Bitter Brew

The first lesson of economics is a simple and basic contention: one will act in one’s own self-interest. In a global economy in which it could be successfully argued that multinational corporations have created oligarchies more powerful than some international political bodies, what becomes of developing nations, those nations on the brink of economic survival? What happens when corporate self-interest collides with the self-interests of local producers?

These are some of the questions pouring out of Starbucks’ recent crisis in Ethiopia. Oxfam charged that the coffee uber-giant opposed Ethiopia’s plan to gain increased control over its coffee trade and, perhaps more importantly, a larger share of the earnings for millions of coffee farmers living in poverty, by protesting Ethiopia’s application for trademark rights to its most famous coffee names, Sidamo, Harar and Yirgacheffe (although Starbucks has denied this).

As Dr. Douglas Holt at Oxford University’s Said Business School noted in Business in Africa, Starbucks’ “rash attempt to shut down Ethiopia’s [trademark] applications would hurt the ethical brand the company has tried to create.” More so, it would cause economic hardship: consider that Ethiopian farmers earn as little as $0.75 for one pound of coffee beans, while Starbucks earns up to $26 per pound; Ethiopia’s GDP is $11.2 billion, while Starbucks’ annual revenues near $7.8 billion. Over 54% of Ethiopia’s GDP depends upon coffee.

According to the The Times, Starbucks’ CEO will meet with Ethiopian Prime Minister Meles Zenawi to discuss the matter. The company’s representatives are quoted as saying: “We support the recognition of the source of our coffees and have a deep appreciation for the farmers that grow them…We are committed to working collaboratively and continuing dialogue with key stakeholders to find a solution that benefits Ethiopian coffee farmers. We have had recent conversations with Oxfam about planning logistics for a stakeholder summit.”

The Starbucks crisis speaks to a larger issue: the need for corporate international growth policies that work with nations, rather than against them, in the hopes of not only increasing private revenue but investing in the local economy–that is to say, working within that economic structure to provide the best conceivable ends for all parties involved. This extends beyond products and supply to the local labor market. Current trade policies are vague on fair labor, allowing corporations free rein to maximize profits to the detriment of the local labor and commodities market. It may sound idealistic, but bridging the gap is certainly within sight.
Posted in Social Justice BlogBookmark the permalink. Trackbacks are closed, but you can post a comment.