NORTHERN Foods Corporation (NFC), a government-owned or controlled corporation (GOCC) under the supervision of the Land Bank of the Philippines, owes farmers, farmer cooperatives, and contract growers P69.6 million in unpaid deliveries dating back to 2016.
The Commission on Audit made this disclosure in the 2019 audit report on the NFC released last November 8, noting that the agency’s obligations increased by a whopping 124 percent from just P31.092 million in 2018.
“Poor cash management resulted to a substantial unpaid current obligation amounting to P69,599,740 as of May 31, 2019 …due mainly to accumulation of unpaid contract grower farmers, thus created risk of losing their main suppliers,” the COA pointed out.
More than 85 percent of the said accountability is payable to 2019 contract growers who delivered tomato fruits for NFC to process and convert into tomato paste and other by-products.
Review of the NFC’s “cash and cash equivalent” account as of May 31, 2019 revealed it only had P3.814 million.
“(It) is clearly inadequate to settle the accounts considering there are a lot of operational expenses incurred,” government auditors said.
The agency’s cash problems were attributed mainly to a 24 percent drop in sales of its tomato paste from P198.472 million in 2018 to just P151.548 million this year ending May, 31, 2019.
On the other hand, operating and sales expenses went up from P29.25 million to P31.35 million during the same period.
The management informed the audit team that the reason for the decrease in sales was the decline of orders from a major customer.
It lamented that tomato paste, being a perishable product, has a higher risk of spoilage which would contribute to additional losses.
The NFC said it has requested different national government agencies for funding subsidy and has likewise submitted a privatization plan to the Office of the President for its approval.