Monday, July 16, 2018
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Breaktime

Brood coffee

Nestlé Philippines, operating in the country for more than a hundred years now, plans to expand its “instant” coffee-making facilities here, supposedly investing some $160 million.

That should be a huge factory, although it would be smaller than the new coffee factory that Nestlé SA, the Swiss parent of the local company, has invested in a similar coffee-processing plant in Vietnam, costing more than $270 million.

Nestlé even had a chance to reveal its planned expansion to our leader Benigno Simeon (aka BS) during his recent state visit to the United Kingdom. The Nestlé project was one of the “investments” that our leader BS supposedly brought home from his recent foreign trip.

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Word has it that Nestlé is still trying to decide on the location of the expansion plant. At present the company has its “instant” coffee processing plant in Cagayan de Oro, but it is also putting up an enormous manufacturing complex in Tanauan, Batangas, where it plans to manufacture its world-famous coffee creamer brand, “Coffeemate.” The location of the $160-million expansion must still be a toss-up between Cagayan de Oro and Tanauan.

I can only wonder what the LGUs in those places are doing to convince Nestlé to locate to their respective areas. Other LGU officials would swim across an ocean of steaming hot coffee for such a huge investment, coming as it is from the world’s biggest food conglomerate.

Swiss firm Nestlé SA is recognized as the world’s biggest food company with more than $100 billion in yearly revenue, followed by US company Kraft’s $60 billion more or less.

During an Asean regional tour last year, Nestlé COO Paul Bulcke hinted about the coffee plant expansion, saying that the company would continue to invest in the Philippines, on top of the new coffee creamer facility that it was building in Tanauan.

In the coffee business here, Nestlé has long dominated the so-called middle market, although its top officials at times talk about its coming up with new products for the high-class and the rock-bottom segments of the market.

After all, “instant” coffee is the cheap version of “brewed” coffee that has exploded in popularity throughout the world in the past 20 years. It does not matter that, according to health buffs, “instant” coffee is high in acrylamide, which is a chemical compound.

Reports quoting the US Food and Drug Administration, for instance, said that the acrylamide in “Nescafe Classic” instant coffee is about 471 ppb (or parts-per-billion), which is a measurement in chemistry for the presence of substances in liquid.

But more than anything else the key in marketing instant coffee here should be the price, and to a certain extent, the pricing of Nestlé would depend on its buying price for raw green coffee from the local farmers.

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From what I gathered, the company informed our leader BS about its plan to introduce a program to buy all the coffee that local farmers can produce, estimating to spend at least P35 million a year.

The thing is, the price paid by industrial buyers of coffee remains a source of friction between coffee farmers and companies like Nestlé and CFC-Robina, part of the conglomerate of taipan John Gokongwei Jr. The two companies have for some time been the biggest industrial buyers of coffee here.

As a matter of fact, Sen. Francis Pangilinan, chair of the Senate agriculture committee, at one time pointed out the problem, as he set aside funding for coffee-roasting facility in Amadeo (Cavite), known as the coffee capital of the Philippines, which was aimed at increasing the farm gate price for coffee in the town.

Nestlé of course has asserted that its buying price has been competitive with world prices of coffee.

Still it could never explain the mystery of shortage of raw green coffee here. While more than 70 percent of our population still depend on agriculture, we still import the raw material for manufacturing “instant” coffee. There is hardly any link between our agriculture and our manufacturing sectors.

Nestlé, for instance, imports more than 70 percent of the coffee bean requirement for its manufacturing operations, mainly from Indonesia and Vietnam. The country imports roughly 40,000 MT of coffee beans every year, amounting to more than $100 million, or close to P4.5 billion, which is really a lot of money for our coffee farmers.

In other words, there continues to be a shortage of coffee beans here. One of the main reasons for it is the potential coffee producers—the farmers themselves—are not happy with the prices that coffee beans can fetch.

The farmers do not have broods upon broods of choice when it comes to buyers.

*   *   *

Based on the flood of reports on the Aquino (Part II) administration’s choice of the new Chief Justice, the parameters should include honesty and integrity—and not “age.”

To me, the next CJ must have those qualities, sure, but based on coffee talk in business, the more important qualification of the candidate must still be knowledge of the law. We are talking here of the highest legal position in the land, right? To those in business, the candidate must be a legal heavyweight.

Thus, in business, they are talking about Pacifico Agabin, former dean of the UP College of Law; Ruben Balane, a professor at the UP and Ateneo law schools who placed second in the 1966 bar examinations; and former congressman (six terms in all) and executive secretary Ronaldo Zamora.

Agabin is a graduate of the Yale Law School who authored law books, receiving even the National Book of the Year Award in Law. He is also involved in the publication of the Philippine Law Digests, those volumes upon volumes of legal reference.

Balane has taught at the Ateneo law school for the past 50 years, having started his career in the academe right from graduation, which I am sure a lot of CJ wannabes can never ever claim.

Topping the bar in 1969, Zamora was the youngest editor-in-chief that the UP publication Philippine Collegian ever had. He was also a consistent honor student in college and law school. From what I heard, he was the valedictorian of the class that included Sen. Miriam Defensor Santiago and Sen. Franklin Drilon.

Really, on top of integrity, we have great need for the intellectual depth in the Supreme Court. We do not need just another lawyer or government functionary. Intellect is what the position demands—always.

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TAGS: Agriculture, appointments, chief justice, coffee, Investments, Nestlé Philippines, Pacifico Agabin, Philippines, Ronaldo Zamora, Ruben Balane, supreme court
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