Talking coffee

Coffee has a rich heritage in the Philippines. The first coffee tree was introduced in Lipa, Batangas, in the 1740s by Spanish Franciscan monks, and so enthusiastically did farmers take up the challenge that the province soon came to be known as the coffee capital of the Philippines. A century or so later, coffee was being exported from Batangas to San Francisco in the United States via the Suez Canal.

By 1876, farmers and planters in Cavite were being enjoined to try their hand at coffee growing, and by the 1880s, the country had become known as the world’s fourth largest exporter of coffee beans.

But disaster was waiting just around the corner. In 1889, coffee trees in Batangas were hit by “coffee rust,” which led to an insect infestation. The coffee industry in Batangas disappeared.

Coffee tree seedlings were transferred from Batangas to Cavite, but coffee production fell so precipitously that the Philippines lost its standing among the world’s coffee producers. Meanwhile, other countries, including our neighbors, discovered the potentials of the coffee trade. But slowly, through the decades, Filipino farmers were once more lured into coffee production, such that by 2002, some 276,000 coffee farms with 79.4 million trees were being recorded.

Today, according to authorities, the Philippines is one of the few countries that produce the four varieties of commercially viable coffee: Arabica, Liberica (Barako), Excelsa and Robusta. This is because “climatic and soil conditions [here]—from the lowlands to mountain regions—make the country suitable for all four varieties.” Considering that coffee is now the “second largest traded commodity behind oil in the world,” it makes tremendous sense not just to encourage the continued growing of coffee around the country (new plantations are springing up frequently in Mindanao), but also to promote the market for coffee among Filipinos.

This makes a proposed policy to impose an excise tax of P10 per liter on sugar-sweetened beverages, including instant coffee especially the very popular “3-in-1” sachets, puzzling for those working to boost the coffee industry as well as those who simply need coffee to fuel their day.

An estimated 34,000 small coffee farmers and their families stand to take the biggest hit from the tax, which is foreseen to cause losses amounting to 76 percent of volume and 64 percent of value, or P23 billion in total, which would be, say observers, “the highest decline among the different kinds of beverages to be affected.”

“Coffee is the beverage of the masses,” says a coffee advocacy briefer. An increase in price of 48 percent for coffee products caused by the tax will certainly make coffee less affordable to the common consumer, which could have reverberations up the line from coffee manufacturers, distributors and growers. In other words, it could have the same impact on the local coffee industry as coffee rust did in the 1800s.

The good news, though, is that in the Senate, legislators have deemed fit to exclude 3-in-1 coffee from the tax on sugar-sweetened beverages, as approved by the Senate ways and means committee, and now undergoing second reading.

“The exclusion of prepackaged powdered coffee products with or without sugar has ensured that we farmers have a fighting chance to improve our competitiveness, as we can count on manufacturers to continue purchasing our produce,” said coffee farmer and Silang, Cavite, Vice Mayor Aidel Paul G. Belamide in a letter to the committee chair, Sen. Sonny Angara.

There’s also a social justice issue here. Antitax lobbyists point out that “the country’s output of green coffee beans, estimated at 23,000 tons annually, will not be put to a disadvantage compared to those of high-end coffee shops whose products will not be taxed. The exclusion provides for a more level playing field, since if 3-in-1 coffee is to be taxed, Juan de la Cruz who buys it in a carinderia or sari-sari store will shoulder the tax, while the executive who buys his sweetened coffee from an upscale coffee shop will not pay the tax.”