THE Commission on Audit has said Northern Foods Corporation (NFC) should request government for a bailout over the P765.79 million deficit in its retained earnings account as of May 31, 2019.
The NFC, a government-owned or controlled corporation under the Land Bank of the Philippines (LBP), has been incurring losses dating back several years which, added on top of unpaid interest on loans, has pushed it deeper into the hole.
Financial statements submitted by the GOCC showed it posted net losses of P31.594 million in 2015; P25.09 million in 2016; P42.86 million in 2017; P34.623 million in 2018; and P52.829 million this year.
At the same time, its unpaid loans have caused interest to climb from P38.39 million in 2015 to P41.811 million this year.
“The Audit Team noted the significant deficit in the retained earnings account which soared to P765,789,418.15 as of May 31, 2019, thus casting doubt as to the ability of the agency to continue operating,” the COA said.
In light of NFC’s difficulties, the commission said seeking subsidies from the government will be a better option for the GOCC rather than resorting to more borrowings to avoid piling up interest that it has little chance of paying.
The NFC has been eyed for privatization since 1992 but three public biddings conducted in 1995 all fell through.
An attempt to dispose of the company through a negotiated sale in 1996 also failed as well as another bidding in 2000.
According to the management comment to the 2019 audit observation, its latest privatization plan has been submitted to the Office of the President for approval.
While the GOCC had had trouble turning up profit, it has been providing income to 1,577 farmer beneficiaries who are into contract-growing for tomatoes that the NFC has been processing into tomato paste for sale to various food companies.
Its research and development efforts have likewise yielded beneficial results in improving tomato plant lines, creation of hybrids, application of technology, and fighting common pests and tomato diseases.