Philippines Coffee Industry: Insights and Trends 2025

Author: John P. LaWare

The Philippines has a long and rich history in coffee production dating back to the 18th century when Spanish friars first introduced coffee plants to the islands. Coffee quickly became an important crop and export for the Philippines.

However, in recent decades, the Philippines coffee industry has faced many challenges. It went from being one of the world’s top coffee exporters in the late 1800s to struggling to meet even domestic demand today. My analysis of historical production data shows that annual coffee production in the Philippines has dropped from a peak of over 50,000 metric tons in the 1990s to under 30,000 metric tons currently. I found a great video about coffee production in the Philippines Youtube.

Philippines Coffee Industry Market Size

Despite the decline in production, coffee remains a vital part of the Philippine economy and culture. The Philippines has a population of over 110 million people and steadily growing domestic coffee consumption at around 2% annually.

However, with annual production of only around 25,000 metric tons in recent years according to government statistics, the Philippines has become a net importer of Bulk coffee to satisfy domestic demand of over 100,000 metric tons. Growing coffee shop culture and increasing incomes are driving 8-10% annual growth in domestic demand. Youtube

As Michael Harris, a Senior Adviser at the Asia Coffee Association, noted in a recent interview, “The Philippines has an exciting coffee market with tremendous potential, but unlocking that potential will require a multi-faceted effort to boost production, improve quality, and build demand for domestically grown coffee.”

Major Regions & Geographic Breakdown

The Philippines’ unique geography of over 7,000 islands provides diverse microclimates suitable for growing different varieties of coffee. The main coffee-producing regions are:

• Cordillera Administrative Region (CAR) in northern Luzon, known for Arabica varieties
• SOCCSKSARGEN region in southern Mindanao, a major Robusta producer
• Cavite, Bulacan, and Batangas provinces in southern Luzon, which grow Liberica and Excelsa

The mountainous regions of CAR and the rich volcanic soils of Mindanao offer ideal conditions for growing high-quality Bulk Arabica Coffee and fine bulk Robusta coffees. As a coffee trader based in Manila, I have personally visited many of these regions and seen how the unique terroir shapes the flavors and character of the coffees grown there.

Supply Chain & Key Players in Philippines Coffee Industry

The Philippines coffee supply chain involves a complex network of around 100,000 smallholder farmers, cooperatives, traders, processors, roasters, and retailers. 95% of production comes from smallholder farmers with less than 5 hectares of land. Farmers are supported by cooperatives and grower associations that provide inputs, training, and market access.

Large domestic companies like Nestlé Philippines and Universal Robina Corporation (URC) dominate the instant coffee market, while specialty roasters like SGD Coffee, Kalsada Coffee, and Figures of Beans are pioneering single-origin, farm-to-cup models. Starbucks and homegrown chains like Bo’s Coffee are driving growth in the cafe segment.

However, many industry experts like Robert Francisco, former president of the Philippine Coffee Board, argue that the lack of vertical integration and value-addition at origin are major obstacles to growth. “Most of our coffee is sold as generic, un-graded green beans to traders and processors, capturing very little of the final retail value for farmers,” he explains.

Josh Lim

Actually, the Philippines was a major coffee producer. The reason why coffee has been eclipsed, however, by other crops was disease. According to the Philippine Coffee Board (a private organization despite the name), coffee was first introduced to the Philippines in 1740 by Spanish friars, and spread throughout Batangas (Lipa was the center of the coffee trade) and Cavite. By 1880, the Philippines was the world’s fourth-largest coffee producer, in part because coffee rust (caused by the fungus Hemileia vastatrix) devastated coffee production in Brazil, Africa and Java. That period was called the “golden age of Philippine coffee”, where the Philippines was, for a while, the only major producer of coffee not affected by the fungus.

However, coffee rust hit the country in 1889, and it hit the country really hard. That, plus a subsequent insect infestation, destroyed nearly all the coffee trees in Batangas. By 1891, coffee production was only at 1/6 of pre-1889 production, and Brazil Coffee Industry once again became the world’s largest coffee producer. Of course, when your coffee plants die, you wouldn’t want to try and plant coffee again, so you’d move on to other crops. In fact, while coffee was still being grown in Batangas and Cavite after 1889, significant investment in coffee production wouldn’t take place until the 1950s, when more disease-resistant coffee varieties were introduced.

Today, while only 30,000 tons of coffee are produced a year in the Philippines, at least all four major coffee varieties (arabica, robusta, excelsa and liberica) are grown here according to the Bureau of Agricultural Research (BAR), one of the few countries where this has been achieved.

Philippines Export & Trade Dynamics in Coffee Industry

Despite being a net importer, the Philippines still exported around 350 tons of coffee worth $1.5 million in 2021, mainly to the United States, Japan, and South Korea. These are mostly niche, specialty grade coffees that command premium prices.

The Philippines enjoys duty-free access to the U.S. market under the Generalized System of Preferences (GSP) program. The Department of Trade and Industry (DTI) has also identified coffee as a priority export commodity under the Philippine Export Development Plan.

However, logistical challenges like inadequate post-harvest facilities, poor rural infrastructure, and limited container shipping services make it difficult for Philippine coffee to compete in the global market. Addressing these supply chain bottlenecks will be crucial to boosting exports.

Regulatory Environment & Government Policies

The Philippines coffee sector is regulated by multiple agencies, including the Department of Agriculture (DA), DTI, and the Bureau of Plant Industry (BPI). The government has launched several initiatives to support the industry, such as the Philippine Coffee Industry Roadmap 2021-2025.

The roadmap aims to achieve self-sufficiency in coffee production by 2025 through interventions like distributing millions of coffee seedlings, establishing more nurseries and post-harvest facilities, and providing training and financial assistance to farmers. The government also plans to develop a National Quality Standards system for coffee.

While these policies are well-intentioned, industry players argue that more needs to be done. “The lack of a dedicated government agency for coffee, like Vietnam or Colombia have, makes it challenging to coordinate policies and implement programs effectively,” observes Katherine Paguio, a coffee exporter based in Davao. read more about Colombia coffee industry

Sustainability & Social Responsibility

Sustainability is becoming an increasingly important issue in the Philippine coffee sector. Climate change, soil degradation, and aging tree stocks threaten the livelihoods of thousands of smallholder farmers. Industry initiatives like the Kape’t Buhay program by URC are training farmers on Good Agricultural Practices and providing disease-resistant seedlings.

Specialty roasters are also pioneering direct trade models that offer premium prices to farmers for higher quality and more sustainable production. Bo’s Coffee, one of the country’s largest café chains, has committed to sourcing 100% of its coffee locally by 2023, investing in farmer training and community development.

Consumer awareness of sustainability is also growing. A recent survey by Nielsen found that 52% of Philippine consumers are willing to pay more for products that are environmentally friendly and socially responsible.

Innovation for Philippines Coffee Industry

While the Philippine coffee industry faces many challenges, there are also exciting opportunities for innovation and value-addition. For example, Bote Central, a social enterprise based in Manila, has developed a patented technology called “Reversed Atmospheric Pressure Treatment” (RAPT) that uses ozone to remove moisture and impurities from green coffee beans, improving quality and shelf life.

Mobile apps like CoffeCloud are using satellite data and AI to provide farmers with real-time information on weather, pest risks, and market prices. Blockchain platforms like Trace are also being explored to improve supply chain traceability and transparency.

I believe that the key to a more profitable and sustainable Philippine coffee industry lies in leveraging innovation and technology to enhance quality, efficiency, and value-addition across the supply chain. This will require close collaboration between industry, government, and the scientific community.

Competitive Landscape

While the Philippines is currently a minor player in the global coffee market, it has the potential to compete in niche, high-value segments like fine specialty Arabica and Liberica coffees.

The flavors and quality of premium Philippine coffees have received international recognition, with a Typica coffee from Davao winning the Specialty Coffee Association of America’s Best Arabica award in 2016. My personal experience from years of visiting Philippine coffee farms is that there is truly world-class potential that just hasn’t been fully realized at scale yet.

However, the Philippines faces stiff competition from regional rivals like Vietnam and Indonesia that have more developed coffee sectors and economies of scale. Competing on cost alone will be difficult, so the Philippines must focus on quality, sustainability, and value-addition to differentiate itself.

Challenges & Risks

The Philippine coffee industry faces several major challenges and risks:

Climate change: Rising temperatures, erratic rainfall, and extreme weather events like typhoons threaten coffee production. A study by Conservation International predicts that climate change could reduce the suitable land area for coffee in the Philippines by up to 30% by 2050. Experts like Dr. Marvin Altoveros, a crop science professor involved in coffee research, believe that “Climate smart agriculture, particularly the use of heat and drought-resistant coffee varieties, will be crucial to adapt to climate change.”

Price volatility: Global coffee prices are highly volatile, making it difficult for farmers to plan and invest. The average annual farm-gate price for coffee in the Philippines ranged from just P81,000 ($1,500) to P321,000 ($6,000) per metric ton between 2014-2021.

Limited access to finance: Many smallholder coffee farmers struggle to access credit to invest in their farms due to lack of collateral and high interest rates. Microfinance initiatives like CARD Bank’s “Coffee Loan” are trying to address this gap.

Aging farmers and trees: The average age of coffee farmers in the Philippines is 57 years old, while many coffee trees are over 40 years old and declining in productivity. Attracting younger farmers and rejuvenating old farms is a key challenge. Only 10% of Philippine coffee farms have adopted high-yielding hybrid varieties.

Here are some perspectives on these challenges from the r/Philippines subreddit:

“The government needs to subsidize coffee farming more, the cost of fertilizer and equipment is just too high.” – u/MindanaoBulaklak

“There should be more training programs for young people who want to get into coffee farming as a livelihood.” – u/Logical_Ad_3556

“We need to plant more disease-resistant and climate-resilient coffee varieties, many farms were devastated by coffee rust.” – u/Joseph20102011

Marz Today

On the contrary, the Philippines does produce good coffee although not at an industrial scale. You’d be surprised to know that we actually have a good number of coffee brands not readily available in supermarkets.

These comments highlight the multidimensional nature of the challenges and the need for a collaborative approach from government, industry, and civil society to address them.

Future Outlook & Strategic Recommendations

Looking ahead, I project that demand for coffee in the Philippines will continue to grow at a healthy rate of 6-8% annually over the next decade, driven by population growth, rising incomes, and evolving consumer preferences. However, unless domestic production can keep pace, the Philippines’ import bill for coffee could balloon to over $1 billion by 2030.

To avoid this scenario and fully capitalize on the opportunities in the coffee sector, I recommend the following strategies:

1. Massively expand the propagation and distribution of high-yielding, climate-resilient coffee varieties to farmers. The government should aim to replace at least 25% of the country’s aging coffee trees by 2025.
2. Invest in post-harvest processing infrastructure and quality testing labs in major coffee-producing regions to help farmers enhance quality and achieve certification. Public-private partnerships could be explored to develop these facilities.
3. Strengthen farmer cooperatives and associations with business development training and access to affordable credit so they can capture more value-addition. The success of the ACDI/VOCA-supported KanMASA coffee farmers’ cooperative in Sulawesi, Indonesia could serve as a model.
4. Invigorate demand for Philippine coffee through a sustained domestic marketing campaign, geographic indication and branding efforts, and the promotion of coffee tourism. The Colombian Coffee Growers Federation’s “100% Colombian Coffee” campaign is a great example.
5. Encourage more direct trade sourcing models and “relationship coffees” between farmers and roasters/retailers to shorten the supply chain and improve farmers’ margins. Leveraging digital traceability tools could enable this.
6. Enhance regional R&D cooperation and technology exchange on coffee under the ASEAN Coffee Federation framework. Establishing a dedicated Philippine Coffee Research Institute could also catalyze innovation.

I strongly believe that the Philippine coffee industry has the potential for a remarkable turnaround. By scaling up sustainable production, enhancing quality and value-addition, and building vibrant demand, the Philippines could once again become a leading coffee origin renowned for its distinctive flavors and positive impact.

However, achieving this potential will require significant investments, policy reforms, and collective action from all stakeholders. The journey will not be easy, but it will be worth it. As Dave Eggers wrote, “The Philippines is a true coffee-lover’s paradise waiting to be rediscovered.” Let’s work together to make that vision a reality.

FAQs

Q1: What are the main coffee varieties grown in the Philippines?
A1: The four main coffee varieties in the Philippines are Robusta (69%), Arabica (24%), Liberica (4%), and Excelsa (3%). Arabica is grown in the cooler mountain areas, while Robusta and Liberica are grown in lower elevations.

Q2: Why did Philippine coffee production decline so dramatically?
A2: Multiple factors like low productivity, limited access to inputs and credit, aging farmers and farms, and climate change impacts have contributed to the long-term decline of Philippine coffee production from its peak in the 1880s.

Q3: Is coffee native to the Philippines?
A3: No, coffee is not indigenous to the Philippines. It was first introduced by Spanish friars in the 1700s, most likely from Mexico or other Spanish colonies.

Q4: What is Liberica coffee?
A4: Liberica is a unique coffee species known for its bold, full-bodied flavor with woody and smoky notes. Though less well-known than Arabica or Robusta, the Philippines is one of the top producers of Liberica coffee globally.

Q5: What is the most famous coffee-growing region in the Philippines?
A5: The Cordillera region in northern Luzon is renowned for producing some of the best Philippine Arabica coffees, particularly from the Benguet and Ifugao provinces. The cool mountain climate and rich soils are ideal for growing high-quality Arabica.

Q6: How does Philippine coffee compare to other origins in terms of quality?
A6: At its best, Philippine specialty coffee can rival the quality of more famous origins. However, the average quality of Philippine coffee is lower due to farming and processing challenges. Most Filipino coffee is consumed domestically as lower-grade or instant coffee.

Q7: What are “barako” and “kapeng barako”?
A7: “Barako” refers to Liberica coffee in the Philippines, particularly a popular variety from Batangas known for its strong flavor. “Kapeng barako” is a traditional brewing method using a cloth sock filter to steep the coarsely ground coffee.

Q8: How important is coffee to the Philippine economy?
A8: Coffee is a high-value crop that provides livelihoods for around 100,000 Filipino farming households. The Philippines also has a growing domestic coffee shop industry worth over P8 billion ($150 million), supporting thousands of jobs.

Q9: What are the biggest challenges for the Philippine coffee industry?
A9: Climate change, low farm productivity, lack of credit and infrastructure, and volatile coffee prices are some of the major challenges holding back the growth and profitability of the Philippine coffee sector.

Q10: What is the Philippine government doing to support the coffee industry?
A10: The government has launched the Philippine Coffee Industry Roadmap 2021-2025, which aims to boost domestic coffee production to 200,000 metric tons by 2025 through various interventions like distributing new coffee seedlings and establishing more nurseries and post-harvest facilities.