Agriculture Reference
In-Depth Information
harvest, which comes mainly during the rainy season and 1 month ahead
of the harvest in Central Luzon, allows for early shipment of rice stocks to
Metro Manila and parts of Southern Luzon.
6.
Western Visayas—Cebu subsystem:
Contributes only about 2 percent to to-
tal national paddy output; high rates of urbanization make it a significant
rice consuming area. Like Metro Manila, Cebu is used as barometer for
the overall rice supply-demand situation.
7.
Mindanao subsystem:
Is fundamentally self-sufficient in rice, with sea-
sonal surpluses shipped to nearby provinces in the Visayas.
8.
Ilocos Region—Central Luzon subsystem:
Experiences deficit periods in
rice, and is served by Central Luzon.
Which of the three options for divesting NFA's marketing options has the
best chances of being successful? To answer this question, all three options are
assessed based on the following four indicators: (1) level of government in-
volvement, (2) level of government budgetary support, (3) privatization pro-
ceeds, and (4) level of market competition. Table 7.9 summarizes these results,
which indicate that unrestricted selling of NFA's fixed assets in bundles might
be the best option, as it results in low government intervention and budgetary
supports (first two rows in the last column), but high privatization proceeds and
market competition (last two rows in the last column). Also note that, except
for the option to sell NFA as one corporation under the restricted sale options,
all options are highly favorable based on indicators of government intervention,
fiscal burden, and market competition efficiency. As a matter of strategy, it is
further proposed that the divestment of NFA's fixed assets be implemented in
two stages. The first stage involves the sale of noncore assets and the second,
the sale of the core assets.
Summary and Conclusions
The objective of this chapter has been to discuss the mandates of NFA, analyze
its operational performance, and offer alternatives to reform the current public
interventions in the food markets of the Philippines. The analysis suggests that,
although the main objectives have remained the same, NFA's mandates have
frequently been changed—sometimes in response to emergencies and at times
to pacify the powerful stakeholders in the system. These changes ranged from
mandating that NFA cover only rice and white corn to expanding its grip to
other commodities, such as sugar and cooking oils, and reverting back to rice
and corn again. The changes, and the way NFA has implemented them, have
been expensive both in terms of the use of public resources and the market dis-
tortions that the policy has created.
The indirect costs of NFA's operation, resulting from inefficient trade pro-
tection, have been astounding. One of the striking indirect costs results from
