If ever there was a time for an African nation to stand strong on the sale, licensing and pricing of a commodity, it’s now. Coffee is an addictive product that drives large swaths of the Western economy. Dunkin Donuts has just started an ad campaign to highlight this fact. Ethiopia can ill afford to be concerned about the elasticity of demand for coffee. The waters have not even been tested. If Ethiopia had aggressively pursued this trademark advantage, they could dramatically increase revenues to this desperately poor nation.Considerations about price haven’t stopped the Belgians from running up the prices of African chocolate. The US National Coffee Association is advocating for a position that is tantamount to theft – and it’s own negotiating power is contingent on a broader US refusal to increase trade to Africa on a fair basis.
What is often lost in the aid-trade debate is that if Americans traded with Africa in the same that America seeks to trade with Japan or China, the increased revenues would dramatically dwarf all aid to the continent through sources like the World Bank, IMF and private foundations. The problem, of course, is that trade cuts the tether of dependency.
The Ethiopians need to hold out. Americans are willing to pay exorbitant prices for cigarettes. They’ll do the same for coffee.