MANILA – San Miguel Corp. said yesterday it would invest up to a billion dollars with Malaysia's Kuok Group to develop a million hectares of Philippine farmland.

"Food supply is an important strategic tool for everyone," Manila-based San Miguel's chairman Eduardo Cojuangco told Dow Jones Newswires.

Food prices are likely to remain at "extraordinary" high levels through 2010, he added, without elaborating.

The project is designed to ensure adequate supply of rice, corn, sugar and other basic food staples for the Philippines, one of the world's top rice importers, San Miguel said in a statement.

Government agencies "will identify, evaluate and review government land suitable for food production," it said.

San Miguel and the Kuok Group "will provide financial, technical expertise for the development and cultivation of the land," it added.

The two companies "guarantee to buy all food products" from these farms, which will be tilled by tenant-farmers and "will continue to be owned by the government," San Miguel said.

"Food security is a global issue. But here in the Philippines, we are feeling the effects even more," San Miguel president Ramon Ang said in the statement.

"Often, when food crises happen, it is not because there is insufficient food supply, but because people do not have access to them," he added.

The farm sector accounts for a fifth of Philippine economic output but employs a third of its work force, according to government data.*AFP

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