Starbucks Throws Ethiopia a Bone, Extracts Skeleton in Return

The Starbucks/Ethiopia trademark debate has just taken a potentially disturbing turn:

Starbucks to Open Regional Farmer Support Center in Rwanda

(press release)

“We are very excited to have a regional Starbucks Farmer Support Center here in Rwanda. We look forward to working with Starbucks to offer additional support to the coffee farming community here and in the neighboring countries,” said Paul Kagame, President of the Republic of Rwanda. This center will offer many new opportunities to enhance our methods and produce even greater volumes of our high quality specialty coffees.” Starbucks (Nasdaq: SBUX) chairman Howard Schultz announced today that the company will open a regional Starbucks Farmer Support Center in Rwanda. The facility will provide an opportunity for Starbucks to collaborate with farmers in Rwanda and in the East Africa region, and demonstrates the company’s continued support for their efforts to expand the availability of their high quality, specialty coffee worldwide.

Sounds great possibly? Uh-uh. As Addis Fortune reporter Shlomo Bachrach observed in his recent article “A Support Centre–An Agreement in a Black Box“:

What has it now agreed to? What is the practical effect of Starbucks’ acknowledgment of Ethiopia’s ownership of the names Yirgacheffe, Harar and Sidamo? Does it involve any payments to Ethiopia? How firm and substantial a commitment has Starbucks made to marketing Ethiopian coffee? What rights did Ethiopia grant to Starbucks? What does Ethiopia gain in exchange?

Essentially, things are rockier than they look: Starbucks kicked off recent negotiations with Ethiopia’s government by benevolently agreeing to not do something it shouldn’t have been doing anyway–claiming that it “owns” the name of another country. In return for offering to be marginally less unethical, it is asking for future partnerships with unspecified terms in Ethiopia’s fledgling tea industry, among other things. It has also offered to build a support center for Ethiopian agribusiness, but in return it gets first crack at a high-demand crop:

Starbucks has made a welcome announcement, which can, if it is more than a token gesture, have a positive impact. Such a centre will, of course, do at least as much good for Starbucks as for Ethiopia, since it gives them better access to premium quality coffee at a time when demand is growing and a shortage is on the horizon.

So essentially Starbucks builds a kiosk with brochures on irrigation in it in Addis Ababa and in return they get the potential to corner the market on one of the world’s most valued coffee sources, and get in on the ground floor if Ethiopia’s tea gamble takes off.

Oxfam congratulated themselves quite a bit when Starbucks signed a toothless licensing agreement last October; it seemed premature then, and even moreso now. (Again, I support Oxfam’s aims, I just think they’ve been a bit blind lately.)