DTI and DA craft development roadmap for local coffee industry

Ihave come across so many success stories of non-government organizations (NGOs) or government extension units working with local communities in establishing sustainable income projects. They have either helped the community propagate indigenous fruit crops, process them into a variety of products and market them within the community or to targeted upscale consumers. Yet in almost all instances, the volume of sales and the reach of the venture has been limited despite opportunities that exist. The obstacles are in the insufficiency of supply of the raw materials (backyard rather than plantations); lack of capital to expand operations or unwillingness to take risks; the NGOs and the government extension units own limited knowledge (more on livelihod rather than a business orientation); and the lack of business and management expertise of the community.

Many years ago, while doing consultancy work for UNIDO in the backwaters of Thailand, I came across a group of Thai fish paste or “bagoong” makers whose products had reached the shelves of supermarkets in the United States. Knowing that they too had to contend with the same challenges as Filipino bagoong makers, I tried to ferret out the secret of their success. In one word, it was COOPERATION. Since bottle manufacturers demanded minimum order quantities beyond the needs of one or two fish paste makers, all of them agreed on common bottles and on a common trademark for the fish paste geared for the export market. They even decided on a common formulation for the export product even as each retained its distinctive characteristics for the local Thai market. They organized for the export market relying on professional management who did the marketing and provided the group with schedules of production and delivery with strict quality control standards. The substantial margins from sales of what the US market considered as “exotic” specialties not only covered the cost of professional managers but also provided good returns. A collateral benefit is that these managers also helped improve their products for the local market in terms of packaging, branding and marketing.

In the Oita prefecturate in Japan, the innovative governor who had previously worked in the Ministry of Trade and Industry introduced the One Town, One Product (OTOP) strategy. Focusing on a traditional product of a town or the abundance of one specific raw material, the towns people concentrated on manufacturing that product or a variety of products using the common raw material. Each town became known for that product and this served as a successful marketing approach. As a whole, the Oita prefecturate then became known as the center of these upsurges of distinctive range of products defining its unique position in the Japanese landscape. It also resulted in the absence of competition between towns and the businessmen and stressed again, the importance of COOPERATION.

In many instances local products are in a disadvantage with imported products. Since many of the cheap imports are over runs of domestic markets in the exporting country, their prices are extremely competitive vis-à-vis local ones. There are even shopping malls whose main attraction is that they carry these cheap imports. Even the shelves of large department stores carry more of these imported products than the locally manufactured ones. Not satisfied with this state of affairs, a Vietnamese businessman decided to build malls exclusively for Vietnamese products. It was not just a simple matter of having a venue for locally manufactured items, he had to ensure that what was on display were the best of Vietnamese products in quality and prices. This meant reaching out to Vietnamese producers all over the countryside identifying the best and helping the others become the best. In the end because of the good reputation, the mall attracted not just the local consumers but also those who were looking for Vietnamese products to sell abroad.

These experiences are rich with lessons for the Philippines. Instead of focusing on creating livelihood opportunities in the countryside, we should help local communities establish businesses. Through cooperation and collaboration, plantations rather than backyard operations are the answer. Forming cooperatives is just one approach; creating partnerships with professional managers or successful businessmen is another. I wonder how many successful retirees can be drawn back to their hometowns with the challenge if not the advocacy to transform them into bustling economic centers? Many may realize its “payback time,”

What are the existing local industries which if clustered and united can have a good crack at the export market? The young generation who were educated on networking, team work and collaboration may be the sparkplugs to get their parent’s enterprises to cooperate with others in the industry. Common services can then become a reality leading to success.

With the local elections coming up next year, can’t we have a new breed of local government officials who will focus on making their areas economically progressive rather than just they or their families rich? Can we have officials who can make the towns cooperate rather than compete; working together rather than fighting?

Are there Filipino businessmen in the retail trade who will put their faith in Philippine products and give Filipinos and the rest of the world, Philippines Best?

I believe there are. Then our country can scale up.

melito.jr@gmail. com

Trade and Industry (DTI) Secretary Ramon Lopez said his agency is working closely with the Department of Agriculture (DA) to ensure that the Philippine coffee industry would be at par with the world’s top producers such as Brazil, Vietnam, Columbia, Indonesia, and Honduras.

“We have to have a patriotic drive to encourage demand for Philippine coffee. We are encouraging local producers to expand coffee production to create the demand,” said Lopez.

While the Philippines consumes as much coffee as countries such as the United States, Brazil, Japan, and the European Union, the country is also looking to be one of the top producers of top-grade coffee around the world.

To make this a reality, President Rodrigo Duterte last March 7, 2017 signed the Philippine Coffee Industry Roadmap 2017-2022 to boost the country’s domestic coffee output in the next five years — a huge lift for coffee farmers, producers, and traders.

The Philippine Coffee Industry Roadmap 2017-2022 will guarantee a coffee industry that is cost-competitive, aligned with global quality standards, reliable and environment-friendly, which will provide sustainable benefits to farmers, processors, traders, and exporters, and attain food security and poverty alleviation.

Coffee is the second most traded commodity in the world and is grown in 50 countries along the equatorial zone called “The Bean Belt,” which is located between latitudes 25 degrees north and 30 degrees south. Interestingly, the Philippines lies within the Bean Belt.

Due to this advantageous location and favorable, although tropical, climate, the country produces four varieties of coffee including Robusta, Arabica, Excelsa, and Liberica.

According to Lopez, the current coffee output of the Philippines is pegged at 37,000 tons a year but with the Philippine Coffee Roadmap, the country is expected to raise the coffee production to 214,626 metric tons by 2022. This will bring the country’s coffee self-sufficiency level to 161% from the current 41.60 percent.

The Philippine Coffee Roadmap would also make available 213,788 hectares of area planted with coffee nationwide, translating to a huge yield of one ton of coffee beans per hectare — a huge discrepancy from the usual 0.33 ton per hectare. The task of implementing the roadmap falls on the Philippine Coffee Council. Lopez is optimistic that the country will be able to achieve this feat especially with DTI assisting the coffee industry, which is one of the priority sectors of the agency.

“Through DTI’s 7Ms (Mindset change, Mastery, Mentoring, Money, Machine, and Models), we will continue to provide enabling mechanisms to empower coffee farmers and help in addressing the challenges in the industry,” Sec. Lopez added.

Data shows that Vietnam is the highest exporter of coffee green beans to the Philippines. Filipinos are also fifth among the highest consumers of coffee behind EU, US, Brazil, and Japan. Similarly, the Philippines is the top importer of soluble coffee and fourth total importer in the world.

As far as coffee production is concerned, the gap between coffee demand and production is widely noticed with demand for coffee is at 90% and imports amounting to R12 billion. The demand is still increasing with expanding consumption based among younger generation.

Currently, the top five regions in producing coffee are SOCCSKSARGEN (Region 12) with 25,100.77 metric tons, Davao with 11,429.78 metric tons, Autonomous Region in Muslim Mindanao (ARMM) with 10,341.59 metric tons, Northern Mindanao with 5,604.95 metric tons, and Western Visayas with 4,356.25 metric tons.

With the Philippine Coffee Roadmap as guide, the trade and agriculture departments together with the private sector, and other coffee stakeholders held last March 20-21, 2018, the 3rd Philippine Coffee Conference in Baguio City and presented the coffee industry’s performance on the first year of the implementation of the roadmap.

The conference also discussed among other topics, the strategies to achieve the goals of the Philippine Coffee Roadmap, trends in coffee brewing methods, quality coffee farming of arabica and fine robusta, retailing a coffee business, financing for coffee business, and coffee business models.