1. THE COFFEE INDUSTRY CLUSTER by: Myrna P. Pablo DTI- National IC Coordinator for Coffee Regional Director, DTI-CAR Mallberry Business Suites, CDO October 13, 2016

2. 1.INDUSTRY PROFILE 2.PHILIPPINE COFFEE ROAD MAP 3.WAY FORWARD

3. INDUSTRY PROFILE

4. PHILIPPINE S Production (ICO-12-2015) Consumptio n (ICO-12-2015) 200,000 7% 2,900,000 Net (Deficit) (2,700,000) -93% WORLD 143.4 M 95% 150.2 M (6.8 M) -5% UNIT: 60-kg bag of dried berries (ICO-12-2015)

5. Region # of Prov.List of Provinces CAR6 Abra, Apayao, Benguet, Ifugao, Kalinga, Mountain Province NCR1Metro Manila R12Ilocos Sur, Ilocos Norte R22Quirino, Nueva Vizcaya R33Aurora, Bataan, Bulacan R4A3Cavite, Batangas, Quezon R63 Iloilo, Capiz and Antique R103Bukidnon, Lanao del Norte, Misamis Oriental R114 Dava del Norte, Davao del Sur, Davao Oriental, Cotabato City R124 Sultan Kudarat, North Cotabato, Saranggani, South Cotabato CARAGA3 Surigao del Sur, Agusan del Norte, Agusan del Sur NIR2Negros Occidental & Negros Oriental R72Bohol and Cebu R82Leyte and Southern Leyte R91Zamboanga ARMM1Sulu 16 Regions 42 Provinces

6. Other Info: Production volume is decreasing by 2.87% per year production yield is decreasing 2.23%/year. Production area is decreasing by 1%/year for the last 9 years and increased by just 1% from 2013 to 2014. Decline in production area is due to shift to other more profitable crops & urbanization. Low yield is due to old age of trees, limited rejuvenation, poor farm practices and poor clones.

7. PHILIPPINES Production In (PSA 2015) Average Price/ (PSA 2015) Total Value of Coffee Production PhP 1.9367 B 23,280 Metric Tons of Green Coffee Beans (GCB) PhP 83.19/ kg- GCB

8. more info … (PSA/ Regional Profiles) Total Number of Farmers : 79,958 : Total Number of Bearing Trees : 67.7 M trees : Total Number of Farmers79,958 Average Farm Size per farmer1-2 hectares Total Number of Bearing Trees67.7 M Number of New Trees3.7 M new trees Total Area Planted (ha)84,580.37 ha No. of Nurseries- Accredited 22 No. of Nurseries – w/o accreditation 16 No. of Seedlings available for sale19,234,260

9. PHILIPPINE COFFEE PRODUCTION by TYPE: (PSA, 2014) TYPE volume in mt Dried berries % share Area planted (ha) Ave Yield mt/ ha Top 3 Regions Arabica 15,871.24 24% 16,612.97.93 R12, R11, R6 Robusta 43,955.4 69% 76,294.75.59 R12, R11, R10 Liberica 346 1% 590.15 R6, R4A, R11 Excelsa 3,170.93 6% 6,643,92 R11, R12, R 4A TOTAL 63,997.57

10. COFFEE PRICES by TYPE per kg of Green Coffee Beans (GCB) PSA. 2014 data of farm gate prices Robusta prices follow fluctuating prices set at London Exchange when sold for soluble market Robusta is also being prepared for the specialty market which now termed as FINE ROBUSTA and could be sold double in price or even at negotiated prices Arabica and Liberica is totally for the Specialty market. Liberica is known for its strong kick Arabica prices are negotiable depending on coffee profile, origin and value adding Excelsa is still mixed with robusta. There is not much distinct mentions on this variety

11. Inputs/ seedlings Coffee berries Dried Coffee berries Dried Coffee berries Parchment Green Coffee Beans Roasted Coffee Roasted Coffee Brewed Coffee INPUT-PRODUCTION PRE-PROCESSING PROCESSING

12. Source: Philippine Coffee Alliance Assumptions: 1 hectare 1,000 trees 500kgs GCB 375 kg. of roasted coffee 100 cups brewed coffee/ kilo of roasted coffee @ P40 / cup

13. 13 Cost Ladder from Farming to Processing PPC - primary processing cost (farm level) SPC - secondary processing cost (to roast and ground coffee) R&G – roasted & ground coffee Source: Department of Agriculture The situation improved largely since 2012 specially on Arabica where primary cost per kg. of green beans improved from P150 to P300/kg and roasted coffee is 600-750/kg.

14. Inputs/ seedlings Coffee berries Dried Coffee berries Dried Coffee berries Parchment Green Coffee Beans Roasted Coffee Roasted Coffee Brewed Coffee INPUT-PRODUCTION PRE-PROCESSING PROCESSING Requirements for Development: Micro Financing for farm inputs Improvement of Agricultural practices Technical assistance on the implementation of GAP and coffee standards Technical assistance on establishing seed banks of certified Seeds Provision of appropriate facilities (pulper, dryer, washer, sorting tables and huller and moisture meter; Massive Technical Trainings of farmers Organizational training on operation of community facility Investment Promotion Financing Database Development and regular updating and dissemination of knowledge products Market Promotion Investment Promotion of coffee businesses Establishment of cupping laboratory Regular cuppings session on coffee samples from all origins Technical courses on coffee processing (Roasting, grinding, brewing

15. Inputs/ seedlings Coffee berries Dried Coffee berries Dried Coffee berries Parchment Green Coffee Beans Roasted Coffee Roasted Coffee Brewed Coffee INPUT-PRODUCTION PRE-PROCESSING PROCESSING Private Nursery Government Nursery Community Nursery Certified Seed Bank Coffee Farm Coffee Demo Farm Learning Site/ Coffee Tour Farm Coffee consolidator Coffee equipment fabricator Coffee drying/ hulling plant Coffee Processing plant Coffee Roaster Coffee Shops Coffee Supply Store Coffee Academy Coffee Q-Grading and Cupping Laboratory Beverage Store Pasalubong Center INVESTMENT AREAS:

16. Inputs/ seedlings Coffee berries Dried Coffee berries Dried Coffee berries Parchment Green Coffee Beans Roasted Coffee Roasted Coffee Brewed Coffee INPUT-PRODUCTION PRE-PROCESSING PROCESSING WHY COFFEE? 1.Coffee industry has high inclusive growth. It is labor intensive in farm development and operation, processing and marketing. 2.The Philippines is largely a coffee consumer. Big number of coffee shops requiring a large number of skilled labor, have emerged. This assures market of coffee in the Philippines. 3.There is a preference of Philippine coffee due to organic properties compared to Vietnam and Indonesia Coffee plantations provide an annual big time income while allowing intercrop of short term cash crops. 4.There is a strong provision for government support; 5.Coffee promotes peace;

18. VISION 1.cost-competitive, 2.aligned with global quality standards, 3.reliable and environment- friendly; 4.provides sustainable benefits to farmers, processors, traders and exporters

19. GOALS  Increase productivity and production leading to self-sufficiency by 2020  Improve farmers’ standard of living through diversified high value agriculture  Increase rural employment  Adaption of environment-friendly technologies  Lessen coffee bean and coffee products importation  Improve incomes of farmers, processors and other stakeholders

20. OTHER PRIORITY CONCERNS Establish an institutional platform among stakeholders at the national, regional and provincial level. (NTWG) Investment promotion from soil to cup Sources of Investments/Funds Compliance of Quality Standards across the Value Chaim Establishment / regular updating of coffee database Challenges

21. Coffee Industry Strategic Plan Inputs/ seedlings Coffee berries Dried Coffee berries Dried Coffee berries Parchment Green Coffee Beans Roasted Coffee Roasted Coffee Brewed Coffee INPUT-PRODUCTION PRE-PROCESSING PROCESSING FOCUS OF COFFEE ROADMAP: 1.Improvement of coffee farmers’ productivity, profitability and product quality 2.Increasing production area 3.Market access and value-addition in coffee products

22. Coffee Industry Strategic Plan Market Access and Value Addition in Coffee Products Investment promotion from seed to cup Development of new products and processing technology Provision of appropriate processing equipment Market Niching for Philippine coffee: Branding, Quality seal, single origins, organic, specialty, etc. Capability building on Q (Arabica) and R (Robusta) grading and cupping Promotion of specialty coffee Improvement of packaging and labeling Institution building (coffee councils, TWG from National to Provincial levels)

23. Coffee Industry Strategic Plan QUALITY standards: PNS/PAES 252 (2011) (English): Agricultural machinery - Coffee Pulper – Specifications PNS/BAFPS 01:2012/ ICS 67.140.20: Green Coffee Beans – Specifications PNS/BAFS 169:2015/ ICS 67.080.20 Code of Good Agricultural Practices for Coffee PNS/BAFS 170:2015/ ICS 67.080.20 Code of Practice for the Prevention and Reduction of Ochratoxin A Contamination in Coffee

24. Coffee Industry Strategic Plan Q- GRADING AND VALUE ADDING: SPECIALTY COFFEE STANDARDS - Specialty Coffee Association of America (SCAA)/ Europe (SCAE) Common Code of Coffee Communities – 4C Association Thematic Value Adding Certifications Women in Development Bird Sanctuary Bio Diversity (WWW Fund for Nature) Rainforest (Rainforest Alliance) UTZ Organic Fair Trade Green Industry

25. Coffee Industry Strategic Plan

27. STRATEGIC OBJECTIVES Inputs/ seedlings Coffee berries Dried Coffee berries Dried Coffee berries Parchment Green Coffee Beans Roasted Coffee Roasted Coffee Brewed Coffee INPUT-PRODUCTION PRE-PROCESSING PROCESSING 3.Product and Market Developme nt 1.Productivity & Efficiency Enhancement 2.Quality Improve- ment 4.Investme nt Promotio n 5.Creation of Enabling Business Environment 6.Access to Finance

28. Enhancing productivity and efficiency Enhancing Productivity and efficiency

29. Quality Improvement

30. Market and Product Improvement Product and Market Development

31. Investment Promotion

32. Enabling environment Creation of Enabling Environment

33. MOVING FORWARD 2 nd Philippine Coffee Conference. Nov. 23-25, 2016. Hotel Supreme Baguio City CREATION OF THE NTWG for COFFEE PUSH FOR BEST QUALITY OF PHILIPPINE COFFEE PUSH FOR BEST QUALITY OF PHILIPPINE COFFEE 1 PROMOTE PROCESSING ROBUSTA FOR THE SPECIALTY COFFEE MARKET DEVELOPMENT OF A A PHILIPPINE COFFEE BRANDING 2 3 4 5