Palm oil is new battleground for San Miguel, MVP

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Two of the country's biggest business groups have added a new battleground for their -- and their Asian tycoon principals' -- intersecting interests

PALM OIL TITANS. Agriculture in the Philippines is the new battleground of San Miguel Corp and the local units of First Pacific. AFP file photo of a palm oil plantation in Sumatra island

MANILA, Philippines – Two of the country’s biggest business groups have added a new battleground for their — and their Asian tycoon principals’ — intersecting interests.

Both San Miguel Corp and the Philippine units of Hong Kong-based First Pacific Co. Ltd. are eyeing possible sites for their expansion into agriculture sector, particularly palm oil.

Rivals in infrastructure, telecommunications, power, media, aviation, and other capital-intensive industries, both San Miguel and the local entities under First Pacific are currently actively eyeing vast hectares of land for commercial farming.

This new foray into palm oil in the Philippines is also part of the move of two of Asia’s tycoons to expand their footprint in the region.

Allied with San Miguel is the Kuok Group, which is owned by Malaysia’s richest and has as part of its portfolio the world’s largest listed palm oil trader.

On the other hand, Indofood Agri Resources Ltd. of Indonesia is the food unit of First Pacific, owned largely by billionaire Anthony Salim and led by Filipino businessman Manuel V. Pangilinan.

Both Kuok and Indofood groups are among the region’s most powerful tycoons who are part of an investment wave on palm oil. The two are expanding their businesses beyond their homebase.

Eye on Davao

San Miguel said on Thursday, May 23, that it is pursuing its planned agriculture venture, which has been put on the back burner after Eduardo Cojuangco, chair of San Miguel, and Robert Kuok entered into a US$1 billion partnership in 2008 to develop a million hectares of idle lands owned by the government.

“We confirm that the Company continues to review and evaluate the viability of developing agricultural plantations in the potential sites recommended by the government and its different agencies and departments,” San Miguel told the exchange.

It also confirmed a report by Manila Standard Today that the government has recommended that San Miguel develops farmlands in Luzon and Mindanao — including the 19,000 hectares of logged-over areas in Davao del Norte.

The report said the Davao del Norte land is part of an estimated 800,000 hectares of farmlands that San Miguel is studying for a possible lease arrangement with the government that it can then convert into commercial farms. The other areas are in the Mountain Province, Zamboanga del Norte, Zamboanga Sibugay, Sarangani, Davao del Sur, South Cotabato, North Cotabato and Agusan del Norte.

Days before, First Pacific’s Pangilinan announced that the group will pursue plans for a palm oil plantation in Davao Oriental, a province near Davao del Norte.

Pangilinan said representatives of Indofood have gone to the 30,000-hectare area in Davao Oriental to assess the prospective development areas.

“We’re still waiting for the assessment of Indofood with regards to a potential palm oil plantation,” he said during the Philex Petroleum Corporation annual stockholders meeting on May 21.

He said the assessment results and development updates will likely be available next week.

He noted that “the land area (in Davao Oriental) is large in Philippine standards but not in global standards.” Indofood’s plantation in Indonesia is considered to be the 3rd largest palm oil producer in the world, reaching around 240,00 hectares.

Both San Miguel and Indofood are also looking into other crops aside from palm oil.

San Miguel is reportedly studying rice, coconut, corn and sugar. Indofood is studying banana in Davao. –

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