Giving local coffee a break
The Philippine Star 09/26/2003

Coffee chains such as Seattle’s Best, Starbucks, Figaro Coffee, Mocha Blends and other coffee establishments are sprouting all around us. This gives the impression that all is well in the local coffee industry.

A deeper look, however, would show that the current conditions of the country’s existing coffee farms are pitiful. Only about 25,000 hectares out of the total 75,000 hectares of farms are productive, many abandoned or unattended when world coffee prices dropped.

Although the local demand for coffee remains strong with consumption already at 55,000 tons, local production is only about 20,000 tons a year. Imports amounting to about P1.5 billion a year fill in the balance.

The potential is there, but given all the current distractions in the Philippines, the struggling local coffee industry seems doomed to have a harder time getting back to its feet.

Lessons From Vietnam

In the past, neighboring countries came to us to learn on new agricultural technologies. Remember the miracle rice? Now, it seems that we will need to seek new knowledge from them since admittedly they have advanced faster than us.

Proponents of the move to revive the ailing local coffee industry could take a few lessons from Vietnam, which rose in less than 30 years to become the world’s second biggest coffee producer next to Brazil.

Vietnam started its first earnest coffee development program in 1975 just a few years after the war with the US. Considering the devastation suffered by the country, the speed by which it implemented the program is amazing.

From only 20,000 hectares that yielded between 5,000 and 7,000 tons, lands devoted to coffee farming now total 500,000 hectares, with the aggregate output this year projected at 700,000 tons. Coffee is now the second key agriculture product, next only to rice.

Today, Vietnam is the world’s top exporter of robusta coffee. Its export revenue accounts for 10 percent of total yearly exports of the country. Vietnamese coffee is consumed in 60 countries, including the United States that buys 90,000 tons of beans annually.

Focus and Agility

How did Vietnam achieve such a feat? From the start, its government realized that it had to make radical innovations to hasten growth in production and trading.

The country opened its doors to foreign investors that provided the financial muscle to go into massive production and international trading. At the same time, land, technical and loan assistance was made available to farmers. These policies plus a determined push from the central government encouraged farmers to go into coffee planting.

Even when world coffee prices dropped in 1999, the Vietnamese government was quick to react to ensure speedy recovery. A second revolution in the coffee industry was started. Focus was placed on quality improvement, production cost reduction, variety and product shifting. This was supplemented by an aggressive promotion to increase coffee consumption both in domestic market and potential customers outside Vietnam.

As of now, the Vietnamese coffee industry keeps on moving forward. There is hardly any competition from its neighbors in the region.

Back To The Local Scene

In its desire to resuscitate the coffee industry, the Philippine government created the National Coffee Development Board (NCDB) to develop and promote the industry. It wasn’t long before the government realized the gargantuan task that lay ahead.

For example, the cost of establishing seedling farms and propagating the seedlings to farmers is staggering at P70 million a year. Existing infrastructures are inadequate. Processing systems of millers are antiquated. Farmers still resist adopting better-yielding varieties and technology.

This has forced the NCDB to revise its target: from an initial (but rather unrealistic) target of 18 months to bring the country’s coffee production to surplus levels, the timetable has been pushed to 10 years.

Feeble Attempts

NCDB initiated several programs to give some life to the moribund industry. A nationwide coffee rehabilitation program was started last year and a P318-million loan facility from the Quedan Rural and Credit Guarantee Corp. was secured.

Coffee farmers, however, were not able access the loans because terms were too stiff for them to qualify as borrowers.

The NCDB is also looking for more coffee farms to rehabilitate, particularly in Mindanao where an estimated 20,000 hectares could be revived. Three big agricultural companies are being wooed, but there has been no substantial development so far.

The NCDB is likewise pushing for the development of a coffee brand name that will make Philippine coffee identifiable in the world market. It is now aggressively promoting local coffee through its Kape Isla program.

This tack raises a lot of questions, especially since we are spending so much money promoting our coffee abroad when local production is so low that we have to resort to importation to supply domestic demand.

Doable Programs, Not Grand Designs

What are needed though are doable programs where benefits are easily seen and felt by the coffee farmers. The government still needs to convince skeptic coffee farmers that they can profit from planting coffee.

Grand designs are not essential. Because we are too far behind our competitors, the first thing that the country should work on is to achieve self-sufficiency in coffee and save those precious dollars currently being used for importations.

For the local industry to really become competitive in the world market, we may have to look at our neighbors, particularly Vietnam, who could teach us a trick or two.

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