SMC’s import substitution to save RP $300M

The Philippines is expected to benefit from food and beverage giant San Miguel Corp.’s raw material sourcing program with savings of around $300 million when fully implemented.

Under the program, SMC will source raw materials such as corn, cassava, soybean and sorghum from local farmers instead of resorting to importation. It uses these raw materials for its feeds, liquor and soft drinks businesses.

SMC chairman and chief executive officer Eduardo M. Cojuangco Jr. said the program will help not only the farmers in the countryside, but also the government in terms of dollar savings. The program, he said, is also expected to generate one million jobs over a five-year period.

Cojuangco said the program provides farmers a steady and an assured long-term market for their produce.

The raw material sourcing program has been introduced in Bukidnon, Zamboanga del Sur, South Cotabato, the CARAGA region, Negros, Panay in the Visayas, Central Luzon, Cagayan Valley and the Ilocos Region. SMC spends millions of dollars every year on imports from the US, Argentina, and India. It currently imports 50 percent of its cassava, 40 percent of its corn and 100 percent of its soybean and soybean meal requirements.

Once the program is in full swing, the conglomerate anticipates acquiring 100 percent of its soybean and soybean meal requirements from local sources.

"I hope other companies will follow the lead of San Miguel and develop programs to source raw materials locally. In so doing they help themselves, they help government and most important, they help alleviate poverty in rural Philippines," Cojuangco said.

"With three out of four poor Filipinos living in rural areas, we need to do our part in countryside development," Cojuangco added.

The raw material sourcing program is just one of several components of SMC’s Integrated Agro-Industrial Zone (IAIZ) growth model.

SMC hopes to put to put up several IAIZs in strategic locations nationwide: Central Luzon, Northern Mindanao, Southern Tagalog, Northern Luzon and Visayas.