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The Case of the Nueva Vizcaya Agricultural Terminal, Philippines

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The Case of the Nueva Vizcaya Agricultural Terminal, Philippines 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, Philippines 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] 4 Professor, 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. Journal of Economics, Management & Agricultural Development Vol. 4, No. 2 59 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 Barangay 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. 60 Montes, Rola, Pabuayon, Depositario, and Atienza 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 Luzon. 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,
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