chapter  9
16 Pages

San Miguel Corporation: A High-yield Hybrid Corn Seed Venture in the Philippines

WithRuth Karen

The San Miguel Corporation (SMC) is a large agro-industry conglomerate in the Philippines, serving both domestic and export markets. This case study focuses primarily on a recently established hybrid corn seed operation in South Cotabato, on the island of Mindanao. By 1985, or soon thereafter, SMC projects that the seed company will supply roughly 50 percent of the domestic market.

The seed company is comprised of a core farm of 1,250 acres, intended to supply all the raw material for a processing plant that dries, husks, shells, sizes, treats, and packages certified seed. There are no contract farmers in this system. In its broadest purpose, SMC expects to aid the nation and all corn farmers by providing the means to increase productivity by 100 to 400 percent or more. More specifically, the seed venture is conceived as a key element in a complex of closely integrated corporate businesses. For example, SMC operates large animal feed mills; these feeds use corn as the grain base. Increasingly in the years ahead, SMC plans to draw its corn supplies from farmers using company hybrids, which will not only simplify the marketing problem of the farmers,but is expected to lower grain costs, even as farmer income rises. In turn, lower feed prices will decrease the cost of meat, both enhancing the diet of more people and making SMC feeds more competitive in both domestic and external markets. Furthermore, SMC is a major grower of poultry, which again provides an internal corporate market for corn-based feed, also produced by SMC.

Within this dynamic system of corporate growth, SMC recognizes that its relationships with the large numbers of small-scale corn farmers who buy their seed and sell their grain to the company is a key element. Therefore, the company's seed marketing program is geared to an expansive program: technical assistance, using a sales force of young men trained by SMC to double as agricultural agents; credit that may soon cover all inputs through harvest, at which time repayment will be made; and community development, which may go beyond the normal range of 144facilitating health, education, and recreation infrastructure to include intervention on behalf of a village with authorities the people have not yet learned to reach.

The SMC outreach to its customers/suppliers appears to be very successful in Mindanao, and the corporation is already planning to diversify its services, for example, helping farmers diversify their cropping patterns to include other cash and subsistence crops. The entire program of investment and development assistance is fully supported by public policy; in 1981, the government stated its intent to spur the socioeconomic development of the entire country by harnessing the private sector's entrepreneurial skills and initiative.