Vietnam coffee overcoming ours

We must admire Vietnam. Not only did it survive and even triumph during the Vietnam war; it also exercised political will in its agricultural development.

As a result, Vietnam is now overtaking the Philippines. This is obviously happening in coffee, and we should not allow this to continue.

Like Vietnam, we should exercise political will, especially in agricultural development. We can start with coffee.

More than 95 percent of our imported coffee comes from Vietnam.

Pierre Yves Cote (0917-800-1764) is a Canadian financial expert, married to a Filipina, who is now president of Rocky Mountain Café, Inc.

He works closely with former Agriculture Undersecretary Robert Ansaldo (0917-309-0850), director of Rocky Mountain Arabica Coffee Company.

In a document written by Cote with Ansaldo’s help, several recommendations were made.

According to Cote, we consume 138 million kilos of coffee. Unfortunately, we produce less than 20 million kilos, or only 14 percent of the coffee we consume.

Worse, our demand is increasing while our supply is declining. Mostly old backyard producers are slowly dying, while their children are abandoning a moribund coffee industry.

This supply gap will increase to 200 million by 2020 and 800 million by 2032, given the current trend.

Cote states: “The supply gap represents 100,000 jobs that go away to Vietnam every year. In terms of economic value, the Philippines will give Vietnam P17 billion within 5 years, P28 billion within 10 years, and P75 billion within 20 years. This will make the Philippines’ coffee importers rich, Vietnam people rich, but Filipino farmers will remain poor. Can we allow this to continue to happen?”

So far, we have been doing exactly that. It is not enough to fight corruption which is necessary, but not sufficient, for inclusive growth. It is also necessary to exercise political will to proactively promote progress.

There is a solution to this. It is to have a coffee roadmap developed by professionals with the full participation and commitment of coffee stakeholders.

Dr. Rolando Dy of the University of Asia and the Pacific has spearheaded the formulation of the roadmap.

Dy has done an outstanding job, and we commend the DA for fully supporting this initiative.

Roadmap formulation is one of the two main recommendations of the Alyansa Agrikultura.

This is so that the DA’s 2014 P78 billion budget will be harnessed to support the roadmap strategic direction, instead of sub-optimally spending these funds.

The other Alyansa recommendation is for good DA management systems so that the roadmap implementation is carried out completely.

Last week, we found out that there is a potential problem with this roadmap. There are other coffee roadmaps being done.

The DA should integrate these roadmaps into one official roadmap and exercise political will to support its implementation.

In the current DA-sponsored roadmap, there is a model that clearly promotes inclusive growth. It is the emphasis on upland farming that benefits the poor, many of whom are indigenous people.

Arabica coffee will be emphasized, instead of the current Robusta. Arabica coffee can grow only in upland areas because of the cool climate it requires.

Unfortunately, most of our coffee is Robusta, which commands a price (P75/kg) that is a third of the Arabica price (P220/kg).

Today, some integrators who sell coffee seedlings buy back these coffee beans only if they meet the integrators’ standards.

Thus, the burden and task of drying and processing the beans to meet the required standards lies with the farmers.

Unfortunately, most farmers lack the required equipment to do this.

A roadmap recommendation is to promote coffee processing centers owned by the farmers in groups, using economies of scale. This will increase the quality and value of their produce.

Ansaldo states that for inclusive growth, the farmer should own the land and cultivate the crop himself.

This way, he will not just rent out his land and become a paid farm worker, with the profits going to the integrator instead of to himself.

The DA should also support this roadmap with the proper management system to implement it.

A critical bottleneck is financing. DA can work with financial institutions like the Land Bank to formulate innovative lending schemes so that loans can flow to small farmers in the coffee sector.

This will augment the current 16 percent of Land Bank loanable funds (more than P250 billion) that go directly to farmers and fisherfolk.

With the political will to implement these recommendations, Philippine coffee will not only protect and expand its domestic market share.

We will also be able to give Vietnam stiff competition in the international market, thus creating thousands of jobs and achieving inclusive growth for our country.

The author is Cchair of Agriwatch, former Secretary for Presidential Flagship Programs and Projects, and former Undersecretary for Agriculture, Trade and Industry. For inquiries and suggestions, e-mail [email protected] or telefax 8522112.