Agriculture Reference
In-Depth Information
R&D. One measure institutionalizes protection of intellectual property rights
involving plant varieties. Such a protection may need to be consistent with the
country's contractual obligations under WTO's Trade-Related Intellectual
Property Rights Agreement. This measure requires legislation changing the
country's legal system for intellectual property rights to include plant varieties.
The other measure involves the issuance of transparent regulations gov-
erning the development and commercialization of transgenic materials. At pres-
ent, the country suffers from a general lack of rules to govern the conduct of field
trials of transgenic plant varieties.
Bt
corn, for example, which has the potential
to reduce the incidence of disease without the use of agricultural chemicals,
needs to be tested at the field level. Present regulations are overly conservative
such that private-sector firms that have the technology find the cost of conduct-
ing field trials too high. There is another set of regulations that governs the com-
mercialization of such transgenic varieties. Both sets of measures are meant to
encourage the development and commercialization of transgenic materials with-
out sacrificing scientifically necessary regulations to reduce risks.
Privatizing NFA's Marketing Functions
Implementation of the aforementioned reforms will have major implications for
NFA's marketing functions, as they will become redundant in a more liberal-
ized environment. Therefore, successful transition will require careful planning
on how to privatize and/or disinvest the assets that NFA has accumulated over
the years. Currently, the assets that the agency owns can be grouped into six cat-
egories: land, buildings, other land improvements, machinery and equipment,
transportation equipment, and furniture and office equipment. The total value
of NFA's fixed assets, based on fair market value, was estimated in 1999 at Php
6.109 billion. Fair market value is defined as the amount at which the property
would be exchanged in the current real estate market, where both buyer and
seller are free of compulsion. Land and buildings account for nearly 90 percent
of the value of NFA's fixed assets.
Four alternative modalities for privatizing NFA's marketing functions are
on the table: (1) sale of NFA on an as-is basis, (2) creation of new smaller pri-
vate corporations, (3) divestment by sale of individual assets, and (4) divest-
ment by sale of bundled assets. The pros and cons of these options are discussed
below.
SALE OF NFA ON AN AS
-
IS BASIS
. The level of government intervention
and budgetary cost will be lowest if the present trading enterprise or assets of
NFA are sold as one unit. However, there are several pitfalls. First, given that
NFA is estimated to be worth Php 6 billion and has a large share in the cereal
market, selling it to a single corporation is likely to negatively affect small pri-
vate traders in the sector. The rice industry is composed of thousands of rela-
tively small private operators—almost 11,000 in warehousing and more in milling
—and none of them has capacity comparable to that of NFA. Selling NFA as a
