The increase in Brew bitter mix costs for coffee consumers, producers

Conclusion

Manila, Philippines – Coffee prices are increasing in the world. The same applies to prices in the Philippines. The reason? Extreme weather conditions.

The global supplies of beloved goods for caffeine lovers decreased last year after the production of main producing countries such as Vietnam, Indonesia and Brazil was affected by drought and other unfavorable climatic conditions.

The tip of the coffee price can be a short news for consumers. But not for producers.

The United Nations Food and Agriculture Organization (FAO) revealed that the prices of coffee grains producers, which refer to the payment amount that farmers receive for their harvest, have increased in various countries.

Last year, the prices of coffee beans in Ethiopia increased by 17.8% in annual sliding, 12.3% in Kenya, 13.6% in Brazil, 11.7% in Colombia, 15.9% in Indonesia and 5.8% in Vietnam, according to FAO.

In the Philippines, coffee producers received an average of 190.66 p per kilo of green coffee beans last year, a overvoltage of 51% compared to the P126.22 per kilo that they obtained in 2023, based on the data of the authority of the Philippine Statistics analyzed by the star.

The PSA estimated that the value of coffee production last year, at current prices, increased by 60% on an annual basis to 6.1 billion pesos, thanks to higher prices of Farmgate and an high production of eight years of almost 32,000 metric tonnes.

Understanding the global increase in prices, industry players and government agencies are in unison: farmers must take advantage of current market opportunities.

Eager to develop

The local robusta coffee (green coffee beans) now varies between P300 and P400 per kilo compared to the price range of P170 and P200 from last year. Meanwhile, the local prices of the Arabica coffee have doubled in annual shift up to 800 p per kilo.

“Before, we did not follow the cash market and we were proud of it. You want our Arabica? Then, pay the premium. But today, local prices followed international quotes,” Chit Juan told the Philippine Coffee Board Inc. to The Star.

International prices have increased so much that the difference between the price of Vietnamese coffee and Filipino coffee has become thinner than ever. Robusta Vietnam was previously P200 per kilo, but now it’s P400.

“This is now equivalent to the rules of the game in terms of demand and quality,” said Juan.

“And farmers should take advantage of it by increasing production,” she added.

For the Ministry of Agriculture (DA), the current situation of the World Café market has a “huge” opportunity for the local coffee industry.

“The strategic imperative emerging from this phenomenon is clearly the preponderance of putting pressure for larger production volumes and strengthening the value chain to allow farmers to take advantage of the positive development of the market,” said the DA – High Crops (HVC) program in an email request.

The DA-HVC program has worked to considerably increase the budget allocated to the coffee industry which was between 80 million pesos and 100 million pesos in the last decade.

This year, the DA spends some 154.78 million pesos under its annual budget to promote the production, processing, marketing and distribution of coffee.

The DA-HVC program said that it had also actively participated in the development plan for the Coconut farmers’ government industry because it led the rejuvenation of 562,370 cafes and the distribution of 369,471 coffee plants between 2022 and 2024.

The program has added that it supports and engages in various Coffee Congress and Exhibitions, National and Regional Competitions for bypassing and roasting coffee to offer farmers a outlet to present, promote and sell their cafes to a wider audience.

Threats

However, the continuous increase in world coffee prices could also harm the Filipino farmers. On the one hand, higher prices will notify that imported coffee products, especially instant coffee, will not be slapped with additional government rights.

Since 2017, the government has made it possible to do a special safeguard service (SSG) on various instant coffee products that enter the country at a price lower than its trigger price.

The price of triggering the imported instant coffee is 203.74 p per kilo. The average instant coffee land cost imported last year was at P244 per kilo, based on data from the Bureau of Customs (BOC) analyzed by the star.

BOC figures have shown that the average monthly price of instant coffee imported in 2024 was not below the trigger price, its lowest average being 218 p per kilo.

Worse, prices are still increasing. In February, the average property cost of imported instant coffee was 285 p per kilo, p82 above its trigger price.

“At this rate, the SSG will die,” said Juan.

The SSG collected by the BOC, such as those of imported instant coffee products, go to a fund called the Fund for Competitiveness Improvement Measures (CEMF) that the government can use bank programs to improve national industries injured by foreign competition.

At the end of 2023, the total amount of the CEMF in government chests was around 4.55 billion pesos, according to budgetary documents. The DA-HVC program noted that CEMF has increased financial support available to coffee producers “in an unprecedented way”.

The Ministry of Budget and Management estimated that the government would collect 1.4 billion pesos in SSG last year and this year. This may not have happened given the world market situation, notes industry sources.

In fact, the DA has released the CEMF for the first time in history when it obtained an allowance of 250 million p in 2024. This year, the DA plans to use 1.25 billion Pesos of the CEMF, a jump to 400% compared to the allocation of last year.

“We will certainly use the (CEMF) this year for (the) coffee (industry),” said agriculture secretary Francisco Tiu Laurel Jr.

Put pressure for legislation

Although there are still SSG funds for coffee, Juan proposed that the government uses them for research and development (R&D). The country needs new varieties and agricultural best practices to respond to threats to worsening the climate crisis, she explained.

She stressed that other coffee producing countries have invested considerably in their respective industries to the point that they have their own research institutes as in Guatemala.

The program of cultures of great value of DA shares the idea of ​​Juan to use part of the CEMF to stimulate research and development efforts (R&D) in the coffee industry.

The DA unit stressed that any effort to improve the competitiveness of farmers in the Filipino coffees would be made “incomplete” and “ineffective” without “important” and “substantial” R&D expenses.

Juan arguments that the government should also consider legislating guaranteed fund support to coffee producers in the midst of current market situations.

The government can legislate a bill similar to what has been done in rice and salt sectors where the rates collected – not SSG – will be used to finance programs to support farmers, said Juan.

Another option is to reproduce the law on the development of the sugar industry which guarantees annual support for sugar cane farmers, she added.

“Whatever the model, what matters most is that it is legislated so that coffee producers have provided the support of an administration between the administrations,” said Juan.

The government has collected at least 200 million pesos in prices from coffee beans imported last year and 64 million pesos from imported coffee products, based on BOC data.

The DA is aware of the need for financial support legislated to coffee producers, given the limited annual budget that the sector obtains.

“The DA through the HVCDP has also strongly delayed on the proposed legislative initiative aimed at adopting a Philippine Coffee Development law which is now approved within the Credit Committee of the House of Representatives,” he said.

The DA unit referred to various bills tabled in the Chamber seeking to establish a national coffee program and a Philippin Coffee Council which will oversee the implementation of an industry roadmap.

Two bills – Bill 9928 and 10018 – want to appropriate at least 500 million pesos for the implementation of the proposed law.

Enduir the tips

Coffee lovers like my. Alyanna Selda had to face the bitter truth – the higher prices of coffee touched in its favorite coffee stand. His favorite icy caramel Macchiato is now P99, P4 higher than before.

“It hurts a little because P4 can already be part of my Jeepney rate or can be used to print some of my class documents,” said the third -year journalism student.

Selda fears the day when her heart rate rushes not because of caffeine, but because of the continuous increase in coffee prices.

“Paano na ang macchiato ko?” She said while she reaches her pocket for her black vape. She took a deep puff and blown her like a chain of clouds.

And if the day comes that Macchiato’s price becomes too high, says Selda, she will stop buying iced coffee. Instead, she will buy coffee flavor juice like her next vape. It will cost him 350 and will last 9,000 puffs in just over two weeks. This will result in approximately P20 per day.

This will give him enough to save money to get his beloved macchiato glossy caramel.

“But if the prices exceed P105, I will just buy and drink 3 in 1 from there,” said Selda to a Sari-Sari store on the right, about 14 steps from its favorite coffee stand.

Indeed, smoke sways from rue Antonio in Sampaloc, Manila – an unusual breeze of vape and coffee.