Enhancing Business-Community Relations
Department of Trade and Industry,
Quezon and Nestle Case Study
by Charmaine Nuguid-Anden1
www.new-academy.ac.uk
www.pbsp.org.ph
www.unv.org
‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
Contents
1. Introduction....................................................................................................................................2
2. The ‘Drivers’ of Kapihan sa Quezon ...........................................................................................3
3. Quezon Province and the ARCs ...................................................................................................3
4. The Birth of Kapihan sa Quezon ..................................................................................................4
5. The Business of Growing Coffee...................................................................................................4
6. Partnership in Action.....................................................................................................................5
7. Lessons and Challenges .................................................................................................................6
8. Conclusion ......................................................................................................................................8
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‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
“Kapihan sa Quezon” Program:
A Partnership Towards Community Development
Research Project Background
This case study is one of ten that were chosen as part of the ‘Enhancing Business-Community
Relations’ project in India implemented in collaboration with Philippine Business for Social
Progress (PBSP). These cases document examples of engagement between businesses and
communities and can be used as learning tools for the promotion of responsible business practice
and sustainable development.
The Enhancing Business-Community Relations project is a joint international initiative between
United Nations Volunteers (UNV) and the New Academy of Business. Implemented in seven
developing countries, the purpose of the initiative was to collect and document information on
business-community practices as perceived by all stakeholders, build partnerships with them and
promote corporate social responsibility practices. It is also intended to enhance international
understanding of business-community relations through information sharing and networking with
other countries especially those participating in the project - Brazil, Ghana, India, Nigeria,
Philippines, South Africa and Lebanon.
The findings and recommendations reflected in the case study are those of the author and do not
necessarily reflect those of UNV, PBSP or the New Academy of Business. It is important to note
that these cases were written as examples of business-community initiatives. They do not constitute
a comprehensive assessment of the company’s social responsibility.
1. Introduction
On October 30, 1998, an Investment and Marketing Encounter in Gumaca, Quezon province was
sponsored by the Department of Trade and Industry (DTI) for the province’s farmers belonging in
agrarian reform communities (ARCs).2 Prospective investors and buyers of the farmers’ produce
participated in the Encounter. One of the resource speakers for the said activity was Nestle
Philippines’ Assistant Vice-President for Agricultural Services, Mr. David Santos. Mr. Santos
impressed upon the farmers that growing coffee especially the Robusta variety, which is used in
instant coffee products, is a profitable endeavour for them. Given that Nestle is the Philippines’
largest market for the country’s coffee and therefore is an authority on the nature of the coffee
market, the farmers were convinced to give coffee farming in Quezon a boost.
Thus, on March
12, 1999, a partnership was formed between Nestle Philippines, DTI-Quezon, Department of
Agrarian Reform (DAR) – Quezon 2 Provincial Office and 12 ARCs. A Marketing Memorandum
of Agreements was signed between DTI, DAR and the ARCs. Nestle committed to support the
program by providing technical assistance to the ARCs. The company also committed to purchase
their Robusta coffee produce at the market price – although farmers were not obligated to sell solely
to Nestle. This was the beginning of the coffee production and marketing project in Quezon to be
later known as the “Kapihan sa Quezon” Program (Coffee Farms in Quezon Program – rough
translation).
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‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
2. The ‘Drivers’ of Kapihan sa Quezon
Kapihan sa Quezon Program is an inter-government agency and government-business program for
the farmers in Quezon. DTI-Quezon, which facilitated the creation of the program, acts as the
Secretariat of the Program. DAR-Quezon provides extension services and supervises coffee growers
in ARCs while Nestle provides the main thrust of Kapihan – technical and marketing assistance to
the farmer-beneficiaries.
DTI serves as the primary co-ordinating, promoting and facilitating arm for trade, industry and
investment activities of the Philippine government. It acts as the catalyst for intensified private
sector activity to accelerate and sustain economic growth. The agency has regional and provincial
offices all over the country.
The enactment of the Comprehensive Agrarian Reform Program (CARP) law in 1988 created a
major shift in the farming practice in the Philippines. The feudalistic relationship between
landowners and tillers in the country was dismantled. The tillers became landowners themselves.
Mindful of the difficulties that the Agrarian Reform Beneficiaries (ARBs) would face in the initial
stages of running their own farms, these ARBs were organised into communities or the ARCs by
the Department of Agrarian Reform (DAR). DAR is the principal agency responsible for
implementing the CARP. Specifically, it is tasked to improve land tenure through better access to
land and its fruits. It shall also enhance the welfare and promote the development of agrarian reform
beneficiaries through the co-ordinated delivery of essential support services.
Nestle is the largest food and beverage company in the world. Nestle Philippines holds the same
distinction in the country. The company takes pride in its commitment to environmentally sound
business practices as embodied in its policy on environment. It also supports sustainable farming
practices that satisfy long term economic, ecological and social requirements. The company does
not engage in commercial farming activities. It sources its agricultural raw materials – primarily
sugar, vegetable oils and coffee either through trade channels or directly from local producers.
Nestle is committed to improve the conditions of small coffee farmers and co-operatives and
provides agricultural service assistance to those who seek to improve the quality of their produce. In
this way, farmers are able to sell their products at market prices and Nestle is able to procure coffee
products of excellent quality.
In Nestle Philippines, the Agricultural Services Department is responsible for extending technical
assistance to coffee farmers. In the recent years, the company has seen a drop in the domestic
supply of coffee that it has been forced to import in increasing quantity from ASEAN countries to
augment their supply. This prompted Nestle to network with all concerned parties who are involved
in coffee development projects.
3. Quezon Province and the ARCs
Quezon Province constitutes an aggregate land area of 870,600 hectares. Located in the Southern
Tagalog region, the province is subdivided into four districts with topological variances from flat
rice plains to mountains. It is home to about 1,482,955 people (year 2000 figures).
The province is known for its large coconut farms. Most of the arable lands in the area are planted
with coconut trees with most of the farmers engage only in coconut farming. Copra, which is from
coconut, used to be the main industrial product of Quezon but over the years the price of the
product is turning to record lows. This prompted the local government to intervene by turning
majority of the affected lands into ARCs and by encouraging the farmers to engage in planting other
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‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
products aside from coconut. Coffee farming emerged as one of the viable alternatives to coconut
farming.
4. The Birth of Kapihan sa Quezon
The signing of the MOA between and among DTI-Quezon, DAR-Quezon II, the 12 ARCs and
Nestle was the beginning of a multi-sectoral partnership aimed at reviving Quezon’s coffee
industry, providing alternative livelihood to farmers in the province and increasing domestic
production of high-quality Robusta coffee which Nestle and other companies can use for their
coffee-based products. A Training of Trainors on Coffee Production was held and by the first
quarter of 1999, several farmers have already sowed certified coffee seeds from Nestle.
The inroads made in the ARC coffee project did not escape the attention of the provincial
government of Quezon headed by Governor Wilfrido Enverga. The project was adopted as a
priority provincial project for the farmers of Quezon and was dubbed as the “Kapihan sa Quezon”
Program. Along with the provincial government, the Quezon Mayors League, Philippine Coconut
Authority (PCA), Quezon National Agriculture School (QNAS) and the Southern Luzon
Polytechnic College (SLPC) took active participation in the project and were formed into a Task
Force to oversee its implementation. An Institutional MOA was signed on August 5, 1999 to
identify the role of each institution in the program.
The Taskforce developed a five-year plan for Kapihan. It targeted a total of 1000 hectares for
coffee plantation. It aims to increase household income on an annual basis; increase employment by
creating two direct and four indirect jobs per hectare and produce one kilo of coffee for every tree.
DTI estimates that about 1.6 tons of coffee seeds will be harvested per hectare (at about 1660 trees
planted/ hectare) and with an estimated price of P50/kilo, farmers are expected to earn around
P50,000/hectare (P80,000 income less expenses of about P30,000/hectare).
The Program was also adopted in 1999 by DTI as a component of its DRIVE program. DRIVE or
the Developing Rural Industries and Village Enterprises is a “national program with a country-side
centred, market driven and agri-industrial approach where government deems the private sector as
partners in developing the domestic, industrial base and opening up of opportunities for small and
medium enterprises (SMEs) in the province”. DRIVE, which began in 1998, is implemented by DTI
and was a priority project of the Office of the President at that time.
Kapihan became a component of DRIVE because of the Big Brother approach that is used in its
implementation – with Nestle providing the farmers of Quezon with technical assistance, market
assurance and human resource development. This is in accordance with the concept of DRIVE
where big businesses are encouraged to assist small community enterprises in their areas of
competence.
5. The Business of Growing Coffee
The Kapihan program components include training; seedling production and nursery management;
seed procurement and technical assistance to farmers. Nestle assists the farmers through on-site
training on coffee nursery management, plantation establishment and on the post harvest process. It
also conducts training for local agriculturists and DAR personnel who assist the Nestle agronomist
in the supervision of coffee farmers. Nestle also sends sons and daughters of farmers to Davao
(Mindanao) to visit model coffee farms under the company’s Future Farmers Program – a program
which aims to provide second-generation farmers with the technical assistance they need to equip
and prepare them to become good farmers when they take over their parents’ farms. DTI-Quezon,
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‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
aside from acting as Secretariat, also extends technical assistance during trainings for farmers
whenever the Nestle agronomist, who is assigned to many provinces, is unavailable.
In the initial stages of the program, seeds were distributed to farmers for plantation development.
However, the experiences of the farmers from the different localities showed that there is wide
variation in the success rate for such strategy. Seedling starters have a higher success rate than seed
starters. Also, farmers prefer to receive seedlings rather than seeds so they won’t have to germinate
the seeds themselves. This lessens their waiting time before harvest and allows them to plant other
crops instead of tending the coffee seeds during the germination period. This prompted the program
implementers to establish a seedling nursery in the province’s agricultural school (QNAS). Twenty
second-generation farmers were sent to the Nestle Future Farmers Program Center in Davao for
training. The participants then used the knowledge they got from the training to establish the
nursery as well as to develop their own farms.
Box 1:
The establishment of the coffee nursery proved
to be successful. The farmers saw their
Clarito Rizarre is an ARB and an active
seedlings bloom into coffee trees. QNAS has
member of the Katuparan Agrarian Reform
also become the centre where new local farmers
and Multi-Purpose Cooperative in
can go and study nursery development and the
Catanauan, Quezon. He started his coffeetechniques of coffee farming. At present,
farming venture on April 1999 by sowing a
nursery and plantation development efforts are
quarter of a kilo of Nestle certified seeds. In
underway in each of the four districts of Quezon
November 2001, he had a bountiful harvest
– replicating the QNAS experience in their own
from the 800 healthy coffee trees that grew
localities. Nestle and DTI continue to provide
out of the seeds he sowed. This was made
inputs and monitors these nurseries.
possible with the assistance of Dr. Jose Reano
of Nestle and DAR Development Facilitator
As of 2002, 28 municipalities of Quezon –
Ador Gojar who provided technical knowabout seven from each of the province’s district
how
and supervised the rehabilitation efforts
– are involved in Kapihan. Thirty-five farmer’s
of the farm when strong winds wrought
organisation and 11 LGUs support and are
havoc to the coffee trees.
active participants of the program. There were
52 trainings conducted by DTI and Nestle for
about 1100 farmer-beneficiaries. The group also trained 67 technicians. About 500 hectares of land
is planted with coffee and is being tended by around 190 farmers. A clonal nursery and a clonal
garden are being maintained with over 500,000 seedlings planted. Mr. Menardo Noscal, DTI Trade
and Industry Development Specialist assigned in the program, is confident that by 2003 they would
be able to achieve if not surpass the target the Kapihan Taskforce set.
6. Partnership in Action
DTI, DAR and Nestle consider themselves as a “team united with one vision”. Constant
communication allows them to explore innovative solutions to the myriad of concerns that they face
in the implementation of the Kapihan program. The support of the local government of Quezon
allows them to tap local resources in ensuring the program’s success.
The process of engaging the farmers is done through participatory mechanisms. Barangay (village)
workshop consultations were employed. Through these workshops, the program implementers
presented the program and its components to the farmers. These consultations provided the
implementers a gauge on how the farmers view the program and with feedback on how they could
make Kapihan relevant to their present economic and social conditions. DTI, DAR and Nestle also
conducted focus group discussions and orientations, in co-operation with the LGUs in this regard.
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‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
Lectures on government policies and market viability of coffee and other farm produce, among
others, are regularly conducted by Nestle and DTI. Nestle informs the farmers of the coffee buying
station that they set up to facilitate the selling of their produce – acting as marketing anchor for
farmers. The company also pledged to buy all the coffee that the farmers would harvest but at the
same time it impresses upon them that they are not prohibited from selling to other coffee buyers.
Farmers are not bonded to sell to Nestle alone. This is made clear in the lectures to farmers. By
providing technical assistance to coffee farmers, Nestle seeks to create a stable supply of coffee
from the Philippines and providing a source of livelihood to farmers and not have a monopoly of
Quezon’s coffee produce.
Nestle agronomist for South Luzon, Dr. Jose F. Reano, who also heads the research and
development for the company’s Agricultural Services Department, notes how Nestle has become
more aware of Quezon as a viable supplier of coffee. Dr. Reano is providing leading edge farming
practices to the farmers by introducing new and innovative environment-friendly and economically
viable technologies. Through the adoption of these technologies, Dr. Reano is confident that the
farmers will have a bountiful harvest of high quality coffee seeds while maintaining the soil’s
productivity. He considers this coffee-based farming system approach a good strategy in raising the
farmers’ awareness on environment protection, particularly on the dangers of soil degradation.
Monitoring of the progress of the coffee farmers is done monthly by the program implementers.
Monitoring forms and farm visits are used to determine the farmers’ progress. DAR used to
implement a monitoring form, which after some trials was found to be too cumbersome for the
farmers, and was therefore simplified for easier use.
Box 2.
The commitment of the government agencies,
LGUs and Nestle in the Kapihan program is not
lost on the farmers. They recognize that the time
and effort being put into the program by the local
agriculturists, Nestle agronomists and the staff of
DTI and DAR, who they sometimes find
overzealous, is driven by the genuine desire to
improve their lives.
Grajeda Farms, owned by Mr. Cesar
Grajeda, is used by Nestle and DTI as a
showcase of the transformative power of a
legitimate community enterprise. He was
convinced to engage in coffee farming.
Now, he not only plants coffee but also
papaya and black pepper through multicropping. He employs 2 people to help
him run his farm. He is thankful for the
opportunity to engage in a profitable and,
more importantly, legitimate business.
Mr. Samuel Hernandez, a Senior Agrarian Reform
Officer and one of DAR’s staff in the program
notes that with the Kapihan sa Quezon, they are
confident that coffee would be one of the high
value crops in the province. Even at present they
are already seeing the fruits of the program with the hiring of labourers and farmers to help in the
farms especially the big ones. Those who have engaged in multicropping have seen their incomes
increased with the harvest of their cash crops and coffee seeds. Given these gains, Mr. Hernandez
expects more farmers to participate in the program and more idle lands to become productive again
through coffee production. Given the accomplishments already made, they believe that the end goal
of making Quezon a major producer of coffee beans is achievable in the next few years.
7. Lessons and Challenges
The implementation of the Kapihan Program was not without its share problems. Foremost of this
is changing the attitudes of farmers who are used to being agricultural workers or plantation
labourers and were thus wage earners. Before the CARP, for many years, these farmers were
earning even without actually tilling a land. When they started farming their own lands, they got
used to planting coconut and prefer to plant it than other crops because it requires less effort and
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‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
time. When the prices of coconut products was high, farmers got a good return from their coconuts
but when these prices started falling and its economic viability was threatened, farmers continue to
rely on coconut as their main source of income. Despite the encouragement of the local government
and the support services available to enable them to venture into farming other products, including
coffee, most of the farmers continue to rely mainly on coconut farming.
DTI, DAR and Nestle often encounter farmers who are resistant to coffee farming during their
trainings. Mr. Alejandro C. Cruz, Provincial Agrarian Reform Officer II, admits that coffee is a
difficult crop to produce compared to coconut given the amount of care it needs to grow and the
length of time it takes before harvest.
Thus, it is not easy to convince them to shift to planting coffee. He and the other program staff
concede that only through continuing education and consistent motivation will they be able to make
farmers realise that planting coffee is more profitable than coconut farming. And although it may
require more effort that what they are used too, the economic gain would be more than worth that
effort. While recognising that re-education of farmers is a long process, they remain optimistic that
when farmers see the improvement in the lives of those who have ventured into coffee-farming,
they would have a change of heart and would be willing to try it also for themselves.
The problems faced by the Kapihan implementers in encouraging more farmers to plant coffee
have led them to re-evaluate their strategy. They eventually decided to adopt an integrated farming
scheme that allows for multi-cropping – farmers are provided with seedlings and technical inputs to
enable them to plant cash crops such as arrow root, peanut, papaya, pepper and other fruits and
vegetables and earn income while waiting for their coffee harvest. This has been met with
enthusiasm by a number of farmers. The primary example of the success of multicropping in
Catanauan, Quezon is the Timbreza Coffee Farm, owned and operated by Mr. and Mrs. Mario
Timbreza. Their coffee farm is intercropped with pineapple, corn, yam, peanuts and eggplants. Mr.
Timbreza’s coffee trees are growing very well and a good harvest is expected. But before then, he is
enjoying the income coming from the cash crops also planted in his farm – a glaring example of the
benefit of integrated farming.
Box 3.
DTI and Nestle recognise that there is the danger
of these farmers engaged in multicropping
When Engr. Ricardo Lusterio decided to
abandoning coffee farming for cash crops farming. develop his four-hectare land into a coffee
Given the significant lesser amount of time and
farm in 2000, DTI and Nestle were there
effort needed to harvest these crops compared to
to lend a hand in the realization of his
coffee, farmers are easily tempted to forget about
desire. Over 6000 coffee seedlings were
coffee farming altogether. They concede that this is
transplanted to Engr. Lusterio’s farm in
an inherent risk in their approach. They continue to
August and September of that year,
promote alternative livelihood to farmers, including
including cloned seedlings from QNAS.
food processing, but they also make them realise
Soon, Lusterio Farm will be the source of
the value of coffee-based farming system approach.
the first certified clonal coffee seeds – a
They are hopeful that the success of the likes of source of pride not only for Engr. Lusterio
Mr. Grajeda and Mr. Timbreza will encourage the
but also for the entire people of Quezon.
other farmers to adopt this approach in their farms.
Another model for success that DTI and Nestle uses in enticing farmers to engage in coffee
farming are the experiences of successful pilot private farms that joined the Kapihan. Although the
Program started out with only land reform communities as beneficiaries, there have been landed
farmers who participated in the program. These farmers have been very receptive to the goals of
Kapihan and have committed their lands to coffee production. Nestle believes that the success of
these private farms would serve as inspiration to the ARCs who may be interested in planting coffee
themselves.
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‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
The inter-agency approach in the implementation of the Kapihan and the pooling of the resources
of each contributed to its wider reach – with almost all municipalities of Quezon having farmerbeneficiaries. The adoption by the provincial government of the Kapihan program as a priority
project gave DTI, DAR and Nestle political legitimacy in the eyes of the farmers who may be have
been initially sceptical of the program.
The problem of peace and order especially with the presence of guerrilla rebels in Quezon is
another area of support Kapihan needs from the local governments. The revolutionary tax required
by NPA rebels from landowners is one of the strongest disincentive to the development of a
significant area of idle lands in the province. Landowners would rather leave their farms
unproductive rather than give in to the demands of the rebels and always live in fear. Vast tracts of
land, which could be used as coffee plantation or for other crops, are left unattended and wasted
because of this. The LGUs’ capability to address this issue is crucial to gaining the participation of
landed farmers to Kapihan.
Getting the continued support of the political leadership is also a challenge to Kapihan’s
implementers. Change in leadership often times means a change in priorities. The new leader may
not consider the program a priority and would want to focus the local government’s resources to
other programs. Sometimes, it may be because the program is identified with the former local chief
executive that the new leader would not want to have anything to do with it. Instead, he or she
would want to create a program that would be identified with his/her leadership. These situations
pose the question of continuity and stability of a program like Kapihan.
What DTI and the other agencies of Kapihan do in these situations is to inform the new leader of
the program and its benefits. Although this is a taxing endeavour as it means they would have to go
back to square one with the LGU, the Kapihan implementers see it as a worthwhile task given the
benefits of a supportive local government. The local government’s political and economic resources
are necessary and effective contribution to the cause of Kapihan.
8. Conclusion
The story of the Kapihan program is a story of partnership. DTI in co-operation with DAR
facilitated the Investment and Marketing Encounter that started the coffee production program for
the farmers of Quezon with Nestle providing the business counterpart. The provincial and municipal
governments played a crucial role in mobilising community buy-in of the program despite the
(incorrect) perception of some parties that government programs are “all promises”. The cooperation forged with Nestle created a partnership that allowed each organisation to tap into their
core strengths and ensure the program’s viability and sustainability. This partnership is clearly seen
with the local governments assessing the needs of the community; the government agencies
articulating these needs and Nestle providing the market impetus for the program. The ARCs also
did their share by helping the program implementers craft a responsive program by sharing their
opinion and feedback on the program.
Nestle’s approach of working with government agencies and LGUs, especially in its coffee
development projects, enabled it to ride on the capabilities of local governments to convene and
spur community action. This opportunity allowed the company to replicate their strategies quickly,
without disregarding unique local conditions, and do comparative assessment of results.
The ability of the institutions in Kapihan to quickly learn from their experience as they implement
the program has allowed them to remain relevant, despite some setbacks. This is clearly shown in
their decision to change their strategy from monocropping (coffee plantation alone) to an integrated
farming approach to allow the farmers to plant cash crops while waiting for their coffee harvest.
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‘Enhancing Business-Community Relations’ – DTI, Quezon and Nestle Case Study, Philippines
Also, even with the change in national and local leadership and with the staff assigned in the
program for DTI, DAR and Nestle, the program has mechanisms in place to ensure its
sustainability. More than the commitment of the staff assigned in the program, it is the commitment
of the institutions to see the program through that makes the difference.
Given that the production of coffee in the province started from scratch, the gains of Kapihan may
be interpreted as modest yet impressive. Aside from the economic gains of employment generation
and increased income, the opportunities provided by the program has become a deterrent to criminal
activities like illegal logging – an unexpected yet welcomed result. The program also strengthened
social capital in the communities of Quezon through the Kapihan-facilitated interaction among the
ARBs and between the ARBs and the government agencies involved (including the local
governments). The farmers were provided with the opportunity to share and learn from each other’s
experiences, which paved the way for stronger community relations. The constant interaction of the
staff involved with the farmers created a harmonious relationship that facilitates the smooth
implementation of the program.
Kapihan sa Quezon Program is slowly making headway in making Quezon one of the top
producers of coffee seeds, in creating a stable supply of local coffee and in changing the farming
culture in the province. Despite the challenges that the program implementers continue to face, they
are resolute in their commitment to bring to fruition what they started for the farmers. They remain
hopeful that in due time, they would be harvesting more than coffee but also a renewed farming
community.
Endnotes
1
The views expressed in this case study are those of the author and do not necessarily reflect those of the New
Academy of Business, UNV or PBSP.
2
An Agrarian Reform Community or ARC is a cluster of barangays where land distribution is almost complete and
where there is a convergence of services from the national government, local governments and non-government
agencies implementing the government’s agrarian reform program. These services provide the agrarian reform
beneficiaries with knowledge, skills, technical, infrastructure and other support services necessary to ensure that these
new landowners will be able to make their land productive resulting in an improved livelihood.
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