Agriculture Reference
In-Depth Information
vestment Committee. The sale would be guided by the Commission on Audit.
The process, however, could take several years, given that there are more than
500 sites, six major categories of assets, and thousands of individual assets.
The likelihood of lower privatization proceeds for the government is high
if the fixed assets are sold individually, without restrictions on the utilization of
the assets purchased. The saleable properties or those with higher value and bet-
ter alternative use can be sold more easily than the rest—resulting in the gov-
ernment's taking the risk of ending up with a long list of noncore assets.
DIVESTMENT BY SALE OF BUNDLED ASSETS
. The Asian Development
Bank's Grain Sector Development Program study (Clarete et al. 1998) empha-
sized that the pattern of trade in rice is dictated by economic and financial forces
rather than by administrative and political boundaries. Competition and innova-
tion move faster and more effectively when trade responds to market forces, and
not under defined administrative boundaries. The study suggested that the coun-
try can be grouped into rice trade subsystems that depict how traditional surplus
and deficit areas complement each other across seasons and at the least overall
transactions cost. The report identified seven subsystems. An eighth subsystem
may be added to this list (the Ilocos region). The main characteristics of each of
these subsystems are presented in Table 7.8 and are briefly discussed here:
1.
Cagayan Valley—Metro Manila subsystem:
Accounts for 13 percent of
total national paddy output; rice harvesting begins one month earlier than
Central Luzon; meets the rice requirements of Metro Manila during the
traditional lean period of July to September.
6
2.
Central Luzon—Metro Manila subsystem:
Accounts for 17 percent of
total national paddy output; its major market is Metro Manila, but it also
serves other provinces in the region and parts of Northern Luzon; has
milling capacity of 2.9 million tons.
3.
Southern Luzon—Metro Manila:
Produces 9.4 percent of total national
paddy output, but this output is concentrated in the provinces of Mindoro
Occidental and Mindoro Oriental. The port facilities in these provinces
and in Batangas make up for the normal flow of trade to Metro Manila and
to the island provinces in the region.
4.
Bicol Region—Eastern Visayas subsystem:
Has two pronounced harvest
seasons, which allow shipments of seasonal surpluses to other provinces
within the region and to the neighboring provinces of Eastern Visayas.
Rice production in the regions is equivalent to about 6 percent of total na-
tional paddy output.
5.
Western Visayas—Metro Manila subsystem:
Accounts for 12.2 percent of
total national paddy output, making it the third-largest supplier of rice. Its
6. Although paddy and rice are different in terms of quantity, one can assume a constant con-
version factor (1 unit of paddy = 0.67 unit of rice).
