MANILA, Philippines — Globally, coffee consumption continues to swell with an average growth of one percent every year. Next to petroleum oil, coffee is said to be the second most traded commodity in the world. The current annual demand for coffee beans is pegged at 64,000 metric tons and valued at around R5 billion. This may be good news for a country that belongs to the world’s coffee belt and produces all four coffee varieties (arabica, robusta, excelsa and liberica). Unfortunately, the Philippines currently produces only a paltry amount of coffee beans, contributing a small percentage to the world’s coffee supply.
Meeting The Demand
“The demand is great, [but the] supply [is] little,” says Department of Agriculture (DA) Sec. Proceso Alcala in his speech during the second Philippine Coffee Investors’ Forum held last November at the Marco Polo Hotel in Davao City. Although Alcala asserts that the coffee sector is not a dying industry, he acknowledges the fact that the country is lagging behind. Over the years, as worldwide demand continues to surge, there have been declining yields of coffee beans. Data from the Bureau of Agriculture Statistics show that the country’s coffee production in 2010 fell by 2.31 percent, while the first nine months of 2011 showed a 7.4 percent decrease.
The forum—organized by Nestlé Philippines, Inc. and the National Convergence Initiative (NCI), and attended by investors from Visayas and Mindanao—discussed policies and technologies on how to improve the country’s coffee industry. NCI is composed of the DA, Department of Agrarian Reform and the Department of Environment and Natural Resources.
Government agencies presented some of the programs that aim to sustain the industry. One such program is the National Greening Initiative that aims to have 1.5 million seedlings, coffee included, planted on 1.5 million hectares of land from 2011 to 2016. At the same time, the DA has allotted R163 million for 2012 to address the decline in coffee production. A minimum of R50 million will be appropriated for post harvest facilities so that coffee farmers all over the country will gain more profit. They are also set to provide guidance on land preparation and develop the bee-keeping process (a technique that promises to enhance the growth of coffee beans) in partnership with State Universities and Colleges.
There was a time when the Philippines was a net exporter of coffee. With the decrease in produce, however, we now have to import from other countries. “Currently, we’re sourcing 25 percent of our raw coffee requirement for soluble coffee manufacturing locally and we’re trying to compensate for the shortfall by importing coffee beans,” says Nestlé Philippines Head of Corporate Affairs and Senior Vice President Edith de Leon. At present, Nestlé buys 75 percent of its coffee beans abroad.
Nestlé is the biggest buyer of green coffee beans in the country, using them for their instant coffee. After the forum, members of the media and other guests were taken on a tour to show how coffee beans are planted, harvested and sold. Farmers and agronomists guided the touring groups as they checked out the Nestlé Experimental and Demonstration Farm (NEDF) in Tagum, Davao del Norte.
Established in September 1994, the NEDF offers farmers access to the latest and technologically advanced Robusta coffee farming tools and methods to help them efficiently improve produce. From 1996 to 2010, the NEDF has trained a total of 8,500 farmers. A duly accredited production nursery, it has also distributed 1.6 million Robusta coffee seedlings from 1996 to 2010.
The tour also included a visit to Nestlé’s coffee buying station. Nestlé has put up satellite coffee buying stations in various locations in the country to support local farmers through its direct buying policy. There, farmers can sell their products directly to Nestlé and get paid immediately based on the prevailing world market price of coffee beans. Aside from Tagum, there are buying stations in Davao, Iloilo, Isabela, Zamboanga, Cotabato, Agusan del Sur, Palawan, Tuguegarao, Solano, Bacolod, Bohol, Calamba, Alabang and Cavite.
Christophe Stern, Nestlé’s executive vice president and business executive manager for coffee and creamer, admits that helping more local farmers and achieving a higher yield of coffee products will never be easy. “It’s a process that will take time so we are planning to have a forum year after year,” says Stern. Just like last year, they plan to hold two forums annually. The company is also expanding by setting up additional plants in the country. Last year, Nestlé has allotted R4.8 billion for the first phase of its Coffeemate manufacturing plant in Tanauan, Batangas. The said facility targets completion by June this year.
With renewed commitment and support from both the government and private sectors, it’s not impossible to realize the dream of the Philippines becoming a major producer once again. “We believe in a very good future. We’re also very optimistic that we’ll be able to provide more Filipino coffee to the industry so that we—UFC, Café Puro and every player in this industry—can really help the coffee farmers of the Philippines,” says Daniel Aellen, executive vice president and chief finance officer for Nestlé. “I think that’s the most important,” he concludes, “everybody will benefit—the farmer, the consumer, [and] the industry. That’s the main task, the main reason we are here.”