Update on the Nescafé Plan in the Philippines

Media visit to the Nestlé Lipa Integrated Coffee Center

In the course of a tour of the Nestlé Lipa Integrated Coffee Center (LICC) for the media organized by VP for Government and Industry Affairs at Nestlé Philippines, Atty. Olive Misa, provided an update on the NESCAFÉ Plan in the country.


Overview of Coffee Farming vs. Consumption

In the Philippines, coffee is the most consumed beverage next to water, with each Filipino projected to consume nearly 4 kilograms of coffee annually by 2025. Despite the love for coffee, local supply is not able to meet the rapid rise in consumption.


Declining coffee production has resulted in a mere 15 percent food self-sufficiency ratio in coffee, or an import dependency ratio of 85 percent in 2020. Experts fear that in the near future, all coffee consumed in the Philippines could be sourced internationally, likely from neighboring countries like Vietnam and Indonesia. Various factors such as increasing number of coffee growers shifting to other crops, old age of trees with limited or no rejuvenation; poor farm practices – limited knowledge on appropriate coffee technology of farmers, aged farmers; limited access to certified planting materials, and limited access to credit caused the continuous drop in coffee production. Other complex issues are affecting coffee production such as climate change and traditional farming methods that are damaging to the soil.

 

The Philippine Coffee Roadmap 2021-2025, which seeks to accelerate growth for the coffee industry, states that smallholder farmers with holdings of one hectare or less are the country’s main producers of coffee. Mindanao produces and grows 83.63% (25,358.38 MT GCB) per year, broken down at Region 10 (including Bukidnon) at 9.23% (2,800.66 MT GCB) and Region 12 (including Sultan Kudarat) at 35.60% (10,794.24 MT GCB); Luzon accounts for 9.18% while Visayas only for 7.2%. The four types grown are Robusta accounts for 66% of coffee produced, 25% for Arabica, 8% for Excelsa, and 1% for Liberica.


The main goals of the Philippine Coffee Roadmap 2021-2025 include:


For the Filipino coffee farmer to reach a yield of 2 kg of dried cherry/tree (1kg GCB/tree) in either a mono crop or an intercrop setting. And for the net farm income to be above a province’s poverty threshold, for the farmer and his family to sustain coffee farming operations, with increase growth in the coffee domestic market by 5% per year for Arabica; 10% for Robusta; 10% for Liberica; and 10% for Excelsa.


For the Philippines to have a continuous supply of coffee by continuing to increase planted trees by ensuring that major coffee-growing regions will cultivate coffee trees with government support on rural credit, plantlets, inputs, postharvest facilities, manufacturing, and marketing linkages; and consider monocrop and intercrop number of trees/ha.

Coffee propagation demo

For farmers to continue being upskilled on the technologies (e.g. GAP, GMP) of coffee production, processing, and marketing.


To close the gap between local supply and demand, and to help farmers achieve a livable income from growing high-value crops including coffee and other produce, the NESCAFÉ Plan has been working with multisectoral partners to increase farmers’ yields and incomes.



NESCAFÉ Plan at 12 Years

In order to accelerate its efforts to strengthen the sustainability and advance the economic benefits of coffee farming, in 2010 Nestlé launched a long-term global program called the NESCAFÉ Plan to promote responsible farming, responsible production and supply, and responsible consumption including educating consumers on coffee industry issues.

On October 4, 2022 Nestlé globally launched Nescafé Plan 2030 to help drive regenerative agriculture, reduce greenhouse gas emissions, and improve coffee farmers' livelihoods over the next eight years. This new initiative, with investments of over one billion Swiss francs throughout the period, builds on the Nescafé Plan that since 2010 has pursued coffee sustainability efforts in collaboration with other stakeholders in various countries.

Press briefing

In the Philippines, the NESCAFÉ Plan is one of the longest-running and most successful public-private partnerships in the coffee industry. With 12 years of multisectoral collaboration and farmer interventions, the NESCAFÉ Plan has been able to help improve farmers’ productivity towards a better standard of living, and introduce a number of regenerative farming practices. Since 2012 the NESCAFÉ Plan has trained an average of close to 8,000 Filipino coffee farmers each year, with the view of improving their yields, incomes, and quality of life.



The NESCAFÉ Plan has provided training and technical assistance such as:



Production and distribution of superior quality Robusta plantlets through the government to farmers. The plantlets consist of better yielding varieties, with a potential yield of at least one metric ton per hectare compared to previous plantlets with a yield of only 300 kilos. Since 2011, Nestlé Philippines has produced and distributed 16.4 million plantlets;



Training in NESCAFÉ Better Farming Practices (NBFP), a set of coffee farming practices designed to increase productivity as defined by the Responsible Sourcing or RS standards. The Nestlé Agronomy team teaches coffee farmers coffee propagation, nursery and farm establishment, fertilization, care and maintenance, harvesting and post-harvest operations, quality control and marketing, coffee rejuvenation, and regeneration.

Coffee sorting and drying

In 2020, the NESCAFÉ Plan and the Technical Education and Skills Development Authority entered into a three-year partnership for a certification course in coffee-based farming based on NBFP. The Coffee Production Level II course produced 473 graduates in 2021, with 500 scholars currently registered in 2022.



Nestlé is committed to prioritize sourcing locally-grown coffee in the manufacture of NESCAFÉ, streamlining quality standards, and ensuring that transactions are ethical, transparent and fair, based on world market prices. In 2020, Nestlé joined the Department of Trade and Industry (DTI) Rural Agro-enterprise Partnership for Inclusive Development (RAPID) and Growth Project as a ready market for Robusta green coffee beans (GCBs).

Grading, cupping, and tasting

The NESCAFÉ Plan provides more immediate economic advantages to farmers through its Farmer Connect program, a direct buying system that encourages smallholder farmers and small-scale intermediaries to sell their produce directly to Nestlé. The company observes price transparency and farmers are provided information about its buying price. The system also enables farmers to be paid within eight banking hours, so they benefit within a convenient period from the sale of their produce to Nestlé. The Nestlé Cagayan de Oro coffee factory buys GCBs 12 months a year.


Strong stakeholder partnerships - the NESCAFÉ Plan carries out its mission to help farmers become more resilient and successful through multi-stakeholder engagement within the framework of the Coffee Roadmap. Philippine government agencies, NGOs, LGUs, academe, farmers, and farmers’ groups all collaborate to support the Philippine coffee industry. The Coffee Roadmap, championed by the Department of Agriculture (DA) and the Department of Trade and Industry (DTI), envisions a more robust and continuously growing coffee industry benefiting Filipino coffee farmers. In past years, one specific area of partnership between the DA and Nestlé has consisted of joint efforts to propagate high-yielding coffee plantlets made available to coffee farmers. The Code of Good Agricultural Practices (GAP) for Coffee (Philippine National Standards) was also formulated to institutionalize the value chain approach to coffee production as outlined in the Coffee Roadmap.

Rainforest Alliance Report on Positive Impact of NESCAFÉ Plan Interventions

Starting in 2018, 1,565 farmers in Sultan Kudarat and Bukidnon have undergone intensive training with Project Coffee+, an initiative under the NESCAFÉ Plan conducted in partnership with GIZ, the German Agency for International Cooperation. Through the Farmer Business School of Project Coffee+, participating farmers have learned agripreneurial skills enabling them to operate their farms as profitable businesses.



According to the 2021 audit of Rainforest Alliance, an international NGO addressing deforestation, climate change, systemic poverty, and social inequity, coffee farmers enrolled in Project Coffee+ increased average yields by around 64 percent, or an improvement of three times over the past year. They harvested an average of 900 kilograms of Robusta GCBs per hectare in 2021, a significant jump in productivity compared to 549 kilograms per hectare in the previous year.

Ecopavers made of recycled plastic packaging

 

Meanwhile, average net farm income breached the six-digit threshold, increasing from PHP 73,842 in 2020 to PHP 107,204 in 2021. On average, coffee contributed approximately 51 percent to total household revenue in 2021, 19 percent higher than in 2020. Commercial crops such as banana and corn accounted for around 24 percent, and off-farm income some 25 percent to total household revenue.



NESCAFÉ: Kapeng Pilipino Para sa Pilipino



The only company in the country with a dedicated coffee Agriservices team, Nestlé Philippines has nurtured a close relationship with Filipino coffee farmers for decades, having started manufacturing NESCAFÉ locally in 1962.

Stingless bees for pollination

NESCAFÉ has one ingredient: green coffee. In its manufacturing process, only green coffee beans and water are used. NESCAFÉ is 100 percent pure coffee.



As one of the world’s biggest buyers of green coffee, Nestlé has a long-standing commitment to help coffee farmers improve the quantity and quality of their coffee yields in a manner that is sustainable for the long term, and profitable to both them and Nestlé.



Today Nestlé Philippines is the leading buyer of the country’s Robusta coffee beans. In 2021, Nestlé increased its volume purchase of locally-grown coffee by 41 percent over 2020, sourced from NESCAFÉ Plan participants as well as consolidators, other smallholder farmers, and farm cooperatives across Mindanao.



NESCAFÉ Plan Towards Regenerative Agriculture: a Continuing Journey

In order to help coffee farmers to become more resilient in the face of climate change, the NESCAFÉ Plan is exerting efforts to accelerate their adoption of regenerative agriculture practices.



Regenerative agriculture is a method of farming that enhances resource use, rather than destroying or depleting them. It is based on farming principles that rehabilitate and enhance the entire farm ecosystem by protecting and maintaining the health of the soil, espousing biodiversity, and a host of other practices that protect the delicate balance of the environment. 

Intercropping

Some of the key principles of regenerative farming are already being introduced to Filipino coffee farmers, including:

• Planting cover crops that help protect the soil. It also helps add biomass to the soil, which can increase soil organic matter and thus soil carbon sequestration.
• Incorporating organic fertilizers that contribute to soil fertility is essential for good soil health.
• Increasing the use of agroforestry and intercropping contributes to biodiversity preservation and diversification of revenue sources.
• Rejuvenation with pruning techniques and/or renovation by replacing or grafting old traditional coffee varieties with new and improved varieties to increase yields.

Today, over 81 percent of local coffee farms reached by the NESCAFÉ Plan have structured intercropping planting systems. In the next few years, the NESCAFÉ Plan aims to introduce other regenerative principles to more farmers in the country.