Planting Process

Since the last post, we’ve been moving quickly with the planting process. Here are some photos showing the various activities involved:

A view of the Bugkalot planting grounds up in the mountains

View of the Bugkalot plantation site up in the mountains

 

Markers in the ground

Layout – Markers in the ground identify where each tree will be planted

Coffee trees in poly bags taken out from the nursery, waiting to be planted into the ground

Coffee seedlings in plastic polybags taken from the nursery, waiting to be planted

Digging holes for the trees

Hole Digging

Adding organic fertilizers

Adding organic fertilizer and mixing it with the soil

Putting the coffee tree into the ground

Putting the coffee tree into the ground

Final product! Now for the rest of the 100 hectares...

Final product!

 

Coffee Growing At A Glance

There are four varieties of coffee – Arabica, Liberica (or Barako), Excelsa, and Robusta. Robusta is the primary variety used in instant coffee (~70% cheaper than Arabica), though other varieties are also blended in, in some cases.

Coffee CherriesCoffee cherries are produced 8-9 months after the tree flowers. The cherries are picked (strip picked or selectively picked) and then processed. All outer layers (skin, pulp, parchment or hull, etc.) are removed, leaving only the seed (or bean). This is then roasted and either ground before packing or packaged as roasted beans.

Coffee is traded globally (ticker KC or EKC for electronic trading), and in its green bean state. A notice of certification is required for contracts to ensure the quality or grade of the beans. Pricing is typically based on USD cents per pound with contract sizes of 37,500 pounds1. Coffee is the second largest traded commodity globally, next to crude oil.2

The supply chain involves growers (producers), traders, exporters & importers, roasters, and retailers before reaching the consumer. Middlemen purchase direct from small farmers, while large growers/plantations often export their harvests or have direct arrangements for processing (roasting, packaging, etc.) sales and distribution. Green coffee beans are purchased by importers from exporters or large growers/plantations. Importers or traders may hold inventory, which is sold gradually through smaller orders. Roasters typically have the highest margins in the supply chain.

Within the chain, BCC is a coffee grower, producing green coffee beans. We will sell directly to Rocky Mountain Arabica Coffee Company (RMACC), thereby cutting out the middlemen. RMACC will then roast, package, and distribute to the consumer.

 

1Source: http://www.investopedia.com/university/commodities/commodities2.asp
Latest pricing: multiple sources provided for comparison – http://www.indexmundi.com/commodities/?commodity=other-mild-arabicas-coffee, http://www.nasdaq.com/markets/coffee.aspx

Supply & Demand

1339587_68401201

With a population of 100 million people, the Philippines consumes some 60,000,000 kg of coffee every year, and has a potential to double this demand to 120,000,000 kg within five years with proper investment in promotion and advertising. In contrast, according to the Bureau of Agriculture Statics (BAS), the Philippines is currently producing only 31,000,000 kg of coffee nationwide, mostly in Mindanao. Philippine production represents about fifty percent of domestic consumption with the balance imported from South East Asian countries like Vietnam and Indonesia.

To compensate for coffee imports, the Philippines would need to develop at least 30,000 hectares of land into coffee production (assuming a yield of 1,000 kg per hectare) and would require that about 45 million coffee trees be produced and planted nationwide in the Philippines. Over 10 years, demand is expected to reach more than 150 million kg per year, and the Philippines would need to have 150,000 hectares of land planted with coffee trees to achieve that level of production. In other words, the Philippines would need to develop 15,000 hectares per year over the next 10 years planting a minimum of 22.5 million coffee trees each year for 10 years just to keep pace with domestic demand.

Because of this huge demand we know our product will always have a buyer here in the Philippines and potentially worldwide.

Prime Location

The Philippines falls right within the ‘coffee belt’, the latitudes in which all coffee plants are grown between the Tropics of Cancer & Capricorn.

Road Access

Road Access

Coffee trees thrive in mountain climates and the best coffee, Coffea arabica, grows best at higher elevations.  Located in the highlands of the Sierra Madre mountain range of northern Luzon, Philippines, the traditional tribal lands of the Bugkalot Ancestral Domain cover more than 136,000 hectares of mountainous forest land in the provinces of Nueva Vizcaya, Quirino, Aurora, and Isabella. It is perfect “coffee country”.

Situated within an elevation between 600 to 2,000 meters above sea level, with good soil conditions, excellent water resources, and reasonable access to transportation and electricity make this site a suitable location for the development of the coffee plantation and an integrated coffee processing complex for Arabica coffee production.