Rising costs brew bitter mix for coffee consumers, producers

Conclusion

MANILA, Philippines — Coffee prices are rising around the world. So are prices in the Philippines. The reason? Extreme weather conditions.

Global supplies of the beloved commodity for caffeine lovers dwindled last year after production of key producing countries like Vietnam, Indonesia and Brazil were impacted by drought and other unfavorable climatic conditions.

The coffee price spike may be a little bad news for consumers. But not for producers.

The United Nations’ Food and Agriculture Organization (FAO) revealed that producer prices of coffee beans, which refer to the amount of payment the farmers get for their crop, have risen across various countries.

Last year, coffee bean prices in Ethiopia rose by 17.8 percent year-on-year, 12.3 percent in Kenya, 13.6 percent in Brazil, 11.7 percent in Colombia, 15.9 percent in Indonesia and 5.8 percent in Vietnam, according to the FAO.

In the Philippines, coffee farmers received an average of P190.66 per kilo of green coffee beans last year, a 51-percent surge compared to the P126.22 per kilo they got in 2023, based on Philippine Statistics Authority data analyzed by The STAR.

The PSA estimated that the value of coffee output last year, in current prices, expanded by 60 percent on an annual basis to P6.1 billion, thanks to higher farmgate prices and an eight-year high output of nearly 32,000 metric tons.

With no immediate end to the global price spike, industry players and government agencies are in unison: farmers must take advantage of current market opportunities.

Keen on expanding

Local robusta coffee (green coffee beans) is now ranging between P300 and P400 per kilo compared to last year’s P170 to P200 per kilo price range. Meanwhile, local arabica coffee bean prices have doubled year-on-year to as much as P800 per kilo.

“Before, we did not follow the spot market and we were proud of that. You want our Arabica? Then pay the premium. But today, local prices have tracked international quotations,” Chit Juan of the Philippine Coffee Board Inc. told The STAR.

International prices have risen so much that the difference between the price of Vietnamese coffee and Philippine coffee has become thinner than ever. Vietnam robusta used to be P200 per kilo, but now it is P400.

“It now equals the playing field in terms of demand and quality,” Juan said.

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

For the Department of Agriculture (DA), the current global coffee market situation presents a “tremendous” opportunity for the local coffee industry.

“The strategic imperative emerging from this phenomenon is clearly the preponderance of pushing for greater production volumes and strengthening the value chain to empower the farmers to cash in on the positive market development,” the DA – High Value Crops (HVC) program said in an email query.

The DA-HVC program has worked to substantially increase the budget allocated for the coffee industry which has been between P80 million and P100 million in the past decade or so.

This year, the DA is spending some P154.78 million under its annual budget to promote coffee production, processing, marketing and distribution.

The DA-HVC program said it has also actively participated in the government’s Coconut Farmers Industry Development Plan as it led the rejuvenation of 562,370 coffee trees and distribution of 369,471 coffee seedlings between 2022 and 2024.

The program added that it supports and engages in various coffee congresses and expositions, national and regional coffee cupping and roasting competitions to provide farmers an outlet to showcase, promote and sell their coffees to a wider audience.

Threats

However, the continuous increase in global coffee prices could also harm Filipino farmers. For one, higher prices will mean that imported coffee products, especially instant coffee, will not be slapped with additional duties by the government.

Since 2017, the government has been levying a special safeguard duty (SSG) on various instant coffee products that enter the country at a price below its set trigger price.

The trigger price for imported instant coffee is at P203.74 per kilo. The average landed cost of imported instant coffee last year was at P244 per kilo, based on Bureau of Customs (BOC) data analyzed by The STAR.

BOC figures showed that the average monthly price of imported instant coffee in 2024 did not fall below the trigger price, with its lowest average being at P218 per kilo.

Worse, prices are still going up. In February, the average landed cost of imported instant coffee stood at P285 per kilo, P82 above its trigger price.

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

SSGs collected by the BOC, such as those from imported instant coffee products, go to a fund called the Competitiveness Enhancement Measures Fund (CEMF) that the government can tap to bankroll programs to improve domestic industries injured by foreign competition.

At the end of 2023, the total amount of CEMF in government coffers is around P4.55 billion, according to budget documents. The DA-HVC program noted that the CEMF has increased available financial support to coffee farmers “in an unprecedented way.”

The Department of Budget and Management estimated that the government will collect P1.4 billion in SSG last year and this year. That may not have happened given the world market situation, industry sources note.

In fact, the DA unlocked the CEMF for the first time in history when it got a P250 million allocation in 2024. This year, the DA plans to use P1.25 billion of the CEMF, a 400-percent jump from last year’s allocation.

“We will for sure use the [CEMF] this year for [the] coffee [industry],” Agriculture Secretary Francisco Tiu Laurel Jr. told The STAR.

Pushing for legislation

While there are still SSG funds for coffee, Juan proposed that the government use them for research and development (R&D). The country needs new varieties and better farming practices to address the threats of the worsening climate crisis, she explained.

She emphasized that other coffee-producing countries have invested substantially in their respective industries to the point that they have their own research institutes just like in Guatemala.

The DA’s high value crops program shares Juan’s idea of using a portion of the CEMF to boost research and development (R&D) efforts in the coffee industry.

The DA unit pointed out that any efforts to improve Filipino coffee farmers’ competitiveness would be rendered “incomplete” and “ineffective” without a “significant” and “substantial” R&D spending.

Juan pitches that the government should also consider legislating a guaranteed fund support for coffee farmers amid the current market situations.

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

Another option is to replicate the Sugar Industry Development Act that guarantees an annual support for sugarcane farmers, she added.

“Whichever the model is, what matters most is that it is legislated so that coffee farmers have assured support across administrations,” Juan points out.

The government collected at least P200 million in tariffs from imported coffee beans last year and another P64 million from imported coffee products, based on BOC data.

The DA is cognizant of the need for legislated funding support for coffee farmers given the limited annual budget that the sector gets.

“The DA through HVCDP has also strongly come behind in full support to the proposed legislative initiative to enact a Philippine Coffee Development Act which is now approved in the appropriations committee of the House of Representatives,” it said.

The DA unit was referring to various bills filed at the House seeking to establish a national program for coffee and a Philippine Coffee Council that will oversee the implementation of an industry roadmap.

Two bills – House Bill 9928 and 10018 – want to appropriate at least P500 million for the implementation of the proposed law.

Enduring the spikes

Coffee lovers like Ma. Alyanna Selda had to face the bitter truth – higher coffee prices have creeped into her favorite coffee stall. Her favorite iced caramel macchiato is now P99, P4 higher than before.

“It hurts a little because that P4 can already be part of my jeepney fare or can be used for printing some of my class materials,” the third-year journalism student said.

Selda fears the day that her heartbeat races not because of caffeine, but because of continuous rise in coffee prices.

“Paano na ang macchiato ko?” she says as she reaches into her pocket for her black vape. She took a deep puff and blew it out like a string of clouds.

And if the day comes that the price of macchiato becomes too high, Selda says, she will stop buying iced coffee. Instead, she will buy coffee-flavored juice as her next vape. That will cost her P350 and shall last for 9,000 puffs in a little over two weeks. That will translate to about P20 a day.

It will give her enough to save money to get her beloved iced caramel macchiato.

“But if prices exceed P105, I’ll just buy and drink 3-in-1 from there,” Selda points to a sari-sari store to her right, some 14 steps away from her favorite coffee stall.

Indeed, smoke billows from Antonio Street in Sampaloc, Manila--an unusual breeze of vape and coffee.