Monday, September 15, 2008 [ philstar.com ]
Southeast Asia’s largest food, drinks and packaging conglomerate San Miguel Corp. (SMC) and the Kuok Group have formed a P100-million joint venture company that will develop around one million hectares of farmland and use the produce to support their food businesses.
Based on documents filed with the Securities and Exchange Commission, the new company San Miguel Kuok Food Security Inc. (SMKFS) has been organized to “develop a sustainable food security program for the Philippines by harnessing idle lands of government and private parties for production of rice, corn, cassava, bananas and other basic food staples.”
The new firm has already obtained a corporate license from the SEC.
SMKFS will optimize land use by planting commercial crops such as palm tree for palm oil production which will allow it to seek financing and/or grants.
The joint venture firm is expected to create livelihood, employment and economic activity in the countryside which will be most beneficial to the poor.
SMC and the Kuok Group of Hong Kong-based billionaire Robert Kuok will spend up to $1 billion for this project and have committed to purchase all agricultural produce from the land.
SMC president Ramon Ang earlier said that SMC and the Kuok Group would split a 30 percent equity infusion in the project while the remaining 70 percent would be raised through long-term debt issues.
The joint venture will help the Philippines, the world’s biggest rice importer, meet a goal of rice sufficiency by 2010. President Arroyo wants to increase rice output to 19.7 million metric tons in 2010, from a projected 17.3 million tons this year.
For this year alone, the Philippines is buying some 2.2 million metric tons of rice.
The Philippines is seen to benefit from the expertise of the Kuok Group which is one of Asia’s largest food, sugar and vegetable oil companies as well as one of the biggest property companies. The Kuok Group owns Wilmar International, the world’s largest listed palm oil trader.
San Miguel, on the other hand, controls the domestic beer market. It also has interests in livestock feed, poultry and hogs.
The investment is seen to help ensure adequate food supply in the Philippines amid soaring prices of food and fuel.
The Kuok Group noted that the “use of crops to produce alternative fuels, the global rise in population, and climate change, have all put tremendous pressure on farm lands and are changing the face of farming.”
The government, through the Depart-ment of Environment and Natural Resources, Armed Forces of the Philippines, National Commission on Indigenous Peoples and electricity producer National Power Corp. will identify, evaluate and review government land suitable for food production.