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Philippine Coffee Farmers Trapped by Nestle's Low Buying Price

February 19, 2012 ·  By Kristine L. Alave, Philippine Daily Inquirer

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Philippine Coffee Farmers Trapped by Nestle's Low Buying PriceAsk any coffee farmer in Amadeo, Cavite, about the going price of their coffee and they will answer with a frown. Josefa de la Peña, a 77-year-old coffee grower, grimaced when told that the price being offered for Amadeo coffee was P96 per kilogram as of Friday.

De la Peña, who was named one of the most outstanding coffee farmers of Amadeo at the Pahimis (thanksgiving) festival last Friday, expressed disgust at the price being offered that day: “It’s too cheap. My son said it’s higher in the world market. He checks it on the Internet!”

The town of Amadeo, whose farmers grow the premium Robusta beans that food giant Nescafé uses for its instant coffee, does not own a community roaster. As such, coffee producers there have no choice but to sell their green, unroasted beans to food conglomerates like Nestlé, and to a limited extent, the Universal Robina Corp., which both seek to keep prices low.

Just one roaster

Imagine then what one roaster could do for the Amadeo farmers. Elsa Honrada, a technician at the Department of Agriculture (DA) whose family owns a coffee farm, said a community roaster could boost the income of the town’s farmers who all depend on Nescafé to purchase their beans.

Since the company buys almost all of the farmers’ green beans, it has the power to dictate the price. A roaster would be a blessing as roasted beans are more expensive, said Honrada. “It is pricier because it has added value,” she explained.

Having a roaster will also enable the farmers to expand their market, she said.

There are about 4,000 coffee farmers in Amadeo. The town used to have as much as 15,000 hectares of land devoted to the bean before pests and low coffee prices brought down the coffee industry there in the 1980s. Today, only 3,600 hectares are planted with coffee, 90 percent of which is devoted to the Robusta variety.

At present, most of the farmers in Amadeo go to a company in Silang, Cavite, to roast their coffee, a tedious and expensive process.

P100-million rescue program

To help the coffee growers, Sen. Francis Pangilinan and the local government of Cavite have come up with a P5-million grant that will make it possible for the Amadeo farmers to buy a 10-kg roasting machine under a farm program aimed at  injecting modest but timely interventions that could lead to big and lasting results for the farming communities.

The program, called Sagip Saka (Farm Rescue), is an initiative of Pangilinan, who chairs the Senate committee on agriculture and food, the DA and private stakeholders.

With an initial funding of P100 million, the program has set out to modernize the country’s agriculture and improve the quality of life in the rural areas and make the Philippines food-sufficient. The program also encourages the farm sector to be competitive so that it can export its products to other markets.

“If the government does not support the coffee industry, the farmers’ incomes and production would go down. The government must intervene to keep the coffee industry alive and to protect it,” Pangilinan said.

Much in demand

Coffee is one of the most valuable agricultural commodities in the world. Pangilinan said roasted Amadeo coffee could even fetch a price double that offered by Nescafé. If Amadeo farmers can roast their own coffee, they could sell it to other food companies and cafés. They won’t be tied to whatever price Nescafé wants and would have more options, he added.

Private-sector partners are also willing to help Amadeo growers take advantage of the Filipinos’ thirst for coffee by helping them market their beans, the senator said. The demand for coffee in the country stands at 60,000 metric tons a year, 40,000 metric tons of which has to be imported, Pangilinan said.

The Amadeo community is just one of the 25 beneficiaries of the Sagip Saka program, which provides modest help to farmers and fishermen with an initial funding of P100 million.

Simple interventions

Many of the projects are simple interventions with long-lasting results. In Leyte, for instance, a 30-member fishing cooperative only needed ring-net fishing gear for its members to increase their catch.

The farmers of Sumilao, Bukidnon, who recently came into land under the Comprehensive Agrarian Reform Law, will be given trucking and farm input support to reduce the costs of hauling seeds, input and labor from their 97-hectare communal farm.

“The truck would also reduce the marketing cost of delivering its products to buyers. In addition, the cooperative would be able to provide trucking service to other farmers and surrounding communities,” according to the project’s briefing paper.

Sagip Saka also provides interventions on credit and market access. According to Pangilinan, food companies like Jollibee Corp. and San Miguel Corp. have pledged to buy supplies from the Sumilao farmers under the program.

The program also provides for infrastructure, postharvest facilities and research and development assistance to the farmers.

Leaving the farms

Noting that an average Filipino farmer earns about P23,000 a year, Pangilinan said it was no wonder that many of them want to leave their farms as agriculture would never be able to pull them out of poverty. The average age of a Filipino farmer is 57, he noted.

“The real heart of Sagip Saka is the drive to bring farmers and fisherfolk out of poverty and give them the respect that their professions so deserve, with the belief that empowering our agricultural sector with financial stability and disposable income will also make a huge impact on our economy,” Pangilinan said.

Sagip Saka was conceived after Pangilinan took over the chairmanship of the agriculture and food committee. The guidelines for the Sagip Saka program were drawn up following a series of meetings with the private and public sector last year.

“Sagip Saka is meant to give agriculture and fisheries the primacy that it deserves by focusing on improving the quality of life of our farmers and fisherfolk and, in doing so, building sustainable farming communities nationwide as a means to achieve food security,” Pangilinan explained.

Restoring rice terraces

Aside from the programs mentioned, Sagip Saka has also allotted funds for the restoration of the Banaue rice terraces and for the preservation of the heirloom rice varieties in that region.

Funds were also given to a tuna-fishing community in Tiwi, Albay, for the construction of a landing port and to an organic rice farming town in Camarines Sur to help it market its products.

Producers of cash crops like mango, rubber and coconuts are also beneficiaries of the first tranche of the Sagip Saka funds.

In exchange for the assistance, the beneficiaries are expected to use the money wisely. There will be a monitoring of expenses and utilization of the funds, Pangilinan said. Local governments are also expected to give their share to the program’s funds as well as extend technical assistance as they are also stakeholders, he said.

“This is not a one-shot deal because our focus is to make the program sustainable so that we can help more agriculture and fisheries workers and communities in the coming years. This is not charity or a dole-out because every Sagip Saka community has gone through a thorough screening, and we have a criteria for selecting our beneficiaries,” he said.

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