Journal of Economics, Management & Agricultural Development Vol. 4, No. 2 57

Organizational Transformation of a Public-Private Partnership: The Case of the Nueva Vizcaya Agricultural Terminal,

1 2 3 Nimfa Beatris D. Montes , Agnes C. Rola , Isabelita M. Pabuayon , Dinah Pura T. Depositario4, and Vella A. Atienza5

Abstract The Nueva Vizcaya Agricultural Terminal (NVAT), Philippines is a mixed capital public-private joint venture established in Nueva Vizcaya in 2004 to address problems such as lack of markets and keen market competition. This study aims to describe NVAT’s organizational transformation, determine key factors that drove its transformation, and assess its current performance. The research made use of key informant interviews (KIIs), focused group discussions (FGDs), direct observations, and secondary data from records and manuals. Results show that transformation was achieved through crucial changes in governance, structure, core processes, culture, and strategies. The key drivers of transformation were the growing demand for fresh fruits and vegetables, dedicated leadership, and collective goal for good governance, among others. Through a farmers’ empowerment strategy and improved trading activities, operations were improved significantly. There were concrete gains in terms of relevance, effectiveness, efficiency, profitability, diversity, and sustainability. An entrepreneurial culture which promotes creativity and innovation should, however, be fostered in the organization. It was also recommended that NVAT should develop a succession plan, implement a continuing training and education process, and put in place a monitoring and evaluation mechanism. Keywords: public-private partnership, market infrastructure, organizational transformation, governance, entrepreneurial culture

Introduction In developing countries, the government established public-private partnership market infrastructure (PPP-MI) to address the inefficiencies created by the lack of institutional and physical infrastructure and imperfect competition (Barrett and Mutambatsere 2008). On the other hand, public sector developed complementary policies to ensure smallholder participation, foster institutional innovation, and promote competitiveness (World Bank 2008). With limited resources and lack of skills, the government encouraged the private sector to actively participate in public- sector infrastructure project in order to ensure the delivery of high quality and more cost-effective public services (Hall 1998). Hence, the PPP is an alternative strategy to deliver services efficiently and create more job opportunities (Public-Private Partnership Center 2012).

1Retired Associate Professor, Department of Agribusiness Management and Entrepreneurship (DAME), College of Economics and Management (CEM), University of the Philippines Los Baños (UPLB), [email protected] (corresponding author) 2Retired Professor, College of Public Affairs and Development (CPAf), UPLB, [email protected] 3Professor, Department of Agricultural and Applied Economics, CEM, UPLB, [email protected] 4Professor, DAME, CEM, UPLB, [email protected] 5Assistant Professor, CPAf, UPLB, [email protected] 58 Montes, Rola, Pabuayon, Depositario, and Atienza

The development of PPP-MI in agriculture is crucial to effectively reduce marketing costs, minimize post-harvest losses, and provide better production returns to the farmers (Saliot 2011). However, through such partnerships, private sector shows a spectrum of possible cooperative or collaborative relationships between public and private actors to achieve these goals instead of the traditionally public- domain services. Such work relationship between the public and private sectors ranged from a position of conflict to formal partnerships (Gentry and Fernandez 1997). In the Philippines, the Nueva Vizcaya Agricultural Terminal (NVAT), a mixed capital public-private joint venture, pursued organizational transformation to solve problems related to lack of markets and keen competition. This paper describes the organizational transformation of NVAT in terms of key elements of the organization; determines the key external and internal factors that drove its organizational transformation and performance; and assesses the performance of NVAT in terms of relevance, effectiveness, efficiency, profitability, diversity, and sustainability. Ultimately, it hopes to formulate concrete suggestions to improve the operations of NVAT.

Framework This study uses the systems theory in organizational development (OD) as its foundation. The organization, division, department or team as a system is an arrangement of interdependent parts, with its own specific functions and interrelated responsibilities (Foster 2015). This paper describes the key indicators of organizational transformation as experienced by NVAT in terms of leadership and governance, structure, core processes, systems and procedures, culture, and strategies (Figure 1). It also identifies the key external and internal factors that drove the transformation processes and performance of the organization. Organizational transformation is expected to bring about crucial changes among key elements of the organization as well as improve the organizational performance significantly. The assessment of organizational performance represents the level of success in attaining goals of food sufficiency and poverty reduction and is measured using the following indicators: relevance, effectiveness, efficiency, profitability, diversity, and sustainability.

Methodology The case analysis approach was applied to NVAT. It is a highly qualitative approach which consists of problem identification and decision-making techniques. The approach enabled the researcher to closely examine the data within a specific context (i.e., a specific geographical area or limited number of individuals as the subjects of study). Primary data were derived from key interviews such as KIIs and FGDs, including direct observations. Several secondary sources of information were used to appraise NVAT such as annual program/project reports and monitoring and evaluation reports. Triangulation was undertaken to reduce or minimize researcher’s bias.

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Figure 1. Framework used in analyzing NVAT performance

Results and Discussion Background of NVAT Prior to 2004, Nueva Vizcaya had no formal vegetable trading system and, consequently, lacked the needed marketing and distribution facilities. The province encountered many problems in relation to trading local farm produce. These include limited available stalls for vegetable trading, congested traffic due to trading activities along the highway, lack of security in the trading area, lack of safe and secure parking space, high postharvest losses of farmers and traders, and no reliable price information system (NVAT 2016). To address these problems, government agencies collaborated to develop facilities for an agricultural trading center through the Gold Project of the provincial government of Nueva Vizcaya (NVAT General Manager (GM) March 2017, personal communication). In 1998, Nueva Vizcaya established a vegetable trading facility through a support from the European Union-funded CASCADE, an Ecosystem-based Adaptation for Smallholder Subsystem and Farming Communities project of the Department of Agriculture (NVAT GM March 2017, personal communication). The farmers’ organizations (FOs) managed the daily operations. The Provincial Government of Nueva Vizcaya (PGNV), with the concurrence of the Department of Agriculture (DA), established a centralized marketing center in a 6.7 - hectare land in Almaguer North in Bambang, Nueva Vizcaya. It was registered with the Securities and Exchange Commission (SEC) in 2001 as a corporate joint venture model (NVAT 2016). The needed capital was raised through fund contribution from the public sector and the sale of shares to private partners.

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In 2004, NVAT built stalls for use of the FOs, farmers, and traders engaged in vegetable trading which were offered at minimal charges to motivate them to patronize NVAT facilities and services. Under the management of the PGNV and the DA-Agribusiness Marketing Assistance Division (AMAD) Region 2 (majority stockholders), farmers hesitated to transact with NVAT for lack of trust (NVAT GM March 2017, personal communication). To counter the farmers’ negative attitude and behavior, NVAT conducted an information campaign highlighting the benefits of NVAT as PPP-MI for fruits and vegetables sold on a wholesale basis. As a farmer-led trading system providing world-class services and governed by dynamic and committed members, NVAT and its key stakeholders engaged in trading, processing, and marketing of agricultural and non-agricultural products and services of Nueva Vizcaya and adjoining provinces to help producers get the best prices for their products (NVAT 2016). Simultaneously, NVAT assisted producers to improve their productivity and profitability. In 2005-2006, NVAT became operational under the management of PGNV, DA-AMAD Region 2, and FOs. Lacking the necessary marketing skills, the FOs depended on big traders to supply fresh farm produce to the wholesale or bagsakan centers in strategic areas in . Growth Phases of NVAT NVAT experienced two (2) growth phases, namely, slow growth phase in 2006 to 2012 with the start of the transformation processes occurring in 2009-2012, and rapid growth phase in 2013 to 2017.

Slow Growth Phase in 2006-2012 From 2006 to 2012, business was assessed to be merely surviving due to political disruptions over the setting of priorities in the allocation of the provincial budget and the power struggle from within NVAT (NVAT GM March 2017, personal communication). Also, the change in political leadership and the prevailing political patronage caused some difficulties in the current political system and the smooth conduct of NVAT (PGNV website, no date). In 2009 to 2012, NVAT initially pursued a privatization strategy through a Build-and-Occupy the Stalls (BOS) program, but this failed as farmers and traders showed a wait-and-see attitude. Consequently, two informal trading facilities near NVAT thrived well due to the NVAT inefficiencies and keen competition. It was noted that during this time, the business had informal as well as incomplete financial records.

Rapid Growth Phase in 2013-2017 The two meta-drivers of organizational transformation of NVAT were the increasing demand for fresh fruits and vegetables and the desire to provide economic opportunities to the FOs, farmers, and traders. In 2013, PGNV elected farmer-leaders of the various FOs to the three Board of Director (BOD) positions and it maintained only one BOD position in order to empower the farmers and consequently, help improve NVAT operations. The PGNV and DA-AMAD Region 2 aggressively implemented the privatization strategy through BOS program. NVAT sold investment stocks to the FOs, farmers, and traders and gave them access to the use of the stalls (NVAT GM March 2017, personal communication). This investment campaign was intensely felt from 2013 to 2016. Eventually, there was a gradual shift in investment and control of ownership from dominantly public (i.e., 70% public - 30% private) to dominantly private (i.e., 30% public - 70% private) entity.

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As a consequence, FOs and farmers became major decision-makers within the BOD, through the exercise of their voting rights. They actively participated in policy formulation and decision-making processes. This led to the implementation of other projects such as building a flood control system within NVAT, rehabilitating road networks, establishing a retail area or tiangge for the use of SMEs/entrepreneurs, and encouraging more farmers, traders and entrepreneurs to invest in NVAT. To aid in the effective and efficient operations in the face of an increasing volume of transactions, they developed a Manual of Operations consisting of past and current policies, systems, and procedures that serve as guides to decision-making by the BOD and the management staff (NVAT 2014). Transformation Processes of NVAT NVAT pursued organizational transformation in 2009-2012 and 2013-2017. This is in response to an increasing demand for healthy and nutritious fruits and vegetables vis-a-vis the seemingly low production of these farm products (i.e., key opportunity) and the keen competition posed by nearby informal trading facilities and outside traders (i.e., key threat). Hence, NVAT as a PPP infrastructure offered alternative market outlet and better price for farmers’ produce, giving them an opportunity to overcome poverty. Figure 2 shows the key indicators of organizational transformation of NVAT because of the interactions between the external and internal environment.

Change in Leadership and Governance Professionalism Among the Staff Through effective leadership and governance, NVAT uses the tool of continuous improvement to help achieve organizational transformation. Transformation is embedded in the day-to-day processes of the organization and is practiced throughout its every part. By instilling a sense of professionalism among the staff, crucial tasks such as risk management, monitoring and evaluation, and healthy cooperation and collaboration with public and private partners were given due consideration. Also, there was the formalization of good management practices by developing a Manual of Operations and adopting and using the core processes and systems and procedures contained in it, thereby rendering daily NVAT operations far more effective and efficient (NVAT 2014). Further, effective communication was achieved through regular (i.e., every 2nd or 3rd week of the month) and emergency BOD meetings as well as during annual stakeholders’ meeting. FOs and farmers as BOD members actively participated in decision-making.

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Figure 2. Key indicators of organizational transformation as applied to NVAT

Key Stakeholders’ Relationships NVAT confronted many problems arising from key stakeholders’ relationships, particularly on issues of information asymmetry ̶ lack of information on prices, volume, and quality; adverse selection ̶ what constitutes a good or bad choice of a strategic partner; and moral hazards ̶ adverse or ill consequences without moral basis. In the early years, there was lack of information sharing on prices, volume and quality, allowing big traders to dominate the farmers. During the period when the “majority” comprised government officials (2004 to 2012), these officials appointed individuals of their choice as members of the BOD, composed supposedly of multi-stakeholders. The appointees lacked the skills and experience required to manage a complex market infrastructure. During the dominantly public period, the BOD did not have regular meetings and formal reports on expenses and income were neglected. Indeed, there was lack of transparency and accountability in the use of funds, particularly when political influence during the early period of NVAT was still prevalent. Also, NVAT experienced some failures as FOs did not live up to the expectation of effectively managing daily trading operations.

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Some governance issues included weak coordination and collaboration between and among strategic partners (e.g., absences in crucial meetings and/or merely sending a representative who was not authorized to make decisions). The effective improvement in the MIS and financial monitoring and control systems were implemented during the predominantly private period of the NVAT with a BOD formally elected in a stockholders’ meeting. Partners’ Risk-taking Incentives Based on partners’ risk-taking incentives, tasks should be split between and among key stakeholders when there is a negative production externality (i.e., risk sharing) (Laffont and Martimort 2001). The public partners benefitted tremendously from the PPP market infrastructure through a formalized trading system (e.g., subject to trading policies, rules, and regulations); improved food safety and product quality; and reduction in traffic accidents. The benefits which accrued to the private partners were as follows: an assured market as most farm produce entered NVAT site; transparent pricing system with the installation of a price monitoring system; and access to low-interest loans and declared dividends on shares (NVAT GM April 2017, personal communication). The management staff was paid competitive wages and given benefits comparable with those in other market infrastructure such as the City Hangar Market. The incentives made them work productively and efficiently.

Change in Structure Shift from a Dominantly Public to a Dominantly Private Entity The functional stakeholders of the facility consisting of FOs, farmers, and traders were encouraged to participate in its governance. The maintenance of order and cleanliness in the trading center was crucial and so stakeholders were made to have direct or indirect involvement in its daily operations as well as in planning improvements. The present owners of the corporation were mostly FOs and private investors, where a large percentage were actual locators in the facility. The shift in investment caused a change in the organizational structure of NVAT, from informal hierarchy to a more formal one. The structure was transformed from being a simple finance and administrative unit headed by a general manager to one with added key functional areas. The latter included trading operations under the marketing program, agricultural credit for farm inputs, and capacity building for farmers and traders under the agricultural production program. Monitoring of commodity prices and financial control systems and procedures were undertaken by management information system (MIS)/agricultural production and finance units, respectively. The number of employees with appropriate specializations also increased to meet the demand of the new structure.

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Inclusion of Smallholders and Building a Strong Institution NVAT ensured that PPP-MI was accessible and affordable to FOs, farmers, and traders, stressing the benefits of using the market facilities, continuing to build their capacity, and regulating the costs associated with using the services. They also fostered access to additional services and resources such as credit facilities for FOs and small and medium enterprises (SMEs) through state banks or links to private banks, conduct of traders’ training, and MIS/price monitoring system. The MLGUs provided additional services such as traffic management and supportive regulations preventing entry of illegal vendors who compete with legitimate stallholders, processing of licenses and permits for traders and operators, and tax collection. The marketing program focused on maintaining and sustaining existing markets through a market penetration strategy involving strategic bagsakan centers in Luzon. New markets such as selected institutions and individuals were developed through trade fairs.

Formulation of NVAT Policies, Systems and Procedures The Importance of Consolidators and Traders/buyers Two major types of traders dealt with NVAT: a) the consolidators like the Golden Millennium Foods Corporation and Dizon Farms which supplied fruits and vegetables to hotels, restaurants, grocery stores, and supermarkets; and b) traders/ buyers who supplied farm produce to the bagsakan centers as they continued to absorb market and financial risks. During peak trading operations, NVAT facilitated the development of a relationship between consolidators/buyers and farmer- producers. For example, buyers/traders maintained contacts with about 10 to 20 farmer-producers (preferred clients) to supply the needs of one consolidator. Under these trading relationships, repeat transactions took place and the undependable traders or producers were screened out in future deals. This was an improvement from the Bambang side road trading where producers and buyers met only once and by chance (NVAT trader December 2017, personal communication). The consolidators provided this important linkage between traders/buyers and farmer-producers. This communication link allowed farmer-producers to meet quality and quantity targets based on the market needs relayed through consolidators. This system paved the way for the achievement of higher efficiency in the allocation of resources and scheduling of activities in the farm areas as well as in the allocation of logistic resources by trading enterprises. Better quality produce and more reasonable prices could then be expected in the consumer markets. Further, farmer-producers and traders experienced the advantage of trading in an orderly manner with ample space, thus allowing fast turnaround times for trading trucks and delivery vehicles of farmer-producers. As a price center, the consolidator was deemed knowledgeable about the prevailing prices and consequently, price negotiation was carried out in a more orderly manner.

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Prioritizing the FOs and Farmers NVAT prioritized FOs and farmers in the space allocations for fruit and vegetable trading. The organization aimed to reduce the layer of middlemen, provide more jobs, and increase the income of farmers. With the new facilities, farmers in Nueva Vizcaya and neighboring provinces were allowed to sell their farm produce in their own stalls. Updating Stall Rentals and Other Fees NVAT’s efforts to update the stall rentals and other fees for basic NVAT services met the most resistance from FOs, farmers, and traders. Since May 2008, an increase for stall rentals was implemented, from PhP1,500 to PhP 3,000 - 3,500 per month in 2016 as approved by the BOD. Once traders and farmers understood the rationale for the said adjustments, their cooperation and collaboration were secured. While NVAT continued to improve facilities and services and ensure good business, private partners realized the honesty and integrity of management, thus, resistance was eventually reduced. Monitoring and Control of Financial Transactions For transparency and accountability, monitoring and control of financial transactions became a very important policy of NVAT. The Internal Audit Committee conducted a thorough review and analysis of the terminal’s financial operations and made a quarterly report to the BOD during the regular board meeting. The chairman of the said committee conducted surprise cash count of funds. Proper accounting procedures for capital expenditure, record keeping and control, and physical inventory of property, plant, and equipment were implemented. Trading Operations and Processes As a formal trading facility, the NVAT has an administrative staff and was equipped with covered stalls and a bay area, loading and unloading building, wash and sort area, guardhouse, function room, water system, waste disposal system, and parking area. The services offered were stall rental; space rental; agricultural input support to farmers, SMEs, and employees; and marketing of agricultural products. The trading facility was funded from investments made by the private sector as a result of the privatization strategies implemented from 2009 to 2012 and 2013 to 2016. In summary, 180 stalls and 16 bay areas were under lease.

Change in Culture As claimed by experts in adaptation and innovation, cultures are constantly undergoing continuous adaptation due to some environmental pressures and they become antecedent of products/service innovation and outcomes (Verdu-Jover et al. 2018). In the case of NVAT, political biases and personal preferences were unfortunately embedded in the choice of strategies in the past which are not necessarily supportive of NVAT’s goals and objectives. Therefore, NVAT pursued the combined strategy of nurturing existing markets/buyers and developing new ones to achieve increased productivity and better income for farmers and other key stakeholders (NVAT GM March 2017, personal communication).

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Effective entrepreneurial culture is linked to new ideas and creativity and a continuous change and/or improvement is viewed as a conveyor of opportunities (Daily et al. 2002). The FOs, farmers, and traders were not used to attending organizational meetings and the management staff had to convince them to cooperate and collaborate through the use of motivation/human behavioral skills and information campaigns. They gradually developed commitment as they attended traders’ training and realized that NVAT advances farmers’ welfare and interests. Key Drivers of Transformation and Performance Key External Factors Growing Demand for Fresh Fruits and Vegetables The supply of fruits and vegetables is clearly not sufficient to meet the growing population needs. To be competitive in Asia, NVAT’s farmer-suppliers must be prepared to produce organic and quality farm products by shifting to sustainable organic farming and/or adopting good agricultural practices (GAP) ( Times 2013). Leadership and Governance There were some challenges encountered in the observance of the principles related to PPPs. Bureaucracy and the associated red tape occurred and consequently, deadlines for project implementation were not met, consequently affecting NVAT’s operations. Minimizing these occurrences will ensure the success of the PPP-NVAT arrangement. Devolution and Entrepreneurship Devolution refers to the granting of more power, authority, responsibilities, and resources by the national government to LGUs to make them self-reliant and active partners (self-governing). The aim of the Local Government Code of 1991 is to aggressively pursue economic development at the regional and local levels by giving LGUs more freedom in carrying out programs/projects that are suitable in their areas. Enabling Environment Vegetable production and marketing falls under the category of agriculture and its ecosystems and it is governed by a national policy on modernizing agro- industrialization known as the Agriculture and Fisheries Modernization Act (AFMA) of 1997 (Republic Act 8435). The Act aims to pursue agro-industrialization that is technology-based, market-driven, and sustainable development-anchored. Advanced Farming Technologies Domestic agriculture needs to move from subsistence farming to viable integrated farming and actively participate in the agri-food supply and value chains. Easier access to technology, finance, and learning well from the valuable experience of progressive Asia-Pacific countries such as Thailand and Vietnam may trigger better economic opportunities to rural-based farmers who are categorized as poor people. The organized market of NVAT led to a unifying effect such as the uniform application of advanced technologies among the farms.

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Key Internal Factors Improved Trading Activities and Operations As a formalized trading system, NVAT trading volume increased substantially in terms of inflow from 365 tons in March, 2015 to 1,707 tons in June, 2017 (an increase of 368%) and outflow from 363 tons to 979 tons (an increase of 170%) (NVAT 2017). The number of farmer-suppliers and traders also increased by 97% and 162%, respectively, indicating an expansion in trading activities (Table 1). Table 1. Comparison of trade volumes in March 2015 and June 2017, NVAT

Trading Activity % Increase/ March 23, 2015 June 19-20, 2017 Indicator Decrease Inflow 365 tons 1,707 tons 368 Outflow 363 tons 979 tons 170 Number of types of vegetables 24 varieties 31 varieties 29 Number of farmer suppliers 560 1,103 97 Number of supplier vehicles 346 652 88 Number of traders 279 730 162 Number of buyer vehicles 160 392 145 Source: NVAT 2017

Farmers’ Empowerment Strategy With the existence of a favorable political climate and by shifting investment and control of ownership from a dominantly public to a dominantly private entity, FOs and farmers were empowered through the participatory approach. The Build-and- Occupy the Stalls (BOS) program allowed FOs and farmers to contribute substantial shares of investments and thereby secure the right to use the stalls as investors. As majority private partners, and through the formally elected BOD and appointed management staff, they engaged in policy analysis, planning, and implementation based on farmers’ needs and made crucial decisions involving daily operations. They greatly contributed to the maintenance of order in the trading operations. Effective Strategies As they diversified crops and markets, the farmers adopted sound postharvest techniques and crop quality control standards. Yet, competition in market outlets and prices for fresh vegetable and fruit trading was still keen and this situation required NVAT to review and evaluate marketing strategies during its monthly BOD and management staff meetings. Sustained Relationships Between and Among Key Stakeholders NVAT strived to maintain harmonious and sustained relationships to help ensure strong cooperation and collaboration between and among key stakeholders. The public and private partners realized the benefits and advantages of the market infrastructure, in terms of the needed formal marketing system for fruits and vegetables to the public partner and the value of facilities and services to the intended users, at the time of a growing demand for fruits and vegetables. This was a win-win situation.

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Entrepreneurial and Adaptive Culture From a weak and unhealthy culture involving the presence of many factions or groups and conflicts within the organization, NVAT worked hard to develop an entrepreneurial and adaptive culture within a corporate structure so that flexibility and innovations may be pursued. So far, it has succeeded in convincing FOs and farmers to invest in NVAT and thereby become involved in crucial decision-making processes and policy formulation and implementation.

Assessment of NVAT Performance An assessment of the performance of NVAT in terms of relevance, effectiveness, efficiency, profitability, diversity, and sustainability was made to measure the impact of its organizational transformation. In assessing relevance, a matching was done of the objective of establishing and sustaining vital operations and activities of NVAT as a PPP market infrastructure with the priority needs of intended program/project beneficiaries – the FOs, farmers, and traders who were also investors of NVAT. The vision and mission statement, including its objectives, was assessed as timely and relevant considering that the crucial undertaking of the agricultural terminal addressed the needs of the private partners in gaining access to alternative markets for their farm produce which led to increased farm productivity and incomes. To assess effectiveness, performance was evaluated by looking at the volume of business transacted, particularly in terms of utilization and capacity use of facilities and services. With expanded services, improved facilities, and procurement of new equipment, NVAT was able to increase effectively its volume of transactions - from zero volume in 2004 to 400 tons of fruits and vegetables daily in 2016. There was also an increased participation of farmers’ cooperatives (46), farmers’ associations (40), and individuals (1,147) as shareholders (Table 2). In terms of profitability, NVAT was able to increase its income from PhP 1.9 million in 2015 to PhP 3.3 million in December, 2016. The agri-center was transformed from 2013 to 2017 and obtained more development assistance from DA, which was further augmented by the PGNV. This paved the way for an increase in rental and entrance fees and greater farmers’ agricultural support and marketing services.

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Table 2. Assessment of NVAT’s performance using effectiveness indicators Effectiveness Indicator 2004-2005 December 2016 Number of occupied 36 stalls fully occupied 180 stalls and 16 bay areas, leased at PhP stalls and bay areas by individual traders 150 per square meter

Number of traders 15 traders 300 traders Production volume Zero to minimal volume About 400 tons daily for the whole operation; about 20 tons daily per stall Number of participants 37 farmers’ associations, 15 MLGUs 46 cooperatives, and 479 40 farmers’ associations, 48 cooperatives, individuals; one and 1,147 individual vegetable growers Provincial LGU (PLGU) from Nueva Vizcaya, , . Other growers come from other provinces of Valley region; 15 municipalities, one PLGU

Source: NVAT 2016

In relation to efficiency, enhanced economies of scale and greater efficiency were realized due to the increased volume of transactions as an offshoot of the increased investment by the private sector. This was made possible by initiating BOS campaigns and more aggressively pursuing privatization strategies. As for diversity, NVAT’s trading became highly diversified in terms of selected fruits and vegetables. As of the time of the study, NVAT was trading all locally- produced varieties of upland (e.g., cabbage, potato, carrot, Chinese cabbage, broccoli, cauliflower, wombok, celery, and lettuce) and lowland (e.g., stringbeans, squash, bitter gourd, tomato, bell pepper, snap beans, onion, ginger) vegetables. This diversification was in response to the needs and preferences of the markets, including quality specifications. However, it was noted that there was limited market diversification, mostly in strategic bagsakan centers in Luzon. The financial aspect was assessed by looking at whether financial resources were available to help support the PPP project activities after the funding from public and private partners was fully utilized. The private sector had continuously patronized and supported NVAT over the years, from 2009 to 2017, by funding the construction of additional market stalls within the market infrastructure for use in entrepreneurial undertakings. As for the sustainability of benefits to farmers, it maintained a price monitoring mechanism through the Philippine Statistics Authority to track price fluctuations and changes in prime commodities from and other vegetable trading centers in Luzon. It also established a support system for making orders, deliveries, and payments. It was cited that in the future, the organization plans to have online transactions and apply for rediscounting, credit line, and bank-to-bank transactions, subject to the approval of the BOD. Further, in 2016, it began implementing a road concreting project. It also purchased a new payloader for hauling solid waste materials and plastic crates to speed up daily operations and activities.

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Finally, the organizational sustainability was assessed by determining whether the organizational structure created by NVAT would likely function after the PPP project ends. Initially, its structure consisted mainly of the BOD and the GM as well as the finance and accounting and administration departments. It added a micro-finance department and a marketing department. The departments were then strengthened by hiring additional qualified personnel. A uniform, stable, and reasonably competitive pay structure was provided to all employees. It made adequate financial provision for training and development of personnel (Table 3). An area of improvement though is in the aspect of succession planning. To achieve organizational sustainability, it needs to address succession issues directly. Table 3. Assessment of NVAT’s performance using organizational sustainability indicators Organizational Sustainability Indicator 2004-2005 December 2016 Number of BOD officers and NVAT staff was just 4 11 BOD officers and members; 33 members, including management staff management staff Staff compensation NVAT monthly staff Uniform, stable and competitive salary of PhP 3,000.00 wages for staff; benefits and incentives like Pag-Ibig, PhilHealth, and retirement funds. Average salary PhP 18,789; min PhP 7,000 and max PhP 32,579

Source: NVAT 2016

Conclusion and Recommendations The desired organizational transformation of NVAT was brought about by an investment/finance shift which caused changes in the organizational structure - from a public-dominant entity to a private-dominant one. Its transformation was achieved through crucial changes in governance, structure, core processes, culture, and strategies. The key drivers of transformation were the growing demand for fresh fruits and vegetables, dedicated leadership, and collective goal for good governance, among others. Through a farmers’ empowerment strategy and improved trading activities, operations were improved significantly. The organizational transformation resulted in concrete gains in terms of relevance, effectiveness, efficiency, profitability, diversity, and sustainability. NVAT should, however, foster an entrepreneurial culture which promotes creativity and innovation within the organization. It is also recommended that the organization should come up with a clear succession plan which could provide a sound basis for selecting and developing a successor to the position of the general manager. The successor must be equipped with knowledge and skills in strategic management and with an operational zeal that had matured in the NVAT. This is to ensure continuity in the operations and sustain a culture of entrepreneurial development.

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A continuing training and education process must also be implemented. The management staff and stockholders must be oriented on the functions and operations of a corporate entity so that they can effectively perform their duties and responsibility in the NVAT system. Finally, there should also be a monitoring and evaluation mechanism in place which will help determine how exactly it contributes to the attainment of national development goals such as poverty reduction and self- sufficiency in food. This could serve as a critical input to business and financial planning and investment programming.

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