Factors Affecting Trade Patterns of - United States International ...

usiness and conducts central coffee auctions, where all coffee in Tanzania is
sold to licensed exporters. 60 In 2004, the TCB permitted the direct export of
premium specialty coffee rather than through the central auction. This direct
export has allowed Tanzanian producers to develop closer relationships with
specialty coffee buyers in the United States and the European Union, and better
understand their requirements for a reliable supply of consistent, high-quality
coffee. 61
Success in Differentiating Coffee from a Homogenous Commodity
Following liberalization of their coffee sectors in the early 1990s, Ethiopia,
Kenya, Rwanda, Tanzania, and Uganda, made efforts toward differentiating their
coffee to capture higher returns. For most of the industry, coffee is a commodity
that continues to be largely priced on exchanges in New York and London.
However, a growing number of producers and coffee manufacturers differentiate
their coffee on the basis of quality, production process, or geographic origin. The
price of this coffee is determined in channels outside of commodity markets in
specialty coffee auctions or directly between buyer and seller. In these channels,
coffee prices are often higher. 62 The differentiated coffee market includes
gourmet and specialty, organic, “fair trade,” 63 and eco-friendly or shade-grown 64
for which consumers appear willing to pay a premium. 65 Consumer markets for
these differentiated coffees are still relatively small but are growing more rapidly
than for conventional coffee.
By mid-2007, Ethiopia’s Coffee Trademarking and Licensing initiative had
secured trademarks of Ethiopian coffee in 28 countries, including the European
Union, Japan, and the United States. 66 This trademarking of Ethiopian coffee is
an attempt to use intellectual property rights to increase export revenues. The
Ethiopian Fine Coffee Stakeholder Committee, a new group formed to manage
this initiative is composed of cooperatives, private exporters, and the Ethiopian
Intellectual Property Office and has a network of licensed distributors around the
world. 67 In June 2007, Starbucks and Ethiopia ended a dispute over this
60
Tanzania Coffee Board Web site. http://www.dreamweaver.co.uk/tcb/index.html (accessed
September 14, 2007).
61
OTF Group, Improving Competitiveness, 2005, 43–44.
62
For example, Ethiopian fine coffee have achieved far greater export prices when traded in
specialty coffee auctions. Ethiopian Coffee Network Web site.
http://www.ethiopiancoffeenetwork.com (accessed October 9, 2007).
63
The International Fair Trade Association defines Fair Trade as “a trading partnership, based
on dialogue, transparency and respect, which seeks greater equity in international trade. It
contributes to sustainable development by offering better trading conditions to, and securing the
rights of, marginalized producers and workers.” International Fair Trade Association Web site.
http://www.ifat.org/ (accessed October 9, 2007).
64
Shade-grown or Eco-friendly coffee production maintains the environment through
management of the forest canopy rather than producing coffee through traditional means under full
or partial sun exposure.
65
Lewin, Giovannucci, and Varangis, “Coffee Markets: New Paradigms in Global Supply and
Demand,” 2004, 100.
66
March, “Making the Origin Count: Two Coffees,” September 2007.
67
Ethiopian Coffee Network Web site. http://www.ethiopiancoffeenetwork.com (accessed
September 11, 2007).
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