Strengthening the Supply Chain of Philippine Coffee

Professorial Chair Lecture

Metro Manila Commission Professional Chair

Place

Department of Agricultural Economics, UPLB

Date

4-16-2012

Abstract

The supply chain of coffee is composed of input suppliers and manufacturers of coffee equipment/instrument, growers, agents, cooperatives/farmers' associations, municipal and city assemblers/distributors and assemblers/processors, trade-millers, processors, wholesalers, retailers, institutional buyers and coffee shops, and end-users.

Analysis of the costs and returns in coffee production in Silang, Cavite in 2012 showed that benchmark farmers incurred a much higher production costs but their income was 76 percent greater than that of typical farmers. The former adopted the proper production practices and delivered the produce to the buyer that led to improve the yield and better income. In the supply chain of Arabica coffee in Benguet in the same period, coffee shops earned the highest net return with 67 percent share, followed by coffee processors and cooperatives cum processors with net income shares of 10 and 8 percent, respectively. Coffee growers received net returns equivalent to 9.3 percent of what the coffee shops earned and 60.6 percent of the processors' net returns. Resu7lts of the value chain analysis indicated that for a kilogram of roasted coffee, it would require processors to procure 5 kilograms of Robusta fresh berries and 6 kilograms of Arabica fresh berries. The estimated value-added for Robusta coffee in Cavite was lowest for trade-millers and highest for the ground coffee processors cum retailers.

To fast track the development of the coffee supply chain, the following policy directions and strategies are recommended: (1) enhance the productivity of Robusta and Arabica coffee in major production areas in Cavite and Benguet: (2) increase the budgetary support for RDE for coffee; (3) strengthen market linkages between the coffee growers and trade-millers and processors local and multinational; (4) conduct a feasibility study to determine the financial viability of providing additional post harvests facilities to well-established cooperatives in research sites; (5) and provide an effective and efficient market information system.

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