The Philippines has been a net importer of coffee since 1997, according to an industry roadmap prepared by the government. The country’s current output is simply not enough to keep up with increasing demand of households and cafes for coffee. Local farms could only supply 15 percent of the country’s annual requirement, while the rest is imported.
Official government data showed that the value of the country’s coffee imports last year reached $129.2 million. Of the coffee products imported by the Philippines in 2023, the not roasted or decaffeinated form topped the list, with the value of shipments amounting to $105.54 million. The value of imports was higher by nearly 7 percent, which means that this product was more expensive in 2023 compared with the average quotation in 2022.
In 2022, the value of coffee imports nearly doubled to $120.56 million, from the year-ago figure of $68.94 million. The surge in prices could be attributed to the reopening of economies and the dramatic spike in demand for the commodity. More cafes and restaurants reopened as more people got vaccinated against Covid-19, prompting governments around the world to ease quarantine restrictions.
As the country’s coffee sector remains unable to meet local demand, expect the Philippines to continue importing this commodity. With the operations of restaurants in full swing and the opening of more cafes, coffee imports will rise in the coming years. Even with the disruption caused by the pandemic, coffee drinking remained as a popular social activity, particularly among younger consumers.
This now makes it imperative for the government to focus on growing the local coffee sector and displacing part of the country’s imports. Reducing imports could encourage young Pinoys to consider planting a crop that is now being enjoyed by many of their peers. Planting this commodity, however, requires a lot of patience and also government support.
Fortunately for the state, it would not have to scrounge around for funds to bankroll initiatives aimed at increasing coffee output. The Philippine Chamber of Agriculture and Food Inc. pointed out that there is an existing fund created by Republic Act 8800 or the Safeguards Measures Act. (See, “Use import fees to improve coffee industry, govt told,” in the BusinessMirror, January 22, 2024). Under RA 8800, part of the fund should be earmarked for improving local agricultural industries that are “affected by increased imports” following the liberalization of nearly all local commodities after the Philippines joined the World Trade Organization in 1995.
The Philippines may not be able to regain its status as a net coffee exporter in the medium-term, but the government should at least start planting the seeds for its development. Based on official government data, coffee is mostly planted in Mindanao, which accounts for nearly 84 percent of the country’s annual production. There is a lot of room for growth in the Philippine coffee sector, but government must work in tandem with the private sector and make judicious use of available resources for improving the sector’s performance.