Food for the Future

That our agriculture cannot produce enough rice to feed our population is a grim fact. Unless we intend to use starvation as the primary policy to control population growth, Filipinos must act aggressively to reform its agriculture. Food, the fundamental determinant of health, is life.

The administration’s responses to the recent food crisis have consisted mostly of palliatives that offer temporary relief, like the massive emergency importation of rice, a heavy price subsidy to make rice affordable to the poor, and cash doles to lucky families.

Food for the Future

The Arroyo administration has talked about pouring P30 billion into a new program to accelerate rice production, but it has not put forward anything as bold and concrete as the food production project proposed by San Miguel Corp. and the Kuok Group. The government has identified three million hectares of idle lands that can be planted to various crops, particularly rice, corn, sugarcane, coconut and vegetables. SMC, together with the Malaysian food giant Kuok Group, wants to develop one-third of that, or one million hectares. They plan to invest as much as $1,000 per hectare for their project called “Feeding our Future.” Under this proposal the government will keep ownership of the land, while SMC and the Kuok Group will provide financial and technical expertise in developing the lands and then buy all of the produce. Since these are public lands, there will be no problem this time with the Comprehensive Agrarian Reform Law like SMC had in Sumilao town in Bukidnon, but the government must make sure that the farmers who will till the land get a fair return on their labors.

So far so good. Now the spoiler – the food is for animals and the rice for beer, and profitability, not exigency, dictates the pace of the project

San Miguel and the Kuok Group will split a 30-percent equity infusion in the project and the remaining 70 percent would be raised through long-term debt issues. “Our priority is always rice, corn, sugar, coconut and maybe later on other crops like palm,” SMC President Ang told reporters, adding San Miguel would convert most of the produce into animal feed.

Rice will be used for beer fermentation, Ang said.

The joint venture will issue debt locally and offshore, depending on market conditions, to fund certain phases of the project, Ang said. “We can go to the market and issue 25-year bonds,” he said.

Ang said the Philippine would benefit from the expertise of the Kuok Group, which owns Wilmar International, the world’s largest publicly listed palm oil trader.