On beer and OCWs

Traditionally, beer, hard liquor, and softdrinks companies use copra prices as an indicator of demand. When copra prices are high, coconut farmers drink more beer and gin. With more money in their pockets, farmers also purchase more food and durables. Inversely, when copra prices are low, there is less purchasing power in the countryside. People buy less liquor and would rather keep their money for more-pressing needs.

In recent years however, many companies engaged in these businesses, including San Miguel Corp. and Coca-Cola, have used OFW remittance as an indicator. This makes a lot of sense because dollar remittances of Filipinos working abroad had driven the economy for years now. Particular attention is being given by these companies as to what provinces and regions these OFWs come from. In fact, research has shown that many OFWs working in Europe hail from Batangas and other Calabarzon provinces.

It has already become part of Filipino tradition that when a balikbayan comes home, he not only brings with him boxes of pasalubong but also brings his relatives to the nearest duty-free store or to a mall to shop. This is also one reason why more and more department stores, appliance stores, and other specialty stores are being put up in the provinces.

Booming Cagayan de Oro

Just recently, I had the occasion of having a chat with the top executive of one of the country’s biggest companies. I asked him why the business community is all agog about Cagayan de Oro. The mall chain owners all want to be there.

He explains that this phenomenon can be traced to the booming vegetable industry in the province. As a result, the people of Cagayan de Oro have more money to spend, enough to warrant the likes of the Sys and the Gokongweis to put up mall branches there.

This obviously is a step in the right direction achieving rural development and industrialization not only to decongest the urban areas but also to spread wealth.

ECJ’s new project

San Miguel Corp. chairman Eduardo Cojuangco Jr. seems to be very passionate about his latest endeavor entering into joint venture arrangements with agricultural producers who will supply the raw material needs of the company.

According to him, in one area alone, SMC has already received serious inquiries covering more than 20,000 hectares for cassava and corn alone. This all started when the company placed an ad with the major dailies inviting agricultural producers to enter into partnerships with the SMC for many crops, including cassava, corn, sugar, among others. As part of the deal, these farmers will be producing SMC’s raw material needs and will be given a guaranteed price.

Cojuangco hopes that with these partnerships, farmers will have better incomes and an assured market.

Before Cojuangco took over management control of SMC, the company seemed to have given very little attention to its agribusiness division. But now, a very significant portion of SMC’s resources are being devoted to food and agribusiness, starting with the acquisition of Purefoods Corp., followed by the company’s reported negotiations with Swift Foods Inc. to buyout the contracts of many of SFI’s independent poultry growers and the recent disclosure that SMC is purchasing Asian Terminals Inc.’s Mariveles grains terminal.

After all, who ever said that the agriculture sector is dead? While imports continue to flood the local market, SMC seems to be very confident that the sector has a very bright future.

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