Starbucks announced yesterday that it has reached a licensing agreement with the Ethiopian government regarding the marketing use of Ethiopia's well-known coffee producing regions, most notably Sidamo, Yirgacheffe and Harar.

This is the resolution to a row that Starbucks began last year when the Ethiopian government filed applications to trademark its most famous coffee names. Securing the rights to these names would enable Ethiopia to capture more value from trade, by controlling their use in the market and thereby enabling farmers to receive a greater share of the retail price. Ethiopia’s coffee industry and farmers could earn an estimated $88 million USD extra per year, no small pittance when you consider that millions of Ethiopian coffee farmers bring home less than $300 USD per year for their crops.

In response, Starbucks successfully blocked Ethiopia's trademark applications in the US through some crafty maneuvering. According to Oxfam, the global coffee giant enlisted the support of the National Coffee Association to assist in blocking Ethiopia's bid. And it worked. In refusing Ethiopia its trademark, the US Patent and Trademark Office cited a position directly from the Starbucks' sponsored NCA letter of protest: The names Ethiopia wanted to trademark were "generic."

This move was good for Starbucks, which had been using the names of Ethiopia's famous coffee regions to sell roasted Ethiopian coffee for up to $26 per pound while farmers in Yirgacheffe were receiving as little as $0.60 to $1.40 per pound for their coffee. This angered international activist groups, including UK-based OxFam, which started a campaign to embarrass Starbucks for its blatant attempt to get richer off the backs of the poor and disadvantaged farmers who have lived for thousands of years in the regions that bear the profitable names in question. I participated in the campaign last November by handing out information to Starbucks employees in my hometown about the shameless profit-seeking, and having them and passers-by sign a petition. The campaign, which created consumer and even employee pressure, worked, and Starbucks announced a mutual agreement on Wednesday.

The agreement gives Ethiopia the marketing rights to the names of its coffee-producing regions while agreeing to contract out those rights to Starbucks for an undisclosed amount. Starbucks has also agreed to build a cupping laboratory in Ethiopia to help farmers improve the taste and quality of their coffee, which should help increase the value of Ethiopia's vital export. The company has also pledged to double purchases of coffee from East Africa by 2008. Starbucks currently buys 2% of Ethiopia’s $400 million coffee crop.

Sources: A Hot Cup of Money, Starbucks in Ethiopia coffee row, Starbucks in accord with Ethiopia