KAPET BUHAY Multi-Partite Community Based Coffee Agribusiness Production & Consumption Program for Philippine Coffee Submitted

by : Bote Central, Inc. ( SEC registered Philippine private corporation) This is a Multi-Partite synergetic program initiated by Bote Central with Dept. of Agricultures Hon. Secretary Alcalas Program to Develop Coffee Roasting Centers throughout the county & DSWDs Hon. Secretary Dinky Solimans Pantawid Pangkabuhayan Program for the poorest of the poor - a nationwide project of DSWD to alleviate the poor by developing nano coffee entrepreneurs in the urban & rural poor . A production & consumption program of Philippine coffee , anchored on sustainable development entrepreneurship for the marginalized poor - wherein farmers shall be transformed , educated, trained, mentored and coached to become farmer entrepreneurs , going into the agribusiness of coffee serving their own produced coffee to the local communities . On the other hand, the SEA-K beneficiaries of DSWD shall be directly linked to the farmer agribusiness clusters for market linkage , wherein the SEA-K beneficiaries, with DSWD soft loan packages , shall also be taught, trained, mentored and transformed into nano coffee retailers to at least augment family income . Project Objectives : Increase income opportunity of small coffee growers by adding value to raw green coffee beans through the process of roasting ; and to the urban poor, by providing capital and skills to transform them into nano-coffee entrepreneurs Provide opportunity for coffee farmer clusters to retail roasted coffee in the community level which will encourage them to drink their own locally produced coffee Empower womens groups to administer & operate the community based coffee agribusiness while teaching proper values to the next generation For the farmers children to happily and proudly accept the legacy of being a farmer Establish Coffee Seed Bank for the roasting facilities To convert Filipinos , both in urban and rural countryside areas to drink & support locally produced / processed Filipino brewed coffee To be totally independent of world market prices for coffee Produce the best coffee in the world

Multi-Partite Public / Private Partnerships : Dept. of Agriculture , HVCDP RFUs - initiated the CRBUs Dept. of Social Welfare & Development - SEA-K livelihood program Department of Agrarian Reform BARBD village enterprise development Philippine Business for Social Progress PBSP - collaborator

Philippine Social Enterprise Network PHILSEN - training & skills development program manager Accenture - Skills to Succeed 2015 Program Globe Telecoms - internet connections for CRBUs Department of Science & Technology DOST production line support Local Government Units - alternative funder for equipments Philippine Coffee Alliance - program incubator & marketing support

Actual Development Impacts : (sourced from Mt. Matutum, General Santos over a three(3) year period)* The civet coffee/roasting machine have motivated the planting of more coffee trees , thereby enhancing the forest from 79 hectares to 400 hectares planted with coffee trees, over a period of three years Expanded wildlife habitat & improved quality of watershed in general Assured long term flow of quality water from the watersheds into the growing urban centers Provided locally produced , low priced but higher quality of coffee products for all market segments Developed entrepreneurial skills to the underprivileged who shall actively participate in the local value chain of coffee Empowered potential and emerging other businesses like eco-tourism, eco-spa , coffee tours, handicrafts , restaurants & other allied support services Promoted cultural heritage of the indigenous communities while they earn more income & take an active role in the economic progress of the community Increased linkage with the potential markets in both local, national & international business communities

*for further data validation, contact Mr. Fred Fredeluces (contact details thru Ms. Vie Reyes mobile 09178124477)

Testimonials available from different Community Roasting Business Units : - Sagada, Mt. Province - Lagawe, Ifugao - Batangas City, Batangas - Clark , Pampanga - Cash & Carry Mall , Makati - South Supermarket , Alabang - Bacolod, Negros Occidental - Gen. Santos, South Cotabato - Jolo , Sulu

Deliverables : Development & establishment of community based coffee roasting facilities - run, managed & operated by the farmer clusters & womens groups in collaboration with existing NGOs (as interim , case to case basis ) in the strategic target areas . Approaches & strategies will be custom fit per community .

Project Support Mechanism : Post harvest equipments , e.g. dehullers, depulpers, dryers Roasting, Grinding & Packaging Units Community Based Technology support & development One year Training program for Community Based Operations , Marketing & Business of Coffee with Fair Trade value formation , including hardware & software

Coffee Seed Bank : ** These coffee roasting facilities will also purchase green coffee beans at Fair Trade prices during coffee peak season. This Coffee Seed Bank would enable the facility to learn and be conversant with green beans trading , both for the farmers and the buyers . This shall give the facility ample supply of coffee to trade and / or roast & sell , till next harvest season.

Time Frame : Manufacture & Delivery of Roasting Machines - Two (2) months from receipt of confirmed payment Social Preparations / Skills & Capacity Training : One (1) - Two (2) Years Incubation & Development depending on Communitys maturity level

Project Cost per Facility Equipments Training with Business & Computer Systems for Skills & Capacity including Monitoring (spread over one (1) year ) Seed Bank (as a Loan Facility) : : : Php 558,700 * Php 350,000 Php 50,000 500,000

Total Project Cost per Facility : Php 958,700 - 1,408,700** (inclusive of one (1) year training program & coffee seed bank)
*Exclusive of Vat Charges & affected by inflation

Community Roasting Business Unit (CRBU) Projected Income (Overview) Presented in the next three tables are three of the possible scenarios that a community may go into. The following are the suggestions/requirements to consider. The community must have nearby source for the coffee beans to be used. Facility should be both accessible to farmers and the target consumer market . It is recommended to sell the few high quality beans in the form of green AND roast substandard or beans rejected by trades for local consumption/selling

Maximize utilization of all green coffee beans from the best to the worst bean quality since Rearden roasting machine accepts and roasts all kinds of beans and quality

A few scenarios are listed below. Option 1 is the present/common situation wherein they sell only the green beans. In the computations overhead costs were not included (electricity, water, rent). The net values computed are the extreme values, meaning the maximum cost is subtracted from the least possible total revenue and vice versa.

Table 1: Option 1, estimates PHP/kg. COMMUNITY ONLY SELLS GREEN BEANS Item Green Beans
* to be revised & updated

Revenue 85 200

Cost 40 60*

Net (15) 160

Table 2: Option 2, estimates PHP/kg. COMMUNITY SELLS GREEN BEANS & ROASTING / GRINDING & PACKING SERVICES. Item Roasted Coffee Green Beans Roasting Cost Packaging Cost Labor Cost TOTAL Revenue 180 600 Cost 102* 220* 8 5 15 5 20 120 263 Net (20) 515 (8) (5 15) (5 20) (83) 480

180 600

* You need 1.2 kgs of green beans to make 1 kilo roasted coffee

Table 2 shows the direct costs associated with a dedicated community roaster. In the green beans row it can be seen that the cost could go to as high as Php 220 (1 kilo of Arabica in Cordillera can go as high as P200. You need 1.2 kgs to have an output of 1 kilo roasted coffee ). This happens when the CRBU sources/uses/buys good quality green beans for roasting. It can also be noted that it can go as low as Php 85/kg for robusta green beans , this on the other happens when the CRBU is partnered with farmers. When option 2 is chosen, another option is made possible. Table 3 shows the possible ADDITIONAL income that can be generated. Table 3: Option 3, estimates PHP/kg. COMMUNITY SELLS GREEN BEANS, PROVIDES ROASTING/ GRINDING / PACKAGING SERVICES AND ALSO SELLS BREWED COFFEE AS BEVERAGE . Item Roasting Green Beans Revenue 180 600 Cost Net

Brewed Coffee Cup 1 Brewed Coffee Cup 2 Cups Creamer Sugar TOTAL 1 TOTAL 2

710 2,840** 2,500 5,000***

120 263**** 142* 180 75

447 2,720 2,237 4,880 (142) (180) (75) 174 2474 2,020 3,580

890 3,440 2,680 5,600

415 565 517 - 660

*142 is the amount of cups that can be made from 1 kg of roasted coffee. This is computed by dividing 1000 grams by 7 grams. 7 grams is the international standard for the amount of coffee to be used per cup of coffee (6 8 oz cups). For Filipino taste, the prescribed is 4 gms per cup only - this will produce about 250 cups per kilo of roasted coffee grounds ** Computed by multiplying P10 - P20 by 142 cups . - ( assuming 7gms of coffee is used per cup ) ***Computed by multiplying P10 P20 by 250 cups - (assuming 4 gms of coffee is used per cup ) **** Value is taken from the total roasted coffee cost in Table 2.

Table 4: Comparison of net values in PHP/kg. Item Option 1 Option 2 Option 3 Option 2 + 3 Net Value (15) 160 (83) 480 2,020 3,580 1,937 4,060 Average 45 397 2,800 2,998.50

Kapet Buhay Investment Package Cost : multi-partite community based coffee agribusiness The next table shows the amounts to be invested to start a CRBU Table 5: List of Investment for Equipments and their cost (PHP) .
Item First Processing - c/o PHILMECH Dehuller Solar Dryer Depulper Moisture Meter Description

Removes parchment skin , with motor Without furnace Dehulls all coffee bean varieties Measures moisture content of bean

95,000 10,000 27,000 15,000

Second Processing Rearden Roasting Machine LPG or electric w/ Cooling Device PATENT INVENTION Awarded by Intellectual Property Office One kilo Coffee Roaster - Hot air, Fluidized Bed , fully automatic, fully computerized , very user friendly , with Philippine Patent Pending applied for . - estimate roasting time is 9 minutes per kilo . Capacity is 1.5 tons 4.5 tons per month . (vat charges not included) This device cools the beans by air after roasting (included in roasting machine ) beans cool down in 2 minutes Grinds the roasted beans 1 roll of 500 meter of aluminium foil that has a two side seal. This is used for the packaging of roasted beans Used for weighing Used for weighing smaller volumes Cuts aluminium foil roll for packaging Seals the cut foil packaging For aluminium foil use Transport & Delivery of Equipments One (1) year comprehensive Training , Mentoring & Monitoring on Coffee Post harvest processing, Roasting , packaging, Labelling, marketing , Sales , Accounting , Monthly Monitoring including travel, administrative & development expenses P 350,000

Multi-purpose Grinder Aluminium Foil

32,000 6,500

10kg weighing scale 1kg weighing scale Cutting board Impulse Sealer Aluminium foil Dispenser Transport & Delivery Administrative & Development

1,000 4,200 2,000 1,000 15,000 300,000

Computer System w/ Internet Link Coffee Seed Bank Purchase Raw Green Coffee Beans (may be treated as a micro-financing scheme)

50,000 50,000 - 500,000 **

Php 958,700 - 1,408,700

(vat charges where applicable)

** the coffee seed bank may be provided at a later time when the community roasting facility is ready to go into the trading of green coffee beans with the farmers & buyers. There may be instances though that the coffee seed bank should be inevitably packaged together with the equipments and training program . This seed bank aims to develop and train the farmer clusters to trade green coffee beans with the big stakeholders .

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KAPET BUHAY - DSWD SEA-K Community - Based Coffee Enterprise Program PROGRAM OBJECTIVE : This program is envisioned to be a synergetic strategy of public-private partnerships, wherein govt institutions such as Dept. of Agriculture (DA) and Dept. of Social Welfare & Development (DSWD) initiate collective programs to empower the small stakeholders, the coffee farmers, the urban / rural mass-based poor , contributing to the countrys end goal of increasing coffee supply and lessen coffee imports. On the other hand, the poor mass-based consumers , contributing as the largest consumer component in the instant coffee based market which is at Php 10 billion annually, shall directly and actively participate and benefit by getting a market share of the P 10 billion , and earn substantial additional income from this Fair Trade supply chain. Furthermore, this program eventually aims to transform the mass-based consumers from brewed coffee retailers to community roasters . Kapet Buhay Program seeks to directly link the rural-based coffee farmers to the urban-poor coffee consumers . Pilot Project : NCR 4th District - Pasay Maximum No. of Target Households: 156 Minimum No. of Target Households : 16 Objective : Additional Household Income from Community-based coffee enterprises Target Increase in Income : Php 5,870.00 additional weekly gross income . Kindly refer to Table 1 for illustration. Table 1. Weekly Sales (actual figures taken from Baclaran Kapihan cum sari sari store) Coffee Beverage cups Gross Sales Merchandise (Packs) Ininstant blend 2 kgs P 5,120* 3 kgs * using 3.9 gms of ground coffee ininstant blend , one (1) kg will give 256 cups . 256 cups x 2 kgs = 512 cups @ selling price of P 10 / cup = gross sales is P 5,120 ** P250 selling retail price (current price) per kilo of coffee . current tinge price of 50 gms per sachet is P 12.50 P250 x 3 kilos = P 750

Gross Sales P 750 **

ACTION PLANS : Level 2 :

Multi-Partite Action Plan With Existing Community Based Coffee Roasting Facilities In The Rural Countryside . * 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. Bontoc, Mt. Province - CAR Guinyangan, Quezon RFU 4A Dolores, Quezon - RFU 4A Calapan, Oriental Mindoro RFU 4B Claveria, Misamis Oriental - RFU 10 Maramag, Bukidnon - RFU 10 Sen. Ninoy Aquino , Sultan Kudarat Sagada, Mt. Province Baguio, Benguet Lagawe, Ifugao Clark , Pampanga Lipa, Batangas Batangas City, Batangas Cash & Carry Mall, Makati South Supermarket , Alabang BF Almanza , Las Pinas Tanjay, Negros Oriental Bacolod, Negros Occidental (2 unts) Liguasan, Sultan Kudarat General Santos, South Cotabato Jolo, Sulu (2 units)

* Including DSWD project sites and high volume traffic areas (24/7) ---------------------------------------------------------------------------------------------------------Capital Investments ININSTANT KAPIHAN PACKAGE

Runner Package : Maximum Php 590.00 investment * Itakure (strainer) Ground Coffee for Brewing Ininstant Thermos optional Php 150 / pc 240/ kg 200 / pc

Kapihan Package : Php 6,500 up to Php 9,300 investment * Stainless Takure w/ Strainer Ground Coffee for Brewing Creamer Brown sugar Ininstant Thermos Php 3,000 / set 1,000 / 5 kgs 800 / 5 kgs 250 / 5 kgs 2,000 / 10 pcs

*Prices are based on pilot / test case. Economies of scale apply.

Kapihan concepts : Kape sa baranggay hall Kape sa munisipyo Kape at resort Kape at ospital Kape sa bahay Kape at carinderia kape at parlor kape at spa Kape at bus stations kape at computer shop kape at kapitolyo kape at catering kape at bangko kape at opisina kape at bakery Kape at sari-sari store Kape at carinderia Kape at padyak tricycles kape at punerarya Kape at sementeryo

Mayaman o mahirap man, nainom ng kape. Mula binyag hanggang lamay, may pa-kape

Contact Person for Bote Central, Inc. : Vie C. Reyes Vice Pres. Treasurer Mobile : 0917.8124477 Email : basil@arengga.com Office tel: (+632) 805.0713 , (+632) 836.0216 , (+632) 801.2682 www.arengga.com