Tuesday, March 15, 2011

Money and Manila

Today we visited two different groups which have different business models. Our first stop was to pick up Terry from the airport and then we headed off to meet Bote Central. They are producers of high quality coffee from various kinds of beans. Their big draw is marketing Civet (Alamid) coffee in Manila and internationally. But that is not what makes Vie and Basil Reyes unique. Basil used to be in the vinegar market when he learned about the civet that lived in the trees where he was working. Being an entrepreneur, he shifted his business. He and his wife run their entire operation out of the first floor of their house. He is a tinker and constructed his own small scale roaster with an integrated circuit that takes some of the expertise out of the process. This is unique because they want to push this processing capability down--essentially enabling clusters to capture more of the value from their produce. He's a big thinker so he sees a domestic and international market for these locally produced single origin coffees sold through the internet and the government is coming around to his idea by providing him with a grant to get the equipment out to the groups. They are not an NGO--they are business people and so are always looking to expand their marketing from opening their own point of sale roasters to possibly exporting their small scale processing technology in other countries. But they do it with a social goal in their mind as well.

Our second meeting introduced us to Nicholas, head of the Philippine Coffee Board. He represents the old-school business model. The government realized production was dropping, they needed a solution so they contacted the main Manila business group (in Makati, the central business district) and through those cultivated relationships came up with the board. Using government funding, the board distributed fertilizer out to the farmers and used those relationships to gather supply that they turned over to roasters to produce their own specialty coffees. They were successful in stopping and partially reversing the production drop, and they further want to develop the capability to produce coffee. However, their optimal endstate is not having small farmers in business for themselves as it is to create scale that could support a single operation to produce coffee for Manila and export.

So what do these two different perspectives show--Manila is still central to any plans for coffee in the Philippines even though none is grown here because this is where the money is. Relationships matter--a theme we've heard throughout the value chain, and when combined with money, there is a real power dimension that cannot be overlooked. Week 1+ is done, and tomorrow we go into CRS to get down to work.

No comments:

Post a Comment