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Philippines to resign from ICO.

The Philippines is planning sever its membership with the International Coffee Organization (ICO) for the failure of the world coffee body to reimpose the annual coffee export quotas and depressing world prices.

Director Antonio Reyes, of the local ICO certifying agency, under the Department of Trade and Industry, said the Philippine government is evaluating if the country's participation in the ICO was still worth its annual membership ree of US $20,000, since the country became a member of the organization.

Reyes said, without the quota system, the Philippines does not get any benefits from the body. The removal of the annual coffee quotas has resulted in a glut of coffee in the world market, which in turn depressed world prices.

As of March 1992, prices of coffee in the domestic market are higher than those in the international market. Robusta beans sell at PP27 (US $1.04) to P30 (us $2.15) per kilo in the domestic market, compared to about PP18 (US$.692) to P21 (US $.808) per kilo in the world market, the cheapest prices since 1975.

Analysts said this year's world coffee prices were not much below the levels after the collapse of prices following the second suspension of the International Coffee Agreement in 1989. At that time, the Philippines was able to export only 9.84 metric tons worth US$9.39 million.

With the continued suspension of the yearly export quotas, Philippine coffee exports took a nose dive.

A dip in coffee export volume and value was first noted in 1986 when the export quota were first suspended.

The Philippines produces an average of 65 tons a year, and allocates 40% of export, with the rest going to the domestic market.

Reyes quotes Alexander Beltrao, executive director of the ICO, who said last October: "Since the suspension of quotas in 1989, the annual income of producing countries from coffee exports, averaging $10 billion in the preceding three years, has fallen to approximately $6.8 billion a year."

Reports from London say the global annual consumption of coffee stands at 96 million bags of 60 kilos, or 1.6 million tons. This includes 21 million bags for domestic consumption in producing countries.

Shift of Strategies

Reyes said, as a result of these developments, the Philippines will now take steps of shift strategies, saying consumer tastes demand to better quality coffee which they enjoy.

The local industry will increase export of roasted and soluble coffee to non-traditional markets in Asia and Eastern Europe; target the specialty consumer markets; and maximize sale of coffee in roasted and soluble forms in the domestic market.

The Philippine coffee export market is determined to maintain its presence in the international market. Leaders believe that coffee, a high value commodity, can, through persistent marketing efforts and aggressive promotion strategy, continue to be a steady source of foreign exchange for the country.

The local ICO-CA head foresees an increasing acceptability of Philippine coffee through improved quality, ensuring its supply availability. He sees shifting in preference from Robusta to Arabica.

Non-Traditional Markets

These efforts include setting the directions of market development efforts to countries with which the Philippines has chronic trade deficits to non-traditional markets with high demand for coffee and, to markets where it has established foothold.

Reyes says quality Robusta, such as washed Robusta and the Cavite AA and Mindanao MI coffees, will be continuously promoted in traditional markets such as the U.S., Germany, Japan, Australia, Canada, Singapore and Western Europe.

The country will exert efforts to penetrate and develop non-traditional markets, like China and the Eastern European Bloc. The Kitanlad, Matutum and Bukidnon Arabicas grown in the high mountains of Mindanao will be pushed for Japan's specialty market.

The enthusiasm is borne by the results of the participation by some Philippine coffee companies in last year's Foodex Japan, considered the international trade show in Asia, specializing on food and catering products, among them coffee. The annual show attracts an average of 100,000 visitors from some 40 countries.

The Philippine coffee sector participation was made on invitation of the ASEAN Promotion Center on Trade, Investment and Tourism. It was represented by ICO-CA Executive director Antonio Reyes, Emmanuel Torrejon and Nicolas Matti, managing directors of General Milling. After the international show, the Philippine representatives proceeded to Osaka on a food-selling mission. Japan is a major importer of Philippine coffee, both in bean and soluble forms.

Among the Japan-based companies importing coffee from the Philippines are: Nestle Kabushiki Kaisha; Tomen Corp; International Coffee Corp; Kyowa Co; Volcafe Ltd.; Sumitomo Corp.; Reyner Coffee International; Getz Food Sales; and Mitsui and Co.

Among the Philippine exporters to Japan are: San Miguel Corp; Pearl Island; Universal Robina Corp.; Sucrex Marketing; Nestle Philippines; Menzi and Co.; Mercado Trading; Geocentric Agriculture; Sympa International; and A.C. Silva Enterprises.

The country eyes the Middle East to promote Liberica and Excelsa varieties, commonly called in the Philippines as "Barako." Oman, the major coffee importing country in the region, has paid an average of $1,294 per metric ton for Liberica, about $400 to $450 more than that of the regular Robusta.

Last year, the country made a breakthrough in exports of soluble and roasted coffee essentially to countries in Asia, like Hong Kong, Singapore, Taiwan and Malaysia and the Pacific Islands, like Fiji and Kiribati.

The country expects also to cash in on the increasing population of Filipino communities abroad, like the U.S., Australia and Canada. Processed form of coffee had fetched an average price of $3,742 per metric ton.

Two of the several approaches taken are: the creation of a multisectoral Coffee Industry Development Committee to design a 10-year development program for the industry to serve as a guide in directing policies, programs and plans toward an improved coffee industry.

The coordination between the ICO-CA and other bureaus and agencies under the Department of Trade and Industry in planning and implementing promotions projects aimed at projecting a good image of Philippine coffee in the international market. While independent exporters may not be able to maximize their exports, the big coffee traders appear to have no problems, since they are subsidiaries of U.S. and Japanese companies.

Coffee sachet

Philippine coffee manufacturers continue to flood supermarkets, grocery stores and even the small neighborhood stores called "sari-sari" (literally, variety) with instant coffee. They come in tumblers, bottles, and sachets.

The most popular packaging is the one-cup sachets, which sell at an average of one peso and fifty centavos (PP1.50), or .057 cents.

The latest of this sachet form is the Great Taste 3-in-1 coffee mix manufactured by CFC Corp. of Pasig, Metro Manila. Each sachet contains a mixture of instant coffee, creamer and sugar.
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Title Annotation:International Coffee Organization
Author:Palacpac, Orlino Sol.
Publication:Tea & Coffee Trade Journal
Date:Jun 1, 1992
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