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(2nd UPDATE) San Miguel, Kuok Group in $1-B agri deal

Southeast Asia's food and beverage giant San Miguel Corp. and the Kuok Group of Companies said they will invest up to $1 billion to develop one million hectares of the country's agricultural land for food production.
Called "Feeding Our Future", the project, which is in line with the government's security program, aims to provide sustainable and adequate supply of grains, sugar and other basic staples.
Ian Kuok, chairman of Shangri-la Asia Properties, said SMC and the Kuok group would provide financial and technical expertise as well as develop the infrastructure needed in the cultivation of government land.
The government, through the Department of Environment and Natural Resources, Armed Forces of the Philippines, National Commission for Indigenous Peoples and National Power Corp., will identify land suitable for food production. The Department of Agrarian Reform will then determine which crops are suitable for different types of land.
"We hope begin soon once government identifies the land," Kuok said.
According to SMC chairman Eduardo Cojuangco Jr., the government was already looking into some three million hectares that are "potentially suitable" for the project, which will be developed at a rate of $1,000 per hectare.
"As the largest food company that already has ongoing agricultural and raw material sourcing programs in several provinces throughout the Philippines, we are stepping up our efforts to assist government in developing solutions for the short-term problem of insufficient food production and the long haul issue of food security," he said.
The project is a 50-50 partnership between SMC and the Kuok group. The two will make equal contributions to raise the 30 percent equity portion of the total investment, said SMC president Ramon Ang.
Ang said they might tap the debt market, possibly through issuance of 25-year bonds, to come up with the remaining 70 percent.
"Food security is a global issue. But here in the Philippines, we are feeling the effects even more. Often, when food crises happen, it is not because there is insufficient food supply, but because people do not have access to them," he stressed.
"Food prices have reached record levels. This is why many lower income families are no longer able to afford the kind of nutrition they need."
Kuok group chairman Robert Kuok cited factors that led to the present food crisis. "Urbanization, changing diets in emerging economies, the use of crops to produce alternative fuels, the global rise in population and climate change have all put tremendous pressure on farm lands," he said.
The creation of a coordinating team and working task force, which will come up with a more detailed action plan on the project, is now underway, the companies said.