MANILA, Philippines – Filipino farmers want to sell a contested stake worth hundreds of millions of dollars in food and drinks giant San Miguel Corporation to rejuvenate underfunded coconut plantations.
"What we are asking is: allow us to touch the interest so that we can start developing the industry," Manuel Del Rosario, president of the Philippine Coconut Producers Federation Inc. (COCOFED), told Reuters Thursday.
"We only want the interest. To tell you frankly, we will live with the interest, we can develop the industry properly," he said.
Although the Philippines is the world's biggest exporter of coconut oil, used to make margarine, soap and cosmetics, farmers have failed to benefit from a recent rise in prices because of small holdings, high input costs, typhoon damage and years of underfunding.
Del Rosario said the only way the industry could fund a major replanting program was to sell a 24-percent stake in San Miguel that is valued at P32.3 billion ($732 million).
However, the stake might not be COCOFED's to sell.
The farmers and the government have been battling for over 20 years for control of the block, which came up for grabs when former dictator Ferdinand Marcos was overthrown in a military-backed revolt in 1986.
The anti-graft court said last year the shares belonged to the government, but COCOFED is contesting that decision.
Fed up with the plight of its members, whose livelihood is being squeezed by rocketing inflation and a declining dollar, COCOFED this month asked the Supreme Court to allow the sale of the shares despite the ongoing legal tussle.
The proceeds of the sale would be placed in a trust fund whose net earnings would be used for the benefit of the farmers.
HANDS IN THE PIE
Del Rosario said COCOFED had received a proposal from Manila-based Top Frontier Investment Holdings to buy the San Miguel shares at P75 each, a 75-percent premium to the stock's current value, in an all-cash deal.
Del Rosario said Top Frontier has an unidentified foreign partner, which he said was not Japanese brewer Kirin Holdings. Kirin already holds a fifth of San Miguel.
"I don't really know too much (about their company)," he said of Top Frontier. "For me, what is important is you show me the color of your money, we'll talk."
Reuters' efforts to contact Top Frontier were unsuccessful.
Finance Secretary Margarito Teves earlier proposed a similar scheme in which proceeds from the sale of the shares would go to a foundation overseeing the industry's development.
Teves wants to sell the stake to help cut the government's budget deficit, which could hit P75 billion this year.
"He (Teves) said, 'Let's put it in the National Treasury, nobody can touch that, which of course we doubt. Then you'll have 200 sticking their hands into the pie, so we didn't want that, we never agreed to establish a foundation," said Del Rosario.
The finance department declined to comment on COCOFED's proposal, saying its lawyers were still studying the plan.
The government seized the San Miguel shares in 1986 after Marcos was ousted, along with a separate block now accounting for 17 percent of the company held by San Miguel chairman Eduardo Cojuangco, on suspicion the shares were acquired using an illegal levy collected from coconut farmers.
The glacial pace of the legal battle has left many of the Philippines' 1.5 million coconut farmers and farm workers bitter.
Their labor accounts for around 5.0 percent of total national exports, around two thirds of world supply of coconut products and is a major foreign exchange earner, according to the Philippine government.
Around three million hectares or one third of the Philippines' arable agricultural land is devoted to coconut trees but Del Rosario said an extra one million hectares was needed to raise the competitiveness and serve a growing local demand for coconut-based biofuels.
"We need a real, honest-to-goodness replanting program, because our trees are very old."
