The special safeguard duty (SSG) slapped by Manila on imported coffee products will ensure that Filipino planters will continue to have a ready market for their produce.
Nestlé Philippines Inc. Vice President and Head of Corporate Affairs Ernesto S. Mascenon told the BusinessMirror that the SSG on coffee imports “simply levels the playing field between importers and local manufacturers.”
“Without the SSG local coffee farmers and local producers suffer because importers [incur] lower production and raw material costs which local manufacturers cannot match,” Mascenon said in a statement sent to the BusinessMirror.
Due to this equal playing field, local coffee manufacturers are able to purchase more locally produced coffee beans, hence, allowing Filipino farmers to earn more, Mascenon said.
“The SSG helps Filipino farmers because the more local manufacturers produce, the more they buy coffee from local farmers whose livelihoods are sustained. The more coffee the Filipino farmers sell to local manufacturers, the more their earnings are enhanced,” he added.
Agriculture Undersecretary for Policy and Planning Segfredo R. Serrano said the government would continue to impose the SSG when imports exceed the minimum access volume (MAV) to protect local coffee farmers.
Serrano said the government imposed the SSG on imported coffee products last year after local manufacturers complained that the surge in imports is hurting their business.
Allowing the market to be flooded with cheap imports, he said, would be detrimental to farmers as Philippine-based manufacturers may cut their purchases of local coffee.
“It is important to protect the livelihood of our people as the welfare of a large portion of our people is at stake. We do not want uncertainties in our coffee industry,” Serrano said in a recent interview with reporters.
“We are really making headways in coffee and other high-value crops, and these are also avenues for diversification for small farmers. It will not be in our interest to abandon and leave them to the dogs and vagaries of international trade,” he added.
Serrano also clarified that Manila did not target Indonesia when it imposed the SSG on coffee imports, as it also applies to the other trade partners of the Philippines.
He noted that even local conglomerates manufacturing coffee, such as San Miguel Corp. (SMC) and Universal Robina Corp. (URC), were also affected by the SSG.
“The actions of the companies that just bring in processed coffee into the country, and are not investing locally, are disadvantageous to our local coffee manufacturers. And these are companies that have invested in processing coffee in the country and are buying beans from farmers,” Serrano said.
“They have a thriving local industry here. It’s not like they leave the country and constructed a manufacturing plant abroad. So, there is a need to balance and provide proper support to the companies that are manufacturing locally,” Serrano added.
Instant coffee and other coffee products imported from Asean member-countries are tariff-free.
The country’s instant coffee imports in 2018 nosedived by 55 percent to $91.791 million from an all-time high of $205.224 million in 2017, Philippine Statistics Authority (PSA) data showed.
PSA data also showed that the total volume of instant coffee imported last year plunged by 63 percent to 34,635.415 metric tons from 93,696.938 MT recorded in 2017.
In 2018, Vietnam edged out Indonesia as the Philippines’s top instant coffee supplier, accounting for 44.2 percent of the total exports to Manila. However, instant coffee shipments from Vietnam fell by 44.5 percent to $40.558 million last year from $73.039 million in 2017.
Indonesia, which has been the top exporter of instant coffee to the Philippines since 2012, posted a 68.2-percent cut in its shipments last year.
In 2018, the Philippines imported $34.518 million worth of instant coffee from Indonesia from the previous year’s $108.46 million.
The country’s purchases of other extracts, essences and concentrates of coffee from abroad also declined by 48.6 percent to $715,867 last year from $1.393 million in 2017.