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The Quagmire in Philippine Agriculture

About a year ago, on the Facebook Group for the tech startup community known as Startup Ph, a discussion went on about agriculture an land reform.  Guys were weighing in on the issue and giving their ideas on land reform.  I was amused at the discussion and the ongoing verbal melee until I could not take it anymore.  So I stepped in and commented, "So, who among you here have actually done a Voluntary Offer to Sell (VOS) to the government"? 

I can't say there was an eerie silence as there is really no audio on FB groups.  One could sense the tone of the discussion change though.

The Comprehensive Agrarian Reform Program (CARP) was implemented in 1988. It was the enabler for the Comprehensive Agrarian Reform Law (CARL) which was the first landmark legislative achievement after the re-establishment of freedom in 1986.

The CARP was for farmers to own the land they have tilled for decades. It should be noted that President Ferdinand Marcos also declared the entire Philippines as a Land Reform Area after Martial Law was declare in 1972. What was not specified is that the declaration only covered “sugar” plantations and did not include rice fields and coconut lands.

From in the first 4 years of the CARP, 848,000 landless farmers became beneficiaries or a 22% of the number of potential beneficiaries. It should also be seen on a context that the CARP has a life of 20 years in which it must be able to give coverage to all the landless farmers.

2 Ways

The Land Reform has 2 methods of acquisition and awarding to farmer-beneficiaries.

1. Voluntary Land Transfer (VLT) – This is when a landowner voluntarily distributes distribute land to farmers-tenants. This happens when the landholdings have been declared as a land reform area. Compensation is provided by the government.

2. Compulsory Acquisition – This is when the government has classified a landholding to be a land reform area and the owner has to sell the land to the government for distribution to farmers.

This covers rice, sugar and coconut plantations


1. Economic Dislocation. The farmer-beneficiaries were given land but lacked the resources with regards to farm inputs such as seeds, palay, irrigation, fertilizers and pesticides.

The farmers were then forced to obtain loans for these inputs, resulting in lower profits.

2.   Volume. There is a certain level of volume production that is needed to make these farms economically viable. These were not factored in land distribution.

In the case of sugar farms, the land redistributed was not economically viable since it could not sustain the needed systemic economic efficiency. In larger tracts devoted to sugar farming, the revenues generated could employ mechanization thus labor was also utilized efficiently. In smaller tracts of sugar farms, mechanization cannot be afforded by the farmers. Thus, yield and crop maximization cannot be realized.

3. Employment. The tradition is for the farmers to employ family members in tilling the land. This did not contribute to employment since family members were not given salaries, thus, there is not employment generation gained.

There were also widespread cases wherein, the farmers who have tilled the land for decades were not the beneficiaries themselves since politics and corruption also permeated the local government agencies charged with the implementation of CARP.

These factors has led to the stagnation of the agricultural sector and has resulted in a lose-lose proposition for both the farmers and the former landholders that has led to the lowering of the income levels in rural areas. That is why poverty has gained in the rural areas instead of decreasing.

As mentioned in a previous post, CARP was a political solution to an economic problem.

Given the evaluation and analysis, there are no oligarchs to blame for poverty.


Digitalhacienda.com @digitalhacienda

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