Nestle to Buy More Coffee Beans

By Lilybeth G. Ison

As the saying “no morning is good without coffee,” food and beverage giant Nestle Philippines on Monday said it is increasing its local procurement of coffee berries from farmers to 75 percent and bring down the company’s imported coffee component to 25 percent by 2020.

“Currently, we’re sourcing 25 percent of our raw coffee requirement for soluble coffee manufacturing locally and we’re trying to compensate the shortfall by importing coffee beans. We are going to reverse that set-up by 2020,” said Edith de Leon, senior vice president for corporate affairs of Nestle, in a press conference during the 2nd Coffee Investors Forum held at the Marco Polo Hotel here.

De Leon said Nestle Philippines will be putting up more buying stations nationwide and already has identified an additional 11 sites in Mindanao.

The country’s coffee requirement stands at an annual volume of 64,000 metric tons (MT) with an estimated value of P5 billion.

Nestle, which supplies about 80 percent of the country’s requirement, produces soluble coffee brand “Nescafe”. It is also the country’s biggest buyer of raw coffee beans from at least 30,000 coffee farmers nationwide.

De Leon said Nestle buys 80 percent of Robusta cuttings and seedlings and distribute them to farmers nationwide as part of a contract growing arrangement.

The company has already distributed as much as two million seedlings and root cuttings over the past five years.

“We are counting on coffee investors to plant more coffee seedlings and directly sell their production to us. We buy at a premium price as long as the farmer’s output meet our standards,” said de Leon.

Nestle’s coffee program is a convergence initiative of the Department of Agriculture (DA), Department of Environment and Natural Resources (DENR), and the Department of Agrarian Reform (DAR).

DENR Assistant Secretary Marlo Mendoza, in his presentation during the forum, said the Department has already identified as much as 1.5 million hectares of upland areas on which to plant coffee with emphasis on the cultivation of the Arabica variety.

On the other hand, DAR Undersecretary Jerry Pacturan said his Department is also looking at transforming about 11,000 hectares of lands previously distributed to agrarian reform beneficiaries (ARBs) to agri-business ventures.

Nestle said it is now open to buying Arabica beans from farmers for its new “Nescafe Gold label” — a new blend of Robusta-Arabica.

The Philippines imports an average of 30,000 to 35,000 MT of coffee from various sources to fill the void caused by the decline in annual output.

According to the Department of Agriculture’s Bureau of Agricultural Statistics (DA-BAS), the country’s coffee production continued to decline to nearly 23,000 MT last year from 40,620 MT in 1999, and 61,080 MT in 1992.

BAS records show that coffee production in the third quarter of 2011 went down by 2.14 percent.

From 9,690 MT production in July to September 2010 period, it went down to 9,480 MT this year.

Agriculture Secretary Proceso Alcala is confident the increased participation of the private sector will help the country improve coffee output by five percent in 2012.

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