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Journal of African Economies, Vol. 20, number 5, pp. 704 –736 doi:10.1093/jae/ejr023 online date 23 June 2011

The Effects of the Coffee Trademarking Initiative and Starbucks Publicity on Export Prices of Ethiopian Coffee† Aslihan Arslan a,* and Christopher P. Reicher b
Downloaded from http://jae.oxfordjournals.org/ at University of Sheffield on October 12, 2012 a

Poverty Reduction, Equity, and Development Research Group, Kiel Institute for The World Economy, Dusternbrooker Weg 120, 24105 Kiel, Germany ¨ b Monetary Policy under Market Imperfections Research Group, Kiel Institute for The World Economy, Dusternbrooker Weg 120, 24105 Kiel, Germany ¨ * Corresponding authors: Aslihan Arslan. E-mail: aslihan.arslan@ifw-kiel.de

Abstract
The Ethiopian government initiated the Ethiopian Coffee Trademarking and Licensing Initiative in 2004 for three coffee origins: Sidama, Yirgacheffe and Harar. Following a court case between Starbucks and the Ethiopian government regarding the trademarking of ‘Sidamo’, Ethiopian government engaged in a public relations campaign to raise awareness for the Initiative, which was widely publicised in the international media especially after Oxfam organised a public campaign. This paper evaluates the effect of these interventions on the export prices of trademarked Ethiopian coffees. We find that the prices of the trademarked coffees increased by about 10% relative to the non-trademarked coffees following these interventions. The magnitude of this change is comparable with the farm gate prices reported in the literature; however, we cannot establish direct causation or observe the passthrough into farm gate prices. †

The fieldwork for this research was funded by the Poverty, Equity and Growth Network (PEGNet) at the Kiel Institute for the World Economy. The support is greatly appreciated. We thank to Mohammed Garad at the Light Years IP for the support in obtaining the data used in this paper. We are also thankful to Ron Layton at the Light Years IP and Gethacew Mengistie for their continued support during and after the field work to improve this article. Three anonymous reviewers have also contributed to this paper with their valuable comments. All mistakes are, of course, ours.

# The author 2011. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oup.com

Coffee Trademarks in Ethiopia

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705

JEL classification: O13, F14

1. Introduction and background

This paper describes what has happened to the relative prices of certain Ethiopian specialty coffees following the Ethiopian government’s introduction of trademarks as a branding strategy. Coffee is one of the most valuable agricultural commodities traded in international markets and Ethiopia is the birthplace and the primary center of diversity of Arabica coffee (Daviron and Ponte 2005; Labouisse et al., 2008). Ethiopia produces around 5% of world production and more than 30% of the total production of coffee in Sub-Saharan Africa (International Coffee Organisation, ICO). Besides the cultural importance, coffee has an important place in Ethiopian economy because it provides 35% of the total export earnings (CSA, 2008). Ninety-five percent of the total coffee output is produced by over one million small-scale producers and more than ten million Ethiopians belong to the coffee value chain directly or indirectly (Bastin and Matteucci, 2007). The Ethiopian government took a bold step based on intellectual property rights to control the value chain and to protect the names of its highquality coffees. In 2004 the Ethiopian Intellectual Property Office (EIPO) collaborated with Light Years IP (LYIP), a non-profit development group based in Washington D.C., to create a system that would capture more of the retail value of Ethiopia’s fine coffees within the country. The result was The Ethiopian Coffee Trademarking and...
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