BAR TODAY || Official Quarterly Publication of the Bureau of Agricultural Research

The Philippine coffee industry: a profile
by Laarni C. Anenias

July-September 2001
Volume 3 No. 3

Coffee drinking is said to have originated in Kaffa, a province in Ethiopia. The Ehiopians were the first to discover the beverage in the beans of a tropical evergreen tree of the genus Coffea. They grounded and roasted these coffee beans, then poured boiling water on it. People in Yemen, Arabia, and Egypt soon learned of this discovery, until coffee drinking spread in many areas in the West, and became part of the everyday lives of people for around 300 years now.

In our country, no morning is complete without coffee. We have our own Batangas barako to be proud of. Instant coffee then came into the scene, and lately, gourmet and specialty coffee with the introduction of foreign cafés such as Starbucks, Seattle's Best, and the like. Coffee drinking has now become more than just a way to wake up one's nerves, it has become a trend.

The market situation
Coffee ranks second only to oil among the world's legally traded commodities. Around the world there are an estimated 25 million coffee growers, who are mostly small-scale farmers. The country has two most prevalent varieties of coffee: Coffea arabica, otherwise known as arabica, and Coffea canephora, or robusta. According to statistics from the International Coffee Organization, robusta accounts for 75% of the country's total production and arabica, 5-10%. Other varieties such as excelsa and liberica, likewise thrive in the country and accounts for 15-20% of the country's coffee produce. Interestingly, the country is one of the few countries in the world where all these four coffee varieties exist. It is estimated that around 300,000 Filipinos depend on the coffee industry. The national average yield is 400 kg/ha, a very low production compared to leading coffee producing countries such as Brazil where production is at 2,000 kg/ha. Average coffee production is at 485 kg/ha of green beans. This, according to experts, is much lower than the ideal production of 1,500 kg/ha. While most of the coffee farms are situated in Mindanao, the most productive area is in Cavite, in terms of volume and quality, averaging 840 kg/ha, according to statistics from Nestle Philippines. However, from 1987 to 1996, the total hectarage planted to coffee decreased, from 149,657 hectares to 138,830 or an average of 1% reduction per year. To date, the country produces 739,000 bags of coffee, with total export of 4,999 bags. The country exports coffee in various forms: green beans, roasted ground coffee, and soluble or instant coffee. Nestle Philippines Inc., maker of Nescafe products, reportedly supplies 85% of the instant/soluble coffee in the market. The remaining 15% is shared by Commonwealth Foods (Café Puro), General Milling Company (Kaffee de Oro), and Universal Robina Corporation (Great Taste).

According to reports, world consumption of coffee continues to increase. Experts predict that the level of consumption will follow population growth. Moreover, domestic consumption also increases by 2.25% per year. This could be attributed to the proliferation of coffee specialty shops, catering to a wider and younger clientele. There is likewise a clamor to produce more of the arabica variety, mostly grown in Benguet Province.

Arabica is known for its elegant and complex flavor and is known to have higher quality than Robusta, and has the potential to capture premium markets such as US, Germany, and Japan. However, arabica coffee production is hampered by the following factors: poor technical knowledge in growing coffee and lack of farm-to-market roads to transport harvested beans. Moreover, local industry leaders say Benguet arabica coffee production needs urgent support from the government for it to become competitive in the growing international specialty coffee market.

A national consultation with industry players revealed more factors that hamper the coffee industry's growth. These include low volume production and poor quality of coffee beans. The low yield was attributed to limited knowledge of farmers on appropriate production technologies such as fertilization, pruning technologies, cropping systems, post harvest handling, and primary processing. Old coffee trees also contribute to low productivity.

The National Sub-network Program on Coffee
In consultation with the industry players, this program addresses identified problems such as low volume of production, poor quality, unstable market conditions, and low income of coffee farmers per hectare. The R&D initiatives formulated include technology generation, improvement of coffee varieties for yield and quality competitiveness, development of farming systems, pest management, post harvest, utilization, and biotechnology.

Sources: The coffee sector, losing its perk, a paper by the foundation for Resource Linkage and Development, Inc., MARID, October 2000; International Coffee Organization, http://www.ico.org/statist/po2.htm; International Trade Data System, http://www.itds.treas.gov/CoffeeIndustry.html; Local coffee growers need to aim for specialty market, Michael Leonen, Businessworld, 15-16 December 2000; The Philippine National Program for Crops and Development, prepared by the National Plantation Crops RDE Network Operation and Management.