the coffee industry cluster in the philippines

THE COFFEE INDUSTRY CLUSTER

by: Myrna P. Pablo DTI- National IC Coordinator for

CoffeeRegional Director, DTI-CAR

Mallberry Business Suites, CDO October 13, 2016

1. INDUSTRY PROFILE2. PHILIPPINE COFFEE ROAD MAP3. WAY FORWARD

INDUSTRY

PROFILE

PHILIPPINES

Production (ICO-12-2015)

Consumption (ICO-12-2015)

200,000 7%

2,900,000

Net (Deficit) (2,700,000)-93%

WORLD

143.4 M 95%

150.2 M(6.8 M) -5%%

UNIT: 60-kg bag of dried berries (ICO-12-2015)

Region# of Prov. List of Provinces

CAR 6 Abra, Apayao, Benguet, Ifugao, Kalinga, Mountain Province

NCR 1 Metro ManilaR1 2 Ilocos Sur, Ilocos NorteR2 2 Quirino, Nueva VizcayaR3 3 Aurora, Bataan, Bulacan

R4A 3 Cavite, Batangas, QuezonR6 3 Iloilo, Capiz and Antique

R10 3 Bukidnon, Lanao del Norte, Misamis Oriental

R11 4 Davao del Norte, Davao del Sur, Davao Oriental, Cotabato City

R12 4 Sultan Kudarat, North Cotabato, Saranggani, South Cotabato

CARAGA 3 Surigao del Sur, Agusan del Norte, Agusan del SurNIR 2 Negros Occidental & Negros Oriental

R7 2 Bohol and CebuR8 2 Leyte and Southern LeyteR9 1 Zamboanga

ARMM 1 Sulu

16 Regions42 Provinces

Other Info:• Production volume is decreasing by 2.87%

per year • Production yield is decreasing 2.23%/year. • Production area is decreasing by 1%/year for

the last 9 years and increased by just 1% from 2013 to 2014.

• Decline in production area is due to shift to other more profitable crops & urbanization.

• Low yield is due to old age of trees, limited rejuvenation, poor farm practices and poor clones.

PHILIPPINESProduction

In (PSA 2015)

Average Price/(PSA 2015)

Total Value of Coffee Production

PhP 1.9367 B

23,280 Metric Tons of Green Coffee Beans (GCB)

PhP 83.19/ kg- GCB

more info… (PSA/ Regional Profiles)

• Total Number of Farmers : 79,958• :• Total Number of Bearing Trees : 67.7 M

trees• :• :

Total Number of Farmers 79,958

Average Farm Size per farmer 1-2 hectares

Total Number of Bearing Trees 67.7 M

Number of New Trees 3.7 M new trees

Total Area Planted (ha) 84,580.37 ha

No. of Nurseries - Accredited 22

No. of Nurseries – w/o accreditation 16

No. of Seedlings available for sale 19,234,260

PHILIPPINE COFFEE PRODUCTION by TYPE: (PSA, 2014)

TYPE volume in

mtDried

berries

%share

Area planted

(ha)

Ave.Yield mt/ ha

Top 3 Regions

Arabica 15,871.24

24%

16,612.97 .93 R12, R11,

R6

Robusta

43,955.4

69%

76,294.75 .59 R12, R11,

R10

Liberica 346 1% 590.15 R6, R4A,

R11

Excelsa 3,170.93 6% 6,643,92 R11, R12, R

4A

TOTAL 63,997.57

COFFEE PRICES by TYPE per kg of Green Coffee Beans (GCB)

PSA. 2014 data of farm gate prices

• Robusta prices follow fluctuating prices set at London Exchange when sold for soluble market

• Robusta is also being prepared for the specialty market which now termed as FINE ROBUSTA and could be sold double in price or even at negotiated prices

• Arabica and Liberica is totally for the Specialty market. Liberica is known for its strong kick

• Arabica prices are negotiable depending on coffee profile, origin and value adding

• Excelsa is still mixed with Robusta. There is not much distinct mentions on this variety

VALUE LADDER

Inputs/ seedlings

Coffee berries Dried Coffee berries

Parchment Green Coffee Beans

Roasted Coffee

Brewed Coffee

INPUT-PRODUCTION PRE-PROCESSING PROCESSING

Nurseries Growers Robusta

Growers Arabica

Roasters Beverage Retailers

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

15,000 28,000 48,000120,000

800,000

COFFEE VALUE CHAIN : PROFIT MARGINS

SOURCE: Philippine Coffee Alliance

Assumptions: 1 hectare 1,000 trees 500kgs GCB 375 kg. of roasted

coffee 100 cups brewed

coffee/kilo of roasted coffee @

P40/cup

13

Cost Ladder from Farming to Processing

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

33.48

1.00 7.60 1.00

36.92 30.00

6.67

183.33

300.00

PPC - primary processing cost (farm level) SPC - secondary processing cost (to roast and ground coffee) R&G – roasted & ground coffee

Source: Department of Agriculture

The situation improved largely since 2012 specially on Arabica where primary cost per kg. of green beans improved from P150 to P300/kg and roasted coffee is 600-750/kg.

Inputs/ seedlings



Roasted Coffee

Brewed Coffee

INPUT-PRODUCTION PRE-PROCESSING PROCESSINGRequirements for Development:

• Micro Financing for farm inputs

• Improvement of Agricultural practices

• Technical assistance on the implementation of GAP and coffee standards

• Technical assistance on establishing seed banks of certified Seeds

• Provision of appropriate facilities (pulper, dryer, washer, sorting tables and huller and moisture meter;

• Massive Technical Trainings of farmers• Organizational training on operation of

community facility• Investment Promotion• Financing• Database Development and regular updating

and dissemination of knowledge products• Market Promotion

• Investment Promotion of coffee businesses

• Establishment of cupping laboratory

• Regular cuppings session on coffee samples from all origins

• Technical courses on coffee processing (Roasting, grinding, brewing

Inputs/ seedlings



Roasted Coffee

Brewed Coffee


Private Nursery

Government Nursery

Community Nursery

Certified Seed Bank

Coffee Farm

Coffee Demo Farm

Learning Site/ Coffee Tour Farm

Coffee consolidator

Coffee equipment fabricator

Coffee drying/ hulling plant

Coffee Processing plant

Coffee Roaster

Coffee Shops

Coffee Supply Store

Coffee Academy

Coffee Q-Grading and Cupping Laboratory

Beverage StorePasalubong Center

INVESTMENT AREAS:

Inputs/ seedlings



Roasted Coffee

Brewed Coffee

INPUT-PRODUCTION PRE-PROCESSING PROCESSINGWHY COFFEE?

1. Coffee industry has high inclusive growth. It is labor intensive in farm development and operation, processing and marketing.

2. The Philippines is largely a coffee consumer. Big number of coffee shops requiring a large number of skilled labor, have emerged. This assures market of coffee in the Philippines.

3. There is a preference of Philippine coffee due to organic properties compared to Vietnam and Indonesia Coffee plantations provide an annual big time income while allowing intercrop of short term cash crops.

4. There is a strong provision for government support;

5. Coffee promotes peace;

THE COFFEE ROAD MAP

THE COFFEE ROAD MAP

VISION

1. cost-competitive, 2. aligned with global quality

standards, 3. reliable and environment-

friendly; 4. provides sustainable

benefits to farmers, processors, traders and exporters

THE COFFEE ROAD MAP

GOALS

Increase productivity and production leading to self-sufficiency by 2020

Improve farmers’ standard of living through diversified high value agriculture

Increase rural employment Adaption of environment-friendly

technologies Lessen coffee bean and coffee

products importation Improve incomes of farmers,

processors and other stakeholders

THE COFFEE ROAD MAP

OTHER PRIORITY CONCERNS• Establish an institutional platform

among stakeholders at the national, regional and provincial level. (NTWG)

• Investment promotion from soil to cup

• Sources of Investments/Funds• Compliance of Quality Standards

across the Value Chaim• Establishment / regular updating of

coffee database

Challenges

Coffee Industry Strategic Plan

Inputs/ seedlings



Roasted Coffee

Brewed Coffee

INPUT-PRODUCTION PRE-PROCESSING PROCESSINGFOCUS OF COFFEE ROADMAP:

1. Improvement of coffee farmers’ productivity, profitability and product quality

2. Increasing production area3. Market access and value-addition in coffee

products


Market Access and Value Addition in Coffee Products Investment promotion from seed to cup Development of new products and processing technology Provision of appropriate processing equipment Market Niching for Philippine coffee: Branding, Quality seal, single origins, organic, specialty, etc. Capability building on Q (Arabica) and R (Robusta) grading and cupping Promotion of specialty coffee Improvement of packaging and labeling Institution building (coffee councils, TWG from National to Provincial levels)


QUALITY standards: PNS/PAES 252 (2011) (English): Agricultural machinery

- Coffee Pulper – Specifications PNS/BAFPS 01:2012/ ICS 67.140.20: Green Coffee

Beans – Specifications PNS/BAFS 169:2015/ ICS 67.080.20 Code of Good

Agricultural Practices for Coffee PNS/BAFS 170:2015/ ICS 67.080.20 Code of Practice

for the Prevention and Reduction of Ochratoxin AContamination in Coffee


Q- GRADING AND VALUE ADDING:• SPECIALTY COFFEE STANDARDS - Specialty

Coffee Association of America (SCAA)/ Europe (SCAE)

• Common Code of Coffee Communities – 4C Association

• Thematic Value Adding Certifications Women in Development Bird Sanctuary Bio Diversity (WWW Fund for Nature) Rainforest (Rainforest Alliance) UTZ Organic Fair Trade Green Industry

STRATEGIC OBJECTIVES

Inputs/ seedlings



Roasted Coffee

Brewed Coffee


3. Product and Market Development

1. Productivity & Efficiency Enhancement

2. Quality Improvement

4. Investment Promotion

5. Creation of Enabling Business Environment

6. Access to Finance

Enhancing Productivity and efficiency

Quality Improvement

Product and Market Development

Investment Promotion

Creation of Enabling Environment

MOVING FORWARD2nd Philippine Coffee Conference . Nov. 23-25, 2016. Hotel Supreme Baguio City

CREATION OF THE NTWG for COFFEE

PUSH FOR BEST QUALITY OF PHILIPPINE COFFEE

1

PROMOTE PROCESSING ROBUSTA FOR THE SPECIALTY COFFEE MARKET

DEVELOPMENT OF A A PHILIPPINE COFFEE BRANDING

2

3

4

5

the coffee industry cluster in the philippines

Economy & Finance