiancoffee/

On the same page you can also see the logos for the umbrella brand (Ethiopian Fine Coffees) and the sub-brands (Harar, Yirgacheffe, Sidamo).

For more background on this story see the 2007 case study published in the WIPO magazine.  This is, of course, not up to date but it does present a valuable overview of the project.  (Thanks to Shlomo Bachrach of eastafricaforum.net for sending me the link.)

Post written by Peter Bloch

Ethiopia’s GI Bill

Ethiopia is in the process of ratifying a Geographical Indication Bill to protect indigenous products.  According to Addis Fortune: 

“Among these location-branded products are Tigray and Masha white honey, Harar senga (bulls fattened to be butchered), Dendi garlic, Limu coffee, Assosa mangos, Ankober sunflowers, and Debre Brehan brandy.” 

 (Thanks to Shlomo Bachrach (http://www.eastafricaforum.net/) for the link) 

The article describes an ongoing project intended to identify products which might benefit from GI protected branding.  This looks like a good idea and might result in increased incomes for producers.  But the value of IP protection – whether a trademark or a GI – will eventually be determined by the ability of the owner to enforce the grant of rights. 

Corporate trademark owners such as Volkswagen, Levi Strauss and Starbucks invest in protecting their global brands by employing investigators to ferret out black market products and other infringements of their IP.  One of the best examples of a GI that is backed up by heavyweight enforcement is owned by Consorzio del Prosciutto di Parma (association of Parma Ham® producers, CPP).  In a well-known 2003 case, CPP successfully sued ASDA: 

“UK supermarket Asda has lost a battle to sell authentic Parma ham under the Parma brand, when the meat is sliced and pre-packed in Britain.” http://news.bbc.co.uk/1/hi/business/3043283.stm 

CPP has protected production methodology, origin, packaging AND how the ham is sliced! 

The CPP is a powerful producer group because its members sell large quantities of Parma Ham, generating sufficient revenues to protect the GI.  If indeed Ethiopian producers procure GIs for products such as Ankober sunflowers, will sales volume generate sufficient revenues to adequately police usage of the name?  Even well known global brands such as Kiwi (shoe polish) are not policed in Africa; although Kiwi polish is widely available, it is all counterfeit.  Presumably Sara Lee Corporation (which acquired a number of UK brands from Reckitt and Coleman) cannot justify the cost of enforcement in Africa. 

 The Ethiopian coffee trademarking program was well conceived and generated a high level of attention from the international press.  But there is still little evidence that this initiative resulted in any income gains for producers.  A number of NGOs provide IP training in developing countries, and it might be advisable for them to position IP as one tool of many in the market development toolbox.  Without sustainable marketing plans and enforcement programs, these IP-centric initiatives are unlikely to be successful. 

Post written by Peter Bloch, consultant to CAS-IP

Ethiopia – “Will The Real Poor Farmer Rise”

The Ethiopian coffee story continues.

You can read a letter from Dr. Eleni Gabre-Madhin (CEO of ECX) by visiting this link:

And a response to this from blogger Nazret here:

And Aldo Coffee weighs in here.  (Although a well placed source observed that this item “recirculates misinformation”.)

Because this story is ongoing, we now intend to only post developments we consider to be signficant from an IP/branding/supply chain perspective, especially if there are lessons that might be learned to benefit commodity producers in other countries.

But if you check the poorfarmer and nazret blogs you’ll get a blow by blow account. Eastafricaforum is probably the most reliable source of information on the Horn of Africa, and significant coffee related events are usually posted there.

Post written by Peter Bloch, consultant to CAS-IP

 

Comment on Ethiopia’s First Commodities Exchange and Dr. Eleni Gabre-Madhin

Wide Angle, a news feature on PBS hosted by Aaron Brown, aired a show called The Market Maker on Thursday, July 22: http://www.pbs.org/wnet/wideangle/episodes/the-market-maker/introduction/5000/

Shlomo Bachrach, the Founder and Editor of eastafricaforum.net, is an Ethiopia watcher. He saw the show, and comments as follows:

“Wide Angle’s The Market Maker features Dr. Eleni Gabre-Madhin, a Stanford economics PhD who left her World Bank position and returned to Ethiopia in 2004 to put her faith in markets into practice.  She persuaded the government to launch the Ethiopian Commodities Exchange, ECX, to establish transparent and reliable markets for the benefit of farmers, traders and exporters.

Persuading the government to support the concept took time. Building the infrastructure, including daily real-time price information from world commodities markets delivered to market towns in rural Ethiopia (where most residents lack electricity and running water), was a challenge.  Setting up the exchange in Addis Ababa, the capital, with warehouses, a trading floor, and a system operated by trained staff was another challenge.

Trading began in late 2008 in several grains, and was expanded to include coffee in the spring of 2009 because of a troubled coffee market.  Since coffee has long been Ethiopia’s biggest export, the government intervened to force ECX to accelerate its entry into coffee trading.

The ECX is not yet a success, and faces big hurdles.  One is the widespread lack of trust among farmers who, based on bitter experience, fear that they will continue to be cheated by merchants who have better information about prices as well as other leverage.  This makes them reluctant to entrust a completely unknown entity like the ECX with their means of survival.  The second and bigger obstacle is the opposition of the traders who have always controlled and manipulated the market, and who will lose their dominance, and their excess profits, if the ECX can establish trading based on transparent pricing, and a system of reliable storage, delivery and payment.

Dr. Eleni, the star of the show, is a brilliant and fascinating woman who gave her time generously as an advisor to a coffee project I worked on some years ago. Success is still distant and is not guaranteed.  But with 60 million people in Ethiopia living off the land, improving farm incomes even a little will have widespread effects.

A lesson that can be learned from this program, which barely scratches the surface of the topic, is the huge gap between the unrealistic and often self serving projects conceived by ‘development experts’ and the reality on-the-ground.

Viewers who have no on-the-ground experience in the field will not grasp much of what they see.  Even those who have gotten their hands dirty – more than attending a few meetings or a conference and a field trip for a few days – will be in the position of the blind man touching an elephant and trying to describe it.  Ideally, viewers will come away from a program like this humbled by the realization of how little they know about what is going on ‘out there’.  In practice, ‘experts’ will continue to be less useful than they think, and local people will be less forthright about their real objectives.  Then there are a few Dr. Elenis, imperfect and overwhelmed by the difficulties of the task, who will slowly make a difference.”

If you want to hear more from Dr. Eleni Gabre-Madhin then you can also visit the TED talks site and watch her talk there.

The latest on Ethiopia’s coffee trade; news reports and expert comment

http://dinersjournal.blogs.nytimes.com/2009/03/25/ethiopia-stops-coffee-exports/

IP watchers (and coffee aficionados) will be interested in developments in the Ethiopian coffee sector.  Ethiopia is one of the few coffee producers to trade mark what are, effectively, regional coffee varieties (e.g., Yirgacheffe) in the hope of increasing prices.   Ethiopia’s move to develop IP protection for its premium coffees sparked a pitched media battle between Oxfam and Starbucks in 2005, and big coffee (the National Coffee Association) filed a 300 page Letter of Protest claiming that the names were all generic.  The history – and outcomes – of this initiative likely have a bearing on any attempts by developing countries to trademark agricultural products in the West.

For more information:
http://www.lightyearsip.net
http://www.ethiopiancoffeenetwork.com
http://poorfarmer.blogspot.com

Shlomo Bachrach, a long time Ethiopia watcher and editor of East Africa Forum comments as follows:

“The surprising report that Ethiopia has suspended coffee exports — its primary source of export income — is easily misunderstood.  In part this is probably a case of irresponsible reporting and both contradicts what the government has been demanding from its coffee exporters and is almost certainly inaccurate.

Ethiopia is desperately short of hard currency. This is the consequence of many factors, including the worsening global economic decline, Ethiopia’s policy of deficit- financed budgets (which the IMF and others have been warning would worsen inflation, which has now declined to 32%, the government proudly announced this week), the inevitable need for foreign capital to finance infrastructure and other development, etc.

Ethiopian businesses are starved for foreign currency to finance imports of raw materials.  Coca Cola (an African-owned franchisee) has temporarily closed its bottling plant because it can’t pay for the syrup from the company. This is only a particularly visible impact of the hard currency shortage.

Prime Minister Meles, desperate for export revenue, has taken control of the coffee owned by exporters and held in the new Commodity Exchange warehouses.  He accused the owners of ‘hoarding’ the coffee in the hope that coffee prices, now far below last year’s prices (down from $1.60/lb+ to below $1.20), will rise.  They claim that they will lose money if they sell at current prices.  But Ethiopia is not suspending coffee exports.  It is suspending the freedom of the owners of the coffee to trade in their own coffee, and asserting the government’s right to do so on their behalf, for the good of the country. The exporters will get the proceeds, in local currency.  Whether the exporters lose money or not doesn’t matter.  The government wants the hard cash right now.

The issue is financial and political, not agricultural.  It is probably not a permanent move into coffee marketing.  But who knows?  It’s an ominous precedent, as any potential investor will tell you. Ethiopia needs a lot of investment in the coffee sector. The long term benefits are probably huge.  The benefit of this strong arm intervention will be short, the damage is likely to last longer.  If the government is capable of this, goes the obvious reasoning, what else might it do? This is the kind of action that is hard to undo.

In Seattle, home of Starbucks, where the press probably knows the coffee business better than most, a newspaper noted that Starbucks had recently announced that it had ‘postponed’ the creation of its promised Farmer Service Center in Ethiopia, intimating that the company might use this as an excuse to drop the plan altogether.  Starbucks has already invested in a bigger Farmer Service Center in Rwanda’s fast-growing coffee sector.

The coffee sector has reason to wonder what might come next.  Meles regularly defends the right of his government to manage and intervene in the economy in a form of  ‘state capitalism’.  He was an avowed socialist for many years, becoming a reluctant free marketer when his rebel movement took over the government in 1991 and he needed foreign assistance from the US and Europe.  (His socialist roots are not entirely without benefit: Ethiopia has spent heavily on health, education, infrastructure, etc., though it remains relatively underdeveloped because it started from such a low level.) The government controls key economic sectors like banking and internet/telecommunications.  Internet and cell phone service are, consequently, exceptionally poor in Ethiopia compared with its neighbors, who allow foreign investment and competition, and where service is cheaper, better, faster and more widely available.”

Post written by Peter Bloch, consultant to CAS-IP