Philippines looking to revive coffee industry

Posted at 02/14/2010 5:51 PM | Updated as of 02/15/2010 10:26 AM

AMADEO, Cavite, Philippines - After watching its neighbors become global coffee heavyweights, the Philippines is taking tentative steps towards regaining its status as a formidable grower of the bean.

However, that era is a long way back for the Philippines, among the top five coffee exporters in the world in the 1880s after Spanish friars brought beans with them to their colonial outpost.

The Philippine Coffee Board, an industry group spearheading the revival attempt, knows the country can not compete with the likes of current regional exporting giants Indonesia and Vietnam in volume.

So they are aiming for niche markets and targeting the fast-growing number of young Filipinos who crowd cafes across the country of 93 million people.

"We have a lot of exotic coffees and that is the way to present our products," said Josefina Reyes, director of the board.

Coffee board co-chairwoman Pacita Juan said the Philippines had long had a thriving coffee-drinking culture with a populace that favored coffee over tea, and this was becoming stronger as society modernized.

"People are drinking more coffee with the change in lifestyles. People are working 24-7 in call centers so there is more opportunity to drink coffee. Even hotels are serving better coffee instead of just instant coffee," she told AFP.

The Coffee Board is promoting "Kape Isla," which loosely translates to "Island Coffee" and is a trademark to distinguish specialty coffees grown in the Philippines.

It is also helping entrepreneurs set up small coffee shops across the country where they can offer their own regional blends.

In this way, they can compete with the global giants such as Starbucks, whose local outlets sell specialty coffees generally only from Africa and South America.

The gourmet coffee products that the Philippines are starting to offer include special "premium arabica" blends and the strong "barako" bean that is favored by Filipinos, Juan said.

Special varieties found only in isolated areas are also being developed, as is production of "civet coffee" -- made from beans eaten and excreted by civet cats.

The country had enjoyed a coffee growing boom in the 1980s when it benefited from special export quotas and prices set under the International Coffee Agreement.

"Back then, a lot of people in coffee got rich. Everyone (in the industry) was buying refrigerators and television sets," recalled wholesale coffee buyer Antonio Mawak, based south of Manila.

But in 1989 the quota system collapsed and the Philippines found itself unable to compete against cheaper coffee from countries such as Vietnam.

"Then our farmers started cutting down their coffee trees and planting their farms with pineapple," Mawak said.

Although global prices have since improved, coffee plantations in the Philippines have shrunk -- giving way to other crops or even to urbanization -- and the country has been forced to rely on imports from mainly its neighbors.

Total area cultivated with coffee has fallen from 130,000 hectares in 1989 to about 70,000 hectares, according to Alejandro Mojica, an agricultural specialist from Cavite State University.

"We need to rehabilitate the farms, rejuvenate the farms and expand the farms," he said.

In Amadeo town, about 90 minutes' drive south of Manila, which calls itself "the Coffee Capital of the Philippines," many of the industry's problems are evident.

Coffee is grown on small farms and it has to share space with other crops such as pepper and fruit trees. The beans are usually dried in the sun and have to be sent to traders for processing.

"You can't survive on coffee alone. It costs a lot to harvest and clear and haul it," said farmer Petronilo Romano, 72, as he stripped the beans from the tree with weathered hands.

Nevertheless, he said coffee was a reliable longer-term source of income.

"Bananas, coconut and jackfruit pay for my daily expenses. But bananas have a low price," Romano said.

"With coffee, you can count on having higher profits. With coffee, you can even keep it in storage for up to two years to wait for better prices."

Romano said many of his fellow coffee farmers had long ago switched crops completely, while others of his vintage had been unable to find anyone willing to take over their farms.

"I have another son of 40 years, who is coming into the business but a lot of others don't have kids who will take after them," he said.

In contrast, other Asian countries produce beans on large plantations with advanced processing technology.

Juan said the coffee board hoped the country could regain self-sufficiency and not have to import from the likes of Vietnam and Indonesia this decade.

That goal looks extremely tough -- Philippine coffee production was just 97,435 tons in 2008, down from 112,271 tons in 2001, according to agriculture department figures.

But the board is confident that new plantings of seedlings and the promotion of alternative coffee varieties will soon bear fruit.

"By about 2012, there will be a double-digit jump in exports of specialty coffee from the Philippines," Juan said, adding the board was hoping the country could be a net exporter by 2017.