The Philippine government is looking at financial rehabilitation of Northern Foods Corporation (NFC), a struggling government-owned tomato processing firm established during the administration of President Ferdinand Marcos, to make it attractive for eventual privatization.
The Department of Agriculture (DA) said the government plans to help the processing firm "get back on its feet."
Initially, the DA it is planning to extend a total of P65 million financial assistance to NFC, which has failed to pay the farmers who sold them tomatoes that it used for processing.
This financial assistance, according to Agriculture Secretary William Dar, will make the processing firm "financially afloat and thus make it attractive for potential investors en route to its privatization.”
During a recent visit to the processing facility, which is located Sarrat, Ilocos Norte, Dar said he is seeking a P26-million loan under the Agricultural Competitiveness Enhancement Fund (ACEF) to finance the operations of NFC as it awaits its privatization.
Aside from that, NFC is also trying to secure an additional P39-million loan from the DA’s Agricultural Credit Policy Council (ACPC) so it could pay its arrears to farmers who had sold tomatoes during previous harvest season.
NFC processes into paste fresh ripe tomatoes, particularly the “Ilocos Red” variety, sourced from 3,000 farmers in Ilocos Norte and Ilocos Sur.
Every season, farmers enter into a contract growing agreement with the NFC, which is tasked to provide technical assistance and arrange financing with lending institutions for fertilizers, pesticides, harvest containers, and other inputs.
“It is direly important that our farmers are promptly paid for their produce and hard work, so they can continuously sell their tomatoes to the NFC for processing,” Dar said.
Tomato is one of the high-value cash crops in Ilocos Region, with 800 hectares of production area. It is planted from October to December, after the main rice crop. NFC farmer-growers commence tomato harvest in January.
With a processing capacity of 500 metric tons (MT) of tomatoes per day, NFC produces about 4,000 MT of tomato paste every processing season from January to April yearly.
NFC supplies tomato paste to leading food chains, fish canners, and tomato sauce and catsup manufacturers in the country, capturing 13 percent of the market for these products combined.
“We were informed that the company has an inventory of P120-million worth of tomato paste, which they can use to pay out the loan to be extended by ACEF and ACPC,” Dar said.
Among those interested in investing in NFC is a group led by former Candaba, Pampanga Mayor Jerry Pelayo, who joined Dar during the ocular visit.
He said his group will meet again with the NFC management to discuss the proposed rehabilitation and upgrading of the processing plant.
Pelayo said they will look into upgrading the facilities to process other commodities such as mango and pineapple, to make the plant occupied and productive year-round, and not only four months of the year.
Data from the Philippine Statistics Authority (PSA) shows that the Ilocos Region produced a total of 28.25 thousand MT of tomatoes last year, representing more than one-third or 38 percent of the country’s total production.
The NFC was established in 1984 as a subsidiary of the Livelihood Corp. (LiveCor) before it was eventually transferred to the Department of Agriculture (DA) in 2000.
Then in 2013, the processing facility was categorized as a government-owned and controlled corporation (GOCC).