LOST BREW: WHEN THE PHILIPPINES WAS COFFEE KING

Posted on July 7, 2014

Financial analyst and coffee entrepreneur Pierre Yves Cote of Rocky Mountain Coffee, Inc. warned the local coffee industry, “The supply gap represents 100,000 jobs that go away to Vietnam every year. In terms of economic value, the Philippines will give Vietnam P17 billion within 5 years, P28 billion within 10 years, and P75 billion within 20 years. This will make the Philippines’ coffee importers rich, Vietnam people rich, but Filipino farmers will remain poor. Can we allow this to continue to happen?”

200 years ago, the Philippines was once the fourth biggest producer of coffee in the world. Today, the country only produces .012 percent of the demand for coffee worldwide.

What happened to the local coffee industry? There are incoming projects, both government and private sector-funded, that aim to revive the old industry.

The root of the problem lies in the fact that local coffee farmers cannot supply even the local demand for coffee. The country has had to import 85 percent of its coffee from Vietnam.

Government data shows that at least 138 million kilograms worth Php6 billion is imported from Vietnam every year.

One of the leading coffee brands, Kopiko, sources its beans from Indonesia. Local coffee produce has been relegated to niche markets that cater to coffee shops and specialty brands.

The cost of coffee imports have also become cheaper because coffee farmers from other countries such as Brazil and Vietnam are willing to sell their beans already roasted, unlike local farmers who sell their coffee beans raw.

Expensive Grinders
Some would think that it is just plain laziness or lack of initiative, but the truth is that local farmers do not have easy access to coffee-roasting tools that measure up to international standards.
Industrial coffee machines cost around a million pesos on average and are costly to maintain if bought secondhand.

There are low-capacity models but these would not be fast and efficient enough to meet market demand, especially if the Philippines wants to compete in the international coffee market, now lorded over by Brazil.

The Bravura is the cheapest roasting machine available in the market. This locally-made roasting machine costs Php485,000 per unit or around US$11,100.

Government Efforts
The old town of Piddigin Ilocos Nortehas started developing an initial 10-hectare Arabica coffee plantation located in one of the coldest mountain ranges in the country.

The DENR has given a grant to the Piddig local government of Php52 million worth of financial assistance for the establishment of a coffee nursery.

The project is expected to produce 2 million coffee seedlings in three years or until 2016.

The DSWD is also involved in the coffee industry revival with its livelihood assistance, worth Php5,000 per family-beneficiary.

It aims to encourage farmers’ family members to produce organic fertilizer through vermiculture needed in sustaining the coffee farm.

Target beneficiaries receive training on how to produce organic fertilizer through a simple process of vermicomposting.

This technology employs worms (African night crawlers) to decompose waste materials, such as household and farm, to produce organic fertilizer for sustainable agriculture.

The vermicomposting technology is now being practiced by many farmers in Ilocos Norte, shying away from costly farming inputs such as commercial fertilizer.

Alongside coffee, high-value crops such as papaya and bananas are being suggested to be intercropped in the coffee plantation.

Political Bottleneck
The unceremonious bypassing of Agriculture Secretary Proceso Alcala by Aquino appointee Francis Pangilinan, himself a former senator, means that government modernization of agricultural industries will slow down.

That includes the coffee industry, which of this moment is still in a vegetative state.

The political maneuvering is being done so as to favor certain cartels that seek to profit from imports, most of them backed by foreign companies engaged in the international coffee market.
Experts say Filipinos consume 138 million kilos of coffee, but the country only produces less than 20 million kilos, or only 14 percent of the coffee that locals consume.

Another alarming fact is that the local demand is increasing while the supply is declining.

According to experts, this supply gap will increase to 200 million by 2020 and 800 million by 2032, if the current trend is to continue.
One solution being proposed is to have a definitive roadmap to restore the coffee industry, combined with political will to confront the cartels.