Phl high-value crops industry (part 2)

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest Industry Trends, despite the potential market, and the possibilities of larger earnings per yield, production of crops categorized as “high-value” is still falling short of demand. Industry participants have noted on numerous occasions that the demand for these crops does exist, but for one reason or another, production has been unable to keep up with the appetite.

In the case of cacao, a very lucrative high-income per yield crop, the Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development (PCAARRD) has noted that international demand has been growing steadily at 2-3 percent per annum. Much of the industrial use of cacao is in the form of oil, which is used in lipstick and other cosmetics, with the residual fruiting body being the main ingredient in the manufacture of chocolate. Local production of about 15,000 metric tons in total has paled in comparison to that of our neighbors, such as Vietnam, whose annual yield stands at 50,000 metric tons.

As per IDEA, the main hurdle that local farmers have faced in growing cacao has been the lack of the appropriate cacao species that are suitable to local environmental conditions. Our high quality local strains are susceptible to borers, making large losses commonplace. A solution has been proposed in the form of a strain from Borneo, which has a hard shell that is impervious to the pest, but sadly is not as aromatic. In addition to the low production volume, local growers are also behind in terms of expertise in “value-adding” processes such as fermentation and drying, which could greatly increase the value of our exports, versus the raw beans that we currently ship.

According to the same published report, the local coffee growing industry also faces a similar conundrum, as local supply has been unable to keep up with the growing customer need for coffee beans. Once the fourth-largest coffee producing country in the world, the Philippines now accounts for less than 1 percent of total global production, and is actually currently a net importer. It is estimated that by end 2013, the country would have imported up to 40,000 metric tons just to keep up with local demand, a clear sign of the large production gap in this crop. The lackluster volume of production has been attributed to a lack of knowledge and technology on the part of local growers.

Furthermore, because the raw coffee bean’s price is subject to the market price on the world exchange, local growers are subject to a large amount of price volatility with regards to their green bean production. In addition, the price of the raw bean, straight from harvest and drying, is much lower than that of its finished product counterparts. Lack of access to technology and technical knowledge has meant that local farmers only sell the raw bean. Local trade and industry authorities have encouraged local farmers to add value to the beans which they produce, especially through roasting. The Philippine Agricultural Development and Commercial Corp. (PADCC) has noted that while a kilogram of raw beans may only fetch Php100 per kilogram, it could easily reach Php 400 per kilogram when roasted, according to the researchers of IDEA.

For comments, rejoinders and questions on credit and collection matters, send email to [email protected]