Gov’t lines up PPP projects in agriculture

The Department of Agriculture has lined up two major public-private partnership projects that involve post-harvest facilities for corn and perishable produce.

Zenaida M. Villegas, director of the DA’s Project Development Service, said in an interview that Agriculture Secretary Proceso J. Alcala had been apprised of and had accepted the proposal for a P298-million grains central project that was meant to rehabilitate and upgrade existing corn trading and processing centers across the nation.

Villegas said the DA was expected to refer the corn depot project to the National Economic and Development Authority within the month. “We hope to have it approved by September,” she said.

National Agribusiness Corp. is the intended implementing agency for the grains central while the Philippine Center for Post-harvest Development and Mechanization or PhilMech is the project proponent.

There are 11 facilities proposed to be included in the project, for which Land Bank of the Philippines and International Financial Corp. have been engaged as transaction advisers.

PhilMech has also presented a proposal for a P683-million cold chain system for perishable goods that, unlike the corn post-harvest system, would be a greenfield undertaking.

Villegas said the cold chain plan might not be as fast-moving as that for the Grain Central because there were “issues that still need to be addressed.”

Five routes have been identified for the proposed cold chain system, with Benguet-Manila as the pilot. The others are Cagayan-Manila, Manila-Cebu, Cebu-Manila and Visayas inter-island connections.

Further, potential sites are still being considered for a fruits and vegetable facility in La Trinidad, Benguet, and for an abattoir project in Guiguinto, Bulacan.

Last April, Economic Planning Secretary Arsenio M. Balisacan said that potential PPP projects in agriculture, to be attractive to private investors, would need government subsidies, incentives or other means of assured funding or return on investment.

Balisacan said this might be done through “take-or-pay” provisions which, unfortunately, were not popular in the Philippines because such arrangements were blamed for the high price of electricity in the country.

Balisacan cited an economics maxim that a project might be viable economically, but might not be financially feasible.

This means that incentives such as government subsidies—in the form of “viability gap funding”—are necessary for agricultural PPPs.