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ABSTRACT
Coffee is part of the Filipino culture for centuries and one of the major incomes for
many farmers in the Philippines. This research study seeks to understand the
dynamics of the coffee industry and identify the different types of coffee that is existing
and in demand in the market and production location in different regions in the country.
The domestic coffee is studied if there is a sustainable industry for coffee farmers and
if it would be a wise investment for those who are planning to put up a coffee production
business. Related studies and secondary sources are used for statistics and
information regarding coffee production.
Keywords: Coffee Production, coffee industry, coffee consumption, demand for coffee
INTRODUCTION
Coffee has been a mainstay in the Philippines for hundreds of years. Commercial
robust beans have been cultivated across the nation for many years, although specialized
arabica production is a small component of the local coffee industry. The rise of Philippine
specialty coffee was hampered by a lot of factors. Natural calamities, environmental
concerns, and shifting economic situations have all influenced production. In 2018, the
Philippines drank 170,000 metric tons of coffee, while only 35,000 kg were produced.
Philippine coffee, like its flavor, has a long history. A Spanish Franciscan friar planted the
first coffee tree in Lipa, Batangas, in 1740. From then, coffee cultivation expanded across
Batangas, helping the province to prosper throughout time. Lipa later became the
Philippines' coffee capital. Batangas had been supplying coffee to America through San
Francisco since the 1860s, and with the inauguration of the Suez Canal, the European
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market became available. By 1880, the Philippines had surpassed Brazil as the world's
fourth-biggest exporter of coffee beans, and when coffee rust struck Brazil, Africa, and
Java, it became the world's only supply of coffee beans. While 2020 may bring new
problems, such as the Covid-19 epidemic and the eruption of the Taal Volcano, it may
also usher in a new age for Philippine specialty coffee. A locally made coffee won the
2020 Philippine National Barista Championship for the first time in history (PNBC).
Continue reading to find out why this achievement is so critical for the future of Philippine
coffee production. In 1740, Spanish monks brought coffee to the Philippines, establishing
Lipa as the country's coffee center. Coffee was rapidly being produced across the country,
and by the 1800s, it was being sold to the United States via San Francisco, and to Europe
via the Suez Canal.
Unfortunately, coffee rust had reached the Philippine shores by the end of the
decade, wiping off all of Batangas' coffee plantations. Following then, the Philippine
coffee industry saw ups and downs and never recovered its former glory. However, the
Philippine coffee industry is not doomed. Coffee is cultivated in 50 countries in the
equatorial zone's "Bean Belt." Surprisingly, the Philippines is located inside the Bean Belt.
Due to its exceptional temperature and soil conditions from the lowlands to the mountains,
the Philippines is one of the few countries that produce all four commercially relevant
coffee varieties, Liberica, Excelsa, Robusta, and Arabica. By the late 1800s, the
Philippines was the world's fourth-largest coffee exporter. When coffee rot devastated
crops in Africa, Java, and Brazil in the nineteenth century, it became the world's sole
supplier of coffee. In the early 1900s, coffee rust found its way to the Philippines,
decimating the country's coffee production. It destroyed nearly all of the country's coffee
plants, prompting many growers to abandon the crop completely. Throughout the
twentieth century, output steadily recovered, and the Philippine government introduced a
disease-resistant cultivar into the country in the 1950s. The Philippines joined a global
organization that deals with irregular migration in 1980. Associate Association of
Occasional Importation and Mercantilism Nations is a group of countries that hire
employees to import and export on a sporadic basis. Despite the region's ongoing drop-
in product availability, demand still outnumbers supply. According to the Agriculture
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MBA 206 – Advanced Managerial Economics [Working Paper, 2022]
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Department, the United States imports between 75,000 and 100,000 metric tons of rice
from Vietnam and the Republic of Indonesia each year. J.C., the company's chief
executive officer Martinez, is also a joint owner and operator. According to him, strong A
was the most important full-grown occurrence in 2019, followed by Arabic A, Excelsior,
and African nation. Farmers have been targeted for expanding specialty Arabica's
occasional output during the last 3 to 5 years. To make matters worse, the year 2020 has
brought whole new hurdles for Philippine coffee producers. When the Taal Volcano
erupted in January 2020, around 450,000 inhabitants were advised to evacuate their
homes and crops. Damage to cropland, crops, and cattle was projected to cost 577 million
Philippine pesos (about $11 million USD), with almost 5,000 metric tons of coffee lost.
The current researcher could interpret the current observations using the acquired
data over a specified period by employing the time-series regression approach. The
current researcher employed a time-series data regression model to find the disparities
in coffee output in the Philippines using the data collected. The production and quality of
coffee have improved throughout time. This study obtained secondary data for the study
from a variety of trustworthy sources that were freely available on the Internet. The total
number of coffee beans produced domestically, domestic consumption, total exports,
coffee yield, total coffee harvest area, the total amount of agricultural irrigation (in mm —
millimeter), and similarly, the number of fertilizers is among the data acquired. The
Department of Agriculture, the Philippine Statistics Authority, and the International Coffee
Organization were used to perform this research. By examining the variables of domestic
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consumption, total coffee exports, coffee yield, harvest area, agricultural irrigation, and
agricultural fertilizers, this study could identify the likely repercussions of the fall in local
coffee production in the Philippines. Local coffee production has a long-term economic
impact when these variables are used in conjunction with the data collected. These
economic tests will be used to assess the relationship between the study's dependent
and independent variables. Local coffee production has a major contribution in our
economic development in the long run.
Figure 1 Shows the world coffee consumption from 2017 to 2020 which includes the
Philippines.
Coffee Varieties
There are four major types of coffee namely, Robusta, Arabica, Excelsa and
Liberica. The most viable type of coffee on that is commercially viable is the Arabica and
Robusta. There are so many types of coffee varieties around the globe but these four
major types are the most commonly grown by farmers.
The Robusta coffee is the type that is dominant and has high yield and mostly used
in espresso and instant coffee. Arabica is best when planted in high altitudes and the
most expensive kind while Excelsa is drier and more resistant to pest and the last is
Liberica has the strongest taste and smell.
Many domestically made ground coffee are being sold in the market like the
Kalinga Musang Coffee, the Civet Coffee from Mount Apo and from Sagada. Local
businesses produce these types of coffee, most of them are doing small scale business.
The increase of the coffee demand and primary concentration on the source of
origin, there are new local coffee manufacturers that is being recognized in the coffee
industry.
Based on the calculation from the Philippine Statistics Authority, the Robusta type
of coffee have a total production of 24,924 metric tons or approximately 69% of total
production while Arabica followed with 8,717 metric tons with an approximate of 24% total
production of coffee.
Domestic Prices
The prices of coffee beans in the Philippines are changeable where there are
increases for the past years. Price of Robusta coffee increased by 5.93% per year, the
Coffee Exports
Total coffee bean exports are steadily dropping, as is total coffee bean output,
despite the latter being able to stabilize about 2010. (ICO, 2021). Improved policies aided
in the development and quality of the coffee industry, both for domestic consumption and
market exports. Given that Indonesia is a large producer of coffee, it primarily exports to
the worldwide market. Policies are proposed to promote productivity and empower
smallholder farmers' performances to improve the competitiveness and sustainability of
the coffee business (Arifin, 2013). In 2014, the Philippines' coffee exports were US$3.2
million. Furthermore, it accounts for less than 0.009% of the global trade supply. Although
instant coffee is the Philippines' greatest export, with an 82 percent value export in 2014,
the extract has dropped from US$6.2 million in 2005 to US$2.6 million in 2014. During
the same time, the Philippines' total raw, semi-processed, and processed coffee exports
fell by US$4 million, from US$7.2 million to US$3.2 million (Bamber et al., 2017). Fairtrade
is a welfare enhancement program that addresses market failures in coffee production,
as illustrated in the short-term, partial equilibrium model that accounts for market failures
(Tedeschi & Carlson, 2011).
Agricultural Irrigation
According to one study, it is possible to reduce the amount of watering technique
without affecting coffee production. There is a potential of reducing irrigation of
consumptive water consumption and increasing yields in coffee cultivation in Vietnam. As
a result, it still calls for induced water stress in the form of a lack of irrigation water,
depending on the scheduling of techniques such as irrigation management, other input
management, and agronomic practices. It is also noted that water can be provided for the
plants. Agricultural crops, on the other hand, require irrigation to ease water stress during
Vietnam's dry seasons, which extend from February to March. Overall, irrigation has a
significant impact on the sustainability of coffee production (Amerasinghe et al., 2015).
The Smart Irrigation Decision Support System was created to manage agricultural
irrigation, since managing the irrigation system is critical for crop sustainability. Based on
soil and climatic variables, the approach determines the weekly irrigations necessary for
a plantation. Previous researchers have presented the concept to examine if using
machine learning techniques with weather and soil as factors is relevant or whether it
might give an automated closed-loop system to anticipate the irrigation demands of each
crop (Navarro et al., 2016). With irrigation as the primary factor influencing agricultural
productivity and environmental resources, worldwide interconnections of agricultural
output and access to land and water resources are being assessed. Previous researchers
have merged alternate irrigation techniques into a novel model to analyze water use
adjustments in agriculture for diverse development events.
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In contrast, a suggested agricultural irrigation system based on internet
technology, by regulating the water-saving irrigation system, maximizes water
consumption, and improves water use, enhancing water productivity (Li, 2012).
Innovation addresses the complexities of climate circumstances, which correspond to
agricultural production dryness. The goal of innovation is not just to improve the agri-food
sector's competitiveness, but also to raise productivity (Oliveira et al., 2019). However,
developing the irrigation system requires significant financial investment and is difficult to
implement. However, to address agricultural issues, notably the management of novel
irrigation, the researchers created a closed pipe water distribution network that increases
crop productivity while saving water (Bhalage et al., 2015).
The findings show that irrigation has a significant influence on agriculture and that
irrigation is critical in tropical Asian nations (Lee, et al., 2012). Agriculture's resilience to
climate change propels agricultural production forward by providing long-term growth.
Using irrigation and rainfall as variables had diverse results in estimating the various
implications on agricultural productivity. Irrigation has a beneficial and large impact on
total agriculture productivity. Climate-smart agriculture increases agricultural productivity
for long-term sustainable agriculture and food production. As a result, it offers policies
and methods to enhance agricultural irrigation and water management (Olayide et al.,
2016). Finally, despite differences in irrigation systems, a tiny number of smallholder
coffee producers in Vietnam refused to adopt either drip or sprinkler irrigation. Mostly
because of the significant expenditure required. As a result, smallholder coffee producers
who are unable to gain access to the irrigation system would likely resort to traditional
growing methods to save money and resources. Although there are no differences
between applying the sustainable method and the traditional system for coffee production,
it has been demonstrated that sustainable irrigation is more lucrative and cost-effective
than the latter (Hung Anh et al., 2019).
Overall, the prior researcher used a more advanced irrigation system technique. It
should also include the role of irrigation and water resources in the future of food security
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and general socioeconomic well-being (Sauer et al., 2010). One prerequisite for
sustainable agricultural production is water from irrigation systems, which must meet the
demands of the crops to produce the maximum yield. According to the study, to maximize
the efficiency of water use in agriculture, it must not waste water resources and prevent
exceeding water requirements for each crop production (Saccon, 2018).
Fertilizer
The influence of fertilizers on coffee production costs led to the idea that
evaluating fertilizer transversal distribution on coffee crops is practical and efficient
(Andrade, et al., 2020). Nitrogen (N) dynamics in plants during agricultural crop growth.
15N buildup in distinct plant sections of mature coffee was detected over time in labeled
fertilizer field research. This study looked at how N absorption in plant compartments
changed over time in a coffee crop planted in the Brazilian "cerrado" that had previously
been farmed with high N fertilizer rates (Bruno et al., 2011). Another study looked at the
effect of fertilizer credit on crop input consumption, crop choice, crop yield, and family
income. Because of loan availability, organic fertilizer consumption increases by 35 kg
per household. Furthermore, financial access raises teff production by 37% but not the
yields of other main crops such as maize and wheat. The findings raise questions
regarding the efficiency of Ethiopia's loan program in improving farmers' living conditions
(Matsumoto & Yamano, 2011). Coffee husk, a rich organic agricultural waste, and
potassium source is a useful material for composting to minimize composting time and
enhance compost quality. Furthermore, partial substitution of chemical fertilizer with
compost improved coffee soil fertility, nitrogen absorption in the leaves, and branch
development rate (Dzung, et al., 2013).
CONCLUSION
This study would advocate implementing the possible changes described in the
study's results to boost the sustainability of growing coffee crops in the Philippines. The
agricultural sector contributes to a country's economy, and boosting government
investment in the coffee industry in the Philippines would improve the agricultural sector's
contribution to the Philippine economy (Murindahabi et al., 2019). Coffee farmers should
adopt the productivity of Cavite farmers to sustain their locally produced coffee, and as
more municipalities have adopted the system, the coffee sector will increase its
productivity to help contribute to the Philippines' agricultural sector (Cubillo, 2018).
RECOMMENDATION
It is suggested that for coffee growers in the Philippines to use coffee waste as an
alternative fertilizer instead of chemical fertilizers while establishing coffee plantations.
This would not only increase coffee output but also serve as a near-standard for
environmental and economic sustainability. Additionally, coffee waste gathered in various
methods, such as coffee brewing, can be pyrolyzed to make industrial commodities such
as charcoal and biogas (Ktori, et al., 2018). According to the experiments, domestic
consumption, coffee output, harvest area, and irrigated service area all have positive
relationships with local coffee production. While fertilizer exports and supply, in general,
have minimal impact on local coffee output. The four characteristics that have a good
association with Local Coffee Production will decide its lifespan. Because domestic
consumption is one of the factors that have a positive association with Local Coffee
Production, we can assume that Local Coffee Production will continue or, better still,
improve in the long term. If domestic demand continues to rise, so will local coffee
production, as they have a positive connection, provided the factors improve in the long
term.
REFERENCES
THE AUTHOR
Maria Tricia C. Sta. Barbara is from Muntinlupa City. She is a
graduate of Bachelor of Science in Commerce major in
Management from Colegio de San Juan de Letran. She is
currently working in the government sector as a Regulations
Officer and pursuing a Master’s Degree in Business Administration
(MBA) at World Citi Colleges, Quezon City.