By Bernie Cahiles-Magkilat
The domestic coffee industry would like the government to put up a coffee fund to spur coffee farming and to reduce the country’s dependence on imported coffee, which hit a staggering $4.5 billion as of 2017.
Chit Juan, president and co-chair of the Philippine Coffee Board, raised this at the Regional Coffee Forum, which tackled the challenges and potential of the industry particularly in the three coffee producing countries in ASEAN — Vietnam, Indonesia and the Philippines to bridge global shortfall in coffee supply.
Based on his presentation, Dave D’ Haeze, regional manager for Asia Pacific Hanns R. Neumann Foundation, it would take $10 million a year in investments for the coffee industry to improve production. He urged to mobilize public and private sector funds to boost coffee production.
D’ Haeze also said that the Philippines has become a net coffee importing country. Philippines’ Cumulative coffee imports from 1990 to 2017 already hit $4.5 billion.
“This is very small compared to the $4.5 billion cumulative coffee importation from 1990-2017,” Juan pointed out.
Juan said the proposed coffee fund should be used to expand areas planted to coffee. There are only 120,000 hectares of coffee farms in the country.
Total local coffee consumption is placed at 130,000 MT but 100,000 MT metric tons are imported because local production is only 30,000 MT.
“Imagine we are importing three times more than we are producing. We don’t want to end up like rice,” she pointed out.
The industry would also like Land Bank of the Philippines to be more creative in lending capital to coffee producers.
Lastly, she said, the government should encourage the youth to engage in coffee farming because this is a generational high value crop.
In his presentation, D’ Haeze said that the estimated global supply gap of coffee could hit 60 million bags (60 kilograms per bag) by 2030 due to rising demand and lower production. Global production is estimated to remain steady at 160 million bags by 2030 while demand is seen at 200 million bags.
Lower production is largely blamed on fewer areas planted to coffee, climate change, limited production areas, ageing coffee farms and trees, lack of economies of scale and access to finance.
According to D’ Haeze, Southeast Asia supplies 44 million bags or 27 percent of total global supply. Vietnam contributes the largest accounting for 67.9 percent followed by Indonesia with 27.6 percent, Papua New Guinea with 1.7 percent, Thailand with 1.2 percent, Laos with 1.1 percent, Philippines with 0.5 percent, and Timor-Leste, 0.1 percent.
Based on his comparison, the Philippines has also good coffee production economics. Statistics showed that in the Philippines there are only 120,000 hectares planted with 800 coffee trees per hectares, producing 300 kilograms of green beans equivalent (GBE) per hectare. Compare this with Indonesia’s 1.3 million hectares of coffee plantation with 3,000 coffee trees per hectare and producing only 500 kgs gbe per hectare. Vietnam has a better figure with 600,000 hectares planted to 1,100 coffee trees per hectare and producing 2,500 kgs gbe per hectare.
D’ Haeze noted that the three ASEAN countries have already good agricultural practices and have the potential to supply 40 percent of global coffee demand from the current 27 percent by increasing the hectarage and adding new coffee varieties.
The Philippines alone has good agricultural practices and can triple the 120,000 hectares of planted to coffee to increase its production to 1 MT per hectare.