PHILIPPINES: THE COUNTRY'S inefficient, monopolistic inter-island transport system is hampering rural development, taking away the incentive for farmers to strive for greater productivity despite advances in agro-fisheries technology, according to a University of Asia and the Pacific study.

The study, conducted by the Transport and Logistics Center of the UA&P-based Center for Research and Communication, found that transport inefficiency led to higher prices of goods.

In turn, higher prices undermine the global competitiveness of the agri-fisheries sector as well as the country's food security.

Enrico L. Basilio of the UA&P School of Economics said prices of goods were going up also because they had to go through many channels before they reach the end-consumers.

"For instance, pechay from Quezon province change hands six or eight times," Basilio said. "The result is that the price shoots up from P4 each at the farm gate to a range of between P18 and P25 when it reaches the end-consumer-an increase of between 350 percent and 525 percent."

Basilio said that for the farmers, a multi-layered marketing system--the products going through several levels of traders, distributors and dealers--meant smaller profits.

"If the marketing structure is streamlined, pechay can fetch P11 apiece at the farm gate and can be sold to the end-consumer at P16 each--an increase of only 45 percent," he said.

The academic explained that much of the high transport cost could be traced to the cost of cargo handling, inefficient port operations and a highly centralized port administration that bars competition among cargo handlers within a port and among different ports.

"[The current port policy] is flawed in that the regulator [the Philippine Ports Authority] benefits from its regulation--it owns ports and earns from operating them," Basilio said. "Also, there is no public bidding in the renewal of expired and expiring cargo handling contracts."

Basilio said that based on the study, he recommended the promotion of roll-on/roll-off (ro-ro) shipping service that would substantially reduce cargo handling, costs, and make loading and unloading of goods efficient.

He also encouraged the establishment of private commercial ports that would support the ro-ro system. He said of the 400 private ports in the country, only 30 are operating commercially.

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