Filipino Coffee for Filipinos
by Brian Tenorio
To develop the coffee industry of the Philippines, the easiest development strategy would have been to replicate the models from the IFC in Kenya and in Nicaragua both programs implemented in the recent last five years.
In Kenya, the IFC supported Kenyan coffee farmers as they improve their supply chain in a country where their own government support for coffee growing has decreased in the last decade. Through the IFC’s intervention, Kenyan coffee farmers have been able to increase their harvest volume while improving on the quality of the stock to meet international coffee standards, all these through a much reinforced system of establishing more and new cooperatives. The gross annual income of Kenyan farmers is expected to increase from $200 to $450 through this intervention and assistance. The average yield per coffee tree has improved by 70%. In Nicaragua, the IFC, Global Agriculture & Food Security Program (GAFSP), Ecom’s subsidiary — coffee trader Atlantic, Starbucks and the Inter-American Development Bank (IDB), joined efforts to deliver Nicaraguan farms from coffee rust by helping more than 500 farmers with replanting and re-establishing their plantations via new coffee varieties and related technologies. This endeavor in Nicaragua is expected to triple the country’s farmers’ average annual coffee yield.
The Philippines is one of the most populated countries in the world (110 million by 2020, and projected to be one of the twenty largest populations with 140 million by 2040–those numbers exclude the Filipino diaspora currently at 10 million in 2013).
The Philippine Situation
Click here to view COFFEE INDUSTRY Road Map Localization by MYRNA P. PABLO, Regional Director, DTI-CAR, the Department of Trade and Industry (DTI) National Industry Cluster Coordinator for Coffee, Republic of the Philippines
The are two factors that majorly affect the Philippine Coffee Industry: (1) coffee brand manufacturers in the country don’t source most of their coffee from the Philippines, and are even importing from Vietnam, for coffee for Philippine sales and consumption, and (2) at least 90% of all coffee consumption are from soluble coffee or instant coffee. Versus typically brewed coffee, instant/soluble coffee has less coffee in the ingredients per serving, especially for the locally popular “3-in-1” coffee mix drinks where the largest two ingredients are sugar and creamer with some coffee flavoring. Filipinos, generally, do not buy their own coffee. In fact and also, the country cannot produce enough for its own consumption.
“Filipinos, generally, do not buy their own coffee.”
These two challenges can be managed (1) by increasing coffee production capacity/yield in the Philippines and (2) by increasing the demand for brewed coffee (versus the cheaper 3-in-1 instant coffee retailed throughout the country), especially local demand for homegrown beans. While the former can be managed by using strategies similar to the IFC’s intervention in Kenya (mentioned above), the latter will have to be addressed by influencing the value system and taste for coffee by Filipino consumers.
Objective #1: Dynamically Increase Coffee Yield
A loan program mechanism can be set-up to support Filipino coffee farmers as they improve and develop their yield and stock. This loan program can be held through a partnership with international development organizations (such as the International Finance Corporation), regional development banks (for example, the Asian Development Bank), with the Global Agriculture and Food Security Program (GAFSP), large scale coffee traders in the Philippines, and coffee-processing/manufacturers involved in retailing coffee to the Philippines (for example, Nestle, which imports 75% of its coffee requirements to manufacture coffee products for the Philippine market – with the goal of making this eventually and ideally unnecessary in the future). This Private Sector Window (the involvement of coffee traders and manufacturers/retailers) would allow responsive private-sector participation and investments in the Coffee Industry in the country and for its coffee farming communities.
This loan program can arm coffee farmers and cooperatives with funds to improve their compliance with recognized industry standards (regionally and internationally), eventually further increasing the export capabilities of Philippine coffee. This program can support technology-/training-based projects that will help coffee farmers with increasing their turnovers. These funding programs can support research projects for improving coffee yield, skills training, benchmarking (local and international), decreasing the use of land and water resources, and mitigating coffee farming pests. These programs can help establish a more consistent and constant yield for Filipino coffee farmers who are usually more vulnerable to challenges in productivity and yield.
Objective #2: Increase Local Demand and Local Love for Local Coffee
Another key aspect that has not yet been fully addressed and explored in the Philippines is the development of local industry taste and standards–for local consumption. The country has yet to develop its taste for its own coffee and coffee preparation. Currently, besides importing most of our requirements of coffee for soluble coffee manufacturing from other countries in the region, a majority of the specialty coffee locations in the country use imported coffee. So for premium coffee or retail coffee experience, Filipinos prefer imported coffee over homegrown.
Coffee retailers and market players create programs and activities to instill more local love for Filipino local coffee. Featured below is an organization’s pitch for the Philippine contribution to International Coffee Day, celebrated last October 1 2016. Read the news feature here.
Partnerships between international development finance organizations (such as the IFC), and regional/international development banks (for example, the Asian Development Bank), with large-scale local players in coffee manufacturing and retail in the Philippines can help support increasing the local demand for local coffee. This Private Sector Window mechanism could enjoin coffee manufacturers (processors, post-harvest) and retailers to commit to increasing general inventory volume, increasing product lines of coffee, and massively increasing distributorship–making Filipino coffee more accessible to more Filipinos across the archipelago. These efforts, supported by blended finance mechanisms, do not only mean having manufacturers (of processed coffee) commit to creating larger inventories, but also increasing the area and outlets of distribution, while invigorating sales and marketing efforts to amplify the demand. These efforts would support in increasing per capita demand for homegrown coffee, while possibly helping increase the number of coffee organizations, registered coffee shops, quality coffee product lines in the local market.
“This Private Sector Window mechanism could enjoin coffee manufacturers and retailers to commit to making Filipino coffee more accessible to more Filipinos across the archipelago.”
By (1) improving coffee yield and performance, the Philippine Coffee Farming Industry should be able to meet the demands of our coffee manufacturers/retailers, minimizing the importation of coffee for processing and distribution in the Philippines, and by (2) managing the consumer public’s taste and standards for our own Filipino coffee through exposure, marketing, and the re-introduction and re-visiting of our heritage values in coffee (pre-colonial and post-colonial coffee history in the country, its preparation and cultural norms), the Philippine Coffee Farming Industry should be able to increase their input into the local value chain.
About the Author
Tehran-born Filipino-American Brian Tenorio is a Manila/New York-based design manager and strategic design and communications consultant for international organizations and the corporate and social development sectors. More information about his work coverage and advocacy can be read here.
He has hosted and produced a Design x Business x Travel Filipino-TV show airing in the Philippines and in the US, Europe, and Asia, @designparasalahat (“Design for Everyone”) with a whole episode about Coffee from the Kalinga province of the Philippines.
Just last March 2017, Tenorio joined a team of consultants and officials from the Department of Trade and Industry of the Republic Philippines on a trip to the Cordillera Administrative Region (CAR) to assess and empower coffee farmers from the provinces in CAR.