Nestlé backs special duties to aid local coffee industry

MANILA, Philippines — Nestlé Philippines Inc. supports the use of collected special duties on imported coffee products by the government to develop the country’s domestic coffee industry, a ranking executive said.

Jose Uy III, senior vice president and head of corporate affairs at Nestlé Philippines, said the implementation of the Competitiveness Enhancement Measures Fund (CEMF) by the government would ensure that local coffee farmers would get “valuable” inputs.

The CEMF is a fund created under Republic Act 8800 or the Safeguards Measures Act of 2000 to improve the competitiveness of domestic industries affected by increased imports.

The fund consists of the 50 percent of the total collected fees, charges and safeguard duties by the government from imported products.

It was created 24 years ago but the Departments of Agriculture and Trade and Industry only issued the joint implementing rules and regulations last year.

Agriculture Secretary Francisco Tiu Laurel Jr. issued the implementing guidelines of the CEMF last February, paving the way for the use of the fund in the agriculture sector.

Government budget documents showed that the CEMF reached P3.343 billion at the end of 2022.

This year, the DA is spending P250 million from the CEMF.

Agriculture industry stakeholders estimate that the bulk of the CEMF came from poultry and coffee imports.

“This means that with the CEMF, local coffee farmers can now receive valuable inputs from the government and the private sector by way of more training, data collection, demonstration farms, post-harvest machinery, mechanics for greater access to a ready market, rural credit, and crop insurance,” Uy told The STAR.

The bulk of the CEMF comes from special safeguard duties (SSG), a trade remedy imposed by the government on imported goods whose values are below the established trigger price to protect local producers injured by increased imports.

The government slaps an additional duty on the imported goods using a formula based on the difference between the value of the imported product and its corresponding trigger price.

The Philippines has been imposing SSG on imported coffee products, including instant coffee, since 2018 following a surge in import volume.

Uy said the SSG “evens out” the competition between local and imported coffee products as it offsets the “undue advantages enjoyed by foreign producers.”

Uy added that the SSG benefits local coffee farmers significantly.

First, it ensures the survival of local manufacturers that provide guaranteed market to farmers’ produce.

Second, farmers stand to receive billions in government support from the duties collected.

“Minus the SSG, the survival of domestic coffee production would be threatened as cheaper imports from countries where costs are lower would dominate the market,” he said.

According to Uy, the CEMF would address the myriad of problems that coffee farmers face – from aging trees, poor farming practices to limited access to certified planting materials, credit and financing.

“The SSG is a crucial means by which the domestic coffee industry can eventually achieve higher production sustainability and competitive advantage in relation to finished imports,” Uy said.

Since the imposition of the SSG in 2018, the country’s coffee imports dwindled to a seven-year low at about 170,000 metric tons in 2023.

The Philippines is the world’s fifth largest consumer of coffee with almost seven million 60-kilogram bags of green coffee beans requirement, according to the United States Department of Agriculture (USDA).