Partnership with Israel fortified with MPIC, LR Group linkage
BOOSTING the strong ties between the Philippines and Israel, two firms from both countries have activated their joint venture (JV) in dairy farming.
Metro Pacific Investments Corp. (MPIC), through its wholly owned subsidiary Metro Pacific Agro Ventures Inc. (MPAV) and Israel-based partner LR Group, have started the ground work on The Laguna Creamery Inc. in the municipality of Bay’s Barangay Masaya.
“This is an extremely important milestone,” Ambassador Extraordinary and Plenipotentiary of the State of Israel to the Republic of the Philippines Ilan Fluss said during the inaugural event last December 22.
The diplomat supported the Herzliya, Israel-based company, which served as the technical advisor for the closing of the deal between MPIC and Carmen’s Best Group in June last year.
The Manuel V. Pangilinan-led infrastructure-investments company entered into an agreement to acquire a 51-percent interest in The Laguna Creamery Inc., as the latter retains a 49-percent ownership. Under their pact, MPIC will further develop and expand the dairy farm’s operations and Carmen’s Best Group’s manufacturing facilities.
Metro Pacific Dairy Farms’ (MPDF) inauguration fulfills the JV, and realizes MPIC’S earlier announcement of its plan to ramp up agricultural-sector investments, and help lessen the country’s dependence on food imports amid ongoing global supply-chain disruptions and rising inflation.
Strong relations
THE Philippines and Israel started their “warm, friendly relationship” in 1938 when President Manuel Quezon allowed 1,300 Jews to seek and secure a safe haven in local shores, as they tried to flee the Nazis invasion, per Israeli Ambassador Fluss.
“The Philippines had an open door policy,” Fluss reminded. “[In 1947 it voted in the United Nations (UN) favoring] the establishment of the Jewish state of Israel—the only country in Asia to do so.”
For these two reasons, he noted that Israel has adopted an opendoor policy for Filipinos, which allows them to visit the “Holy Land” without the need for a visa: “This is a very important moral and historical reason…since those years we have seen the relations between our countries, the collaboration in many fields, grow—[whether they are] government-to-government, civil society, [or private sector-based],” the envoy said.
According to him, Israel’s embassy to the Philippines is focused on “nurturing the relations” of both Asian nations, which is vital for their future. Their linkage in the area of innovation and technology is geared toward creating opportunities and introducing new solutions.
Israel has been progressive, as far as agriculture is concerned. Opengov Asia reported that Israeli cows produced an average yield of 12,010 kilograms (kgs) in 2018, which is higher than global standards.
While the country lacks the best farming conditions because of extreme heat, humidity and lack of resources, the said country compensates in terms of technological advancements. More than 70 years ago, it produced 4,000 kgs of milk annually. Currently, its farms produce over 12,000 kgs on a yearly basis.
The Israeli embassy said that the farm will be operational within the next 18 months and is expected to produce 6.5 million liters of fresh milk every year. It will increase the dairy production capacity of the Philippines, which today is “only minimal, and heavily dependent on imports.”
Said facility will be equipped with modern dairy-farming technologies from Israel, including wearable health-monitoring devices for each cow in the herd, advanced milking control, monitoring systems and others.
The embassy, in partnership with its economic mission, hosted the first meeting between the two parties in March 2022.
“[For] dairy farming, Israel is No. 1 in the world in milk production per cow. I believe it’s the most significant partnership between [our countries, and that of an Israeli company and a Philippine counterpart in the] agriculture sector,” Fluss said, referring to the JV linking MPIC and the LR Group.
“[Such partnership will contribute and be significant] to the agricultural productivity and food security of the Philippines,” he added. “This is exactly the request of President [Ferdinand Marcos Jr. when I met him to see more Israeli agri-technologies and more Israeli companies involved in agriculture sector here in the Philippines. They] not only will create job more opportunities and generate income for Filipinos in the barangays and in the surrounding areas, but will [also] reduce poverty, hunger and malnutrition.”
‘Legen-dairy’
HERALDING their foray into the agriculture sector, the JV partners are infusing “a pretty hefty investment” of roughly around P2 billion for the MPDF, where they plan to annually produce 6 million liters of milk, bared MPAV’S president and CEO Jovy Hernandez.
“If you take a look at the scale of what we have in terms [of, specifically, in the farm, where we have roughly 90 to 100] milking cows… that will be immediately 6 times bigger. So the investment is really quite sizable,” Hernandez told the media during the groundbreaking ceremony. “We’re looking at a 70:30 loan-to-equity ratio. We can get local banks first of all to do that. Then, we’re 60:40 with LR [Group] for the 30 percent equity [investment].”
The state-of-the-art and integrated dairy farm facility will have 1,000 cows; 600 of which are for milking. It will maximize fresh milk’s shelf life through highly mechanized and automated operations, which will ensure adherence to quality and safety standards.
MPDF is where modernization meets sustainability, according to the Israeli Embassy. Hence, it will also be equipped with solar farms that will produce power for the dairy facility, a water-treatment plant that will yield human-grade drinking water for the cattle, and a waste-management facility that will allow the farm to produce fertilizer.
Apart from helping pave the way for the Philippine dairy industry, the firm also plans to work with local corn farmers for cattle feed rations. Further, the facility will be a future training ground for farmers and experts in agriculture, in ties with academic entities.
The dairy farm facility’s construction will begin this year, and take about two years to finish. Operations are estimated to start by late 2025 to early 2026.
This JV in agribusiness affirms MPIC’S vision to be the largest catalyst for a “Sustainable Philippines” to contribute to national progress, and help improve Filipinos’ lives. It is also aligned with the company’s efforts to contribute to the UN Sustainable Development Goals, particularly Goal 2, to “end hunger, achieve food security, improve nutrition and promote sustainable agriculture.”
With this in mind, Hernandez bared their goal to at least account for a quarter of the nation’s milk requirement over the next five years, as the Philippines currently imports 99 percent of its yearly dairy needs. Only 1 percent of the entire national supply is domestically sourced.
“From our perspective, targeting 25 percent of the dairy to be served locally by us, it’s already a very hard objective,” the MPAV official said, as he conceded that the facility might not be enough to reach that figure. “But as an initial salvo, we’re very ready excited about this project, and…to prove to everybody that it can be done. When we get to that point, maybe it’s time for us to expand again with LR Group.”