Oct 13, 2012

Philippines - Are you ready for 2015?

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THE ASEAN economic landscape will be changing in the next two years. Already, we have our sugar and rice farmers thinking of what to do when prices come down after the tariffs disappear.

Sugar farmers may shift to planting coffee and rice farmers have to think of niche or specialty markets like organic rice, heirloom rice and anything but white rice (there is brown, pink, black, etc).

In coffee we are happy to be part of the ASEAN Coffee Federation whose members want to help each other address the coming years’ increasing demand for coffee which may be about a deficit of 32 million bags (60 kilograms each) come year 2020. Already we are bringing in experts who can help our farmers find the secrets to higher production and make a road map to self-sufficiency. Present imports of coffee amount to no less than 5 billion, mostly from Vietnam and Indonesia.

In coffee we are also happy to be making a road map for the industry with the private sector coming together. We have had several meetings with Nestlé (biggest buyer of local coffee), farmers, government agencies and other private sector coffee users like Universal Robina Corp. (URC). Already we are comparing production figures and finding a way to reap low hanging fruits such as increasing the yield of even small landholdings in Cavite and Sultan Kudarat. Our board members have been asked to speak around the country in various fora, preaching about planting coffee.

Coffee consumption is increasing double digits annually in the instant or coffee mix category while increasing 5-6% annually in the roast and ground sector (those who have to use coffee makers to brew their coffee). Our production remains steady (if not declining) at 25,000 MT while demand is over 100,000 MT already, if we are to add up all the information we are getting from the trade.

So, it’s good to come together with our ASEAN counterparts, if our industry should survive 2015. For us in coffee, it is not just about ASEAN free trade, it is about the opportunity brought about by increasing global coffee consumption which are driving prices higher, but leaving our farmers wondering what to do next.

Cavite farmers will be tempted to sell to developers while Mindanao is too far for some investors who hail from Luzon. The Visayas, Panay in particular, under our Chair Nicholas Matti, may be the next coffee area if URC and the Philippine Coffee Board, Inc. (PCBI) find the farms and plant new trees. Nestle will take care of many areas in Mindanao where they have pilot farms and nurseries. And Luzon coffee areas will have to be more productive through the help of NGOs, non-profits like the PCBI and government agencies. The ARMM will be an area the PCBI holds near and dear because we also want to see peace profits, and not just economic profits. Already we are working with Sulu coffee cooperatives and will continue to do so until we reach our goal of self-sufficiency in coffee.

I can only write about coffee but I worry about sugar, rice and even seaweeds. Are we competitive around the region? I hear Cambodia’s rice prices are way lower than ours. And Vietnam or Thailand’s sugar is cheaper than our white granules from Negros.

It is high-time for the industries which are threatened to think of self-sufficiency and at the same time encourage cooperation with regional players. I am thankful coffee is in high demand and that Asia now has the major producers for the crop. The Philippines will get a lot of boost from our cooperative neighbors, our lands being so naturally fertile and still of low acidity.

So if you have not yet given it much thought, it is time to do so now. There is a ASEAN Business Advisory Group being convened by Jay Yuvallos and supported by Ms. Tessie Sy-Coson of the SM Group. Maybe it is time industry players clustered together and cooperated with their regional counterparts.

This is the dream of the ASEAN ministers when they convened about the Free Trade Agreement in 1992. A free flow of goods within the ASEAN community. A better ASEAN that will be competitive in global markets. Will it mean cooperation in the region or just increased competitiveness?

Chit U. Juan

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