It would be very convenient if Starbucks was the malevolent corporate giant that the Students for Social Justice (SSJ) made it out to be at a Fair Trade Awareness workshop on Monday, in which they used the company as an example of how evil capitalist corporations take callous advantage of the Third World. It would be very convenient for SSJ, anyway – not so much for Ethiopia or Starbucks, however.
Of course, the SSJ has lots of statistics – and even a documentary – to back up their case. It’s true that Ethiopia relies on coffee beans for 67 percent of its export revenue. It’s also true that Ethiopia is desperately poor and suffering from an abhorrent AIDS epidemic.
But it’s not true that Starbucks is malevolent. In fact, the company is trying to prevent Ethiopia from making a serious mistake.
Starbucks is a company that “employs 145,000 people, all of whom earn more than the minimum wage (and) receive stock options,” according to Fortune magazine. The company extends health care coverage to qualified employees who work as little as 20 hours per week. Starbucks, in fact, was recently named the second-most admired company by Fortune. Howard Schultz, the former CEO and current chairman of Starbucks, told the magazine, “Everything we do is about humanity.”
That hardly sounds like a company guilty of what fair trade activists accuse it of. That’s because it isn’t: The current conflict is just another misunderstanding between a business that understands business and activists who don’t.
The whole row started when Ethiopia realized that, after its overhead was taken care of, Ethiopian farmers were seeing less than a dollar per pound of profit for the coffee they produce. That same pound of coffee can sell for as much as $25 more in the United States. Ethiopia, rightly, wants a bigger cut of the pie.
The problem lies in how Ethiopia is going about taking that cut. The Ethiopian government – which has a track record for “heinous crimes against humanity,” according to a recent article in the Sudan Tribune – wants to trademark its coffee. If Ethiopia obtains that trademark, it will presumably be able to decide for itself how much to sell a pound of coffee for. If it can do that, the Ethiopian government can divvy out more money to the wretchedly impoverished Ethiopian coffee farmers.
That isn’t really likely, however, if one goes by what the Sudan Tribune has to say about those in charge of Ethiopia. There’s also the opinion of Transparency International, an organization that calls itself “the global coalition against corruption.” Ethiopia tied for 130th place on Transparency International’s Corruption Perceptions Index of 2006. That’s pretty bad: The list went from least corrupt at one to most corrupt at 163. Simply put, this means Ethiopian farmers likely won’t see a penny, even if the price of coffee beans goes up.The Ethiopian government seems to believe that, with a trademark on its coffee beans, it will be able to charge more. Of course, price controls of that nature are a sticky business – just ask the former Soviet Union. Aside from the arduous task of determining what products “should” cost, one has to find a company that will deal with a nation that implements price controls on its products. Most, like Starbucks, won’t. The market price for coffee beans – whether it’s fair or not – fluctuates with supply and demand. Good luck explaining that to a brutal government when revenues aren’t what they “should” be.
To settle the row, Starbucks has promised to double its orders of Ethiopian coffee – from 2 percent of the company’s “bean count” to 4 percent. They also endorse a more traditional solution to Ethiopia’s gripe: A geographic certification, such as Idaho has for its potatoes and Florida has for its orange juice. The Ethiopian regime won’t have it, however.
The regime in Ethiopia has every right to commit economic suicide by implementing trade strategies – such as trademarks that will certainly lead to price controls – which are fundamentally backward. It has the “right,” unfortunately, to brutalize its citizens, since no one seems to be stopping it. But Starbucks is under no moral obligation to submit to that regime’s whims. Furthermore, Starbucks does not deserve the harassment it’s receiving for not doing so; no matter how “fair” certain activists seem to think that submission would be.
Jordan Capobianco is a senior majoring in English literature.