Ethiopian Fine Coffee

Trademarking & Licensing Initiative

How has the Light Years model worked?

Four million fine coffee farmers and small traders and carters are now collectively using business approaches common to modern corporations, due to assistance in value capture strategies from Light Years IP, and with the participation of the Ethiopian Government. These strategies have transformed the farmers’ negotiating position and increased their income substantially.

The strategies recognized that while Ethiopia was receiving export income of about $100 million in 2006/7 from the export of the three highly respected fine coffees, this coffee was generating around $2,000 million in retail markets worldwide. Ethiopia registered trade mark ownership of their fine coffee brands and set up a network of licensed distributors, breaking free of the commodity market. Through this, Light Years helped Ethiopian coffee farmers and producers to achieve a stronger negotiating position.

The negotiating position was strengthened sufficiently to capture an extra $100 million for Ethiopia out of this retail value in 2007-2008 (June year, reported by the Ethiopian Ministry of Trade and Industry, July 2008). Income has increased by 100% for around four million Ethiopian fine coffee farmers and small traders. Also, since export prices are now based on retail values for distinctive fine coffees instead of the commodity coffee market, much greater stability in prices will be achieved in the medium term, when the current world recession ends. The licensed distributors also gained, as the value they surrendered was in return for a place in the retail future of three highly regarded fine coffees, whose availability outlook has dramatically improved.

Low-income Producers

Exporting from the birthplace of coffee, Ethiopian farmers experienced balanced negotiating positions for about four or five centuries, receiving a price for their fine coffees based on that negotiating position. Indeed, had a buyer offered as low as 5% of the retail value of fine coffee under the trading conditions that historically prevailed in Ethiopia, he would have been disdained. Up until 2007, however, while Ethiopian fine coffees would retail for up to $20.00/lb. by the bag in retail stores in US, Europe and Japan, Ethiopian export prices have been only $1.00 or around 5% of retail values. Under current trading conditions, with farmers dependent upon commodity markets dominated by a few large developed country buyers, we have come to normalize returns of 5% for low-income producers of distinctive products, a condition that commercial producers in the industrial world would not tolerate.

The business model is different

There is a different way and a different business model that substitutes dignity for exploitation and an improved negotiating position that results in a “world income”, defined as income related to world retail values for quality products. While the use of modern business strategies that cross trade borders by low-income producers such as Ethiopian coffee farmers, Ugandan vanilla farmers or Mozambique cashew farmers may seem revolutionary, it is essentially a return of their countries to a more balanced negotiating position, long enjoyed by industrialized nations. The importing distributors are fully aware that the current system is damaging to their long-term interests and many embraced the LYIP solution for fine coffee.

Full Circle - Coffee Comes Home to Ethiopia

The production of this DVD was executed by Light Years IP and debuted at the 2008 Specialty Coffee Association of America (SCAA) Annual Conference in Minneapolis. It introduces the history of coffee as Ethiopia's unique and enduring gift to the world. It is also the story of the Ethiopian Fine Coffee Trademarking and Licensing Initiative, which is an IP Value Capture strategy designed to create a legitimate IP leverage to improve the price negotiating power of the Ethiopian coffee producers, thereby allowing them to capture a more equitable price share from the high export market retail value that is generated from the premium quality of the coffees made possible by the producers great skills and care.

This increased income will help Ethiopia secure a significantly higher export revenue and lead to alleviation of poverty, positively impacting the economic development of the country. The strategy will ultimately secure the Ethiopian coffee producers a global control of distribution and brand control of their fine coffees.