Government to rehabilitate coffee sector

Newly-appointed Agriculture Secretary Luis Lorenzo said the government is set to rehabilitate the country’s coffee industry in a bid to restore the Philippines’ status as a coffee exporter, create additional jobs and respond to the challenge posed by reduced tariffs on coffee imports.

The country last year imported close to 23,000 metric tons of coffee. The influx of imported coffee drastically increased in 1997 following the country’s entry into the World Trade Organization (WTO).

Lorenzo said the government expects the domestic and international demand for coffee to rise in the short term. This is in view of the rapid increase in specialty coffee shops in urban centers and the rapid growth of the popularity of coffee consumption among the youth and young professional sectors.

The increased domestic demand could only fuel a rise in importation if we do not act fast, Lorenzo said. He said the country must also eye the growing opportunities in the international coffee market with the rise in coffee consumption even among traditionally tea-drinking countries in Europe.

Lorenzo recalls that the country used to be self-sufficient in its coffee supply.

"We even used to export 14,000 metric tons of coffee annually to other countries," he said. Philippine coffee exports peaked to about 43,000 metric tons in 1986 generating some $122.5 million in revenues for the country.

Today, the coffee sector must not only compete with cheap imports but also with declining productivity. The slump has seriously affected farmers and laborers, especially in upland areas, Lorenzo explained.

Sultan Kudarat is currently the country’s biggest coffee-producing province, followed by Cavite. Asia has a 21-percent share in the international coffee market with Vietnam and Indonesia sharing the lead with seven percent each of the region’s total output. The global market is dominated by the Americas with 62 percent.

Partnership with private sector

Lorenzo said the program to revive the coffee sector is being undertaken in partnership with the private sector. President Arroyo has organized a task force and encouraged coffee industry leaders to set up a Coffee Development board chaired by Lorenzo.

The program emphasizes the improvement of farm productivity at an increased per-hectare yield of one metric ton within two years. Coffee is a perennial crop and takes time to bear fruit so the focus is on increasing harvest rather than on the planting of new trees, Lorenzo explained.

The program also calls for intensified application of fertilizers and good agricultural practices. Lorenzo said President Arroyo has instructed Land Bank to set up a P300-million lending program for these requirements.

The government is now focusing its assistance on some 22,000 hectares of coffee farms. When these farms yield an incremental 22,000 metric tons, the country effectively closes the important gap, Lorenzo pointed out.

Raising standards

The government is also supporting a program for the promotion of coffee product excellence launched by the Makati Business Club. This is called "Café Isla" which was patterned after a Columbian Coffee campaign.

Café Isla is a seal of excellence used by industry participants to aggressively promote their products in the international market and help the country regain its place in the global coffee trade. The seal symbolizes high standards of production.

The seal certifies that a retailer is selling 15-percent Filipino coffee in their shops; that a miller’s post harvest facilities conform with the standards of the International Coffee Organization; and, that a farmer is producing at least two metric tons per hectare of coffee in his farm.

"The seal is a brilliant strategy to promote loyalty to Philippine coffee," Lorenzo said. Product loyalty will lead to reduce imports, increased domestic production and more jobs in the rural areas, he added.

Meanwhile, Lorenzo also tasked the Bureau of Plant Industry (BPI) to intensify research and extension work to benefit the coffee sector.