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How San Miguel is integrating smallholders into its vast supply chain

Through backyard livestock raising, San Miguel Foods is combining commercial and development goals

Natividad Rubia, 55 years old, is a mother to four school-aged children and one of the first dozen enrollees into San Miguel Foundation and BMEG's Hogriculture enterprise program that kicked off in Pili, Camarines Sur last April.

Today, she's proudly showing off to her BMEG veterinary technician, Cristina Andalis, the nine piglets that were born less than a week ago. The gilt, (a young pig that hasn't yet given birth to a litter) was given to the Rubia family by BMEG. Andalis trained Aling Nati and supervised the insemination of the gilt, the breeding, and birthing process--the entire process of which took roughly 115 days.

"We chose Aling Nati to be part of our Hogriculture program because she was eager to learn, had the right attitude toward work and was willing to participate fully in the process of backyard hog raising," says Andalis, clearly encouraged by her student's efforts.

Willingness and eagerness to learn are an essential part of the selection criteria, economic status is another. Each of the scheme's recipients belongs to indigent households and was selected and vetted by a small working group that included representatives from BMEG and the barangay.

Don Guerrero, program associate of San Miguel Foundation, and Natividad Rubia, one of the first recipients of San Miguel Foods' Hogriculture program.

Guerrero worked with a team of BMEG sales people and technicians. Cristina Andalis is in pink. Next stop: Leganes, Iloilo and Tagaloan, Cagayan de Oro

Don Guerrero, program associate of San Miguel Foundation, spearheaded Hogriculture together with San Miguel Foods and describes the scheme as a conditional hogs disbursement program. "BMEG gets to keep half of the piglets in the first litter (succeeding litters require remittances in diminishing amounts), and the recipient must use BMEG feeds, vitamins and medicines throughout the process. San Miguel Foods underwrites the  BMEG products required to rear the first litter and down the line pay back comes in the form of the pigs that are then distributed to the next beneficiary or contract grower.

A housewife who occasionally takes on laundry jobs to augment her family's meager income, Aling Nati can now make three times more than she would earn weekly. The grow-out period for piglets is around 160 days, but once the pig reaches market weight, she stands to earn around P2,500 to P3,500 per fattened pig depending on how much the pig weighs.

"We're trying to create a steady income for our backyard growers," says Guerrero, "and along the way encourage entrepreneurship in a way that can easily be sustained.

"BMEG provides them technical knowledge and basic business acumen so they're primed to succeed," he adds.

On San Miguel Foods' part, the investment is relatively modest. Still, the benefits are substantial. For the pilot program, Guerrero's tracking showed that 53% of the Food Group's investment went to BMEG which translated in an over 20% increase in sales in the number of BMEG feed bags sold in the pilot market of Camarines Sur alone. 

Backyard livestock raising is not a business without its own set of challenges. Diseases such as hog cholera and swine flu are just some of the health hazards, but BMEG's bio-security systems and feeds protect livestock against disease. "We make it a point to transfer best practices so that our beneficiaries can thrive even without us present," says Andalis.

The Hogriculture program has all the ingredients needed to create better opportunities for backyard farmers like Aling Nati and is proving a durable sourcing arrangement for the business.

It also provides an opportunity for learning. "In business," says Guerrero, "they're taught to use a competitive mindset. This program introduces a shift in thinking. In this case, they're not focused on the competition but on how the business can improve the lives of people like Aling Nati and how a partnership-oriented outlook can deliver change and incorporate small-scale producers into expanded supply systems."

Linking the worlds of small-scale rural farmers to the food conglomerate whose supply chain is among the most complex in the Philippine food industry might help both ends of the spectrum to understand their interdependencies and create the most value for both ends of the chain. Following the success of Hogriculture in Camarines Sur, San Miguel Foods is deploying the program to Leganes, Iloilo and Tagoloan, Misamis Oriental.

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