One of the weaknesses of a democratic system (which, mind you, is still the best system tried to date despite its weaknesses) is that the leaders have to get elected. To get elected they have to be popular, to be popular they have to do things, make decisions that will appeal to voters. So emotion, populism, creeps in, absolutism sneaks through. What makes good economic sense gets put aside.
Take the proposed extension of the Comprehensive Agrarian Reform Program (CARP). In 1988 Congress decided that ALL agricultural land should be split up into 5-hectare lots. That was 27 years ago, so by now we should be seeing great success as the law intended, right? Wrong. It has not succeeded as intended, yet there is pressure to extend the failure for even longer.
Some crops grow well on small plots (most vegetables, rice, etc.). Others need a large scale for efficiency (sugar, pineapples, etc.), to give consumers the best price and quality, and to be competitive on the world market. This is my basic objection to CARP: It gives no choice.
Stagnant agricultural productivity and money-grubbing middlemen have kept poverty high in the rural areas. The sector has been constrained by small farmers’ lack of access to formal credit, low level of farm mechanization, inadequate irrigation facilities and farm-to-market roads, lack of postharvest facilities, limited private investment in agriculture, security issues in areas ideal for high-value crops, and weather disturbances. These are what need to be addressed.
In addition, the sector’s growth was primarily constricted by an ill-considered and poorly-implemented agrarian reform program. Since 1990 the sector’s growth has averaged a miserable 2.6 percent per annum. UP School of Economics professor and National Scientist Raul Fabella stressed in his discussion paper, “CARP: Time to Let Go,” that CARP and Carper only created a new class of people: the “landed poor.” Poverty incidence in CARP areas is 54 percent, and among non-CARP farmers it’s a lower 35 percent, Fabella noted. Also, the nontradability of CARP farms (a major weakness of the law) has destroyed the formal land market, prevented best use of farms, and affected the development of formal credit (you can’t borrow without tradable collateral).
Just look at what a farmer, Zenaida Soriano, said in a letter to the editor: “Before sunrise every day, women peasants, together with the men, are in the field, doing the backbreaking work of weeding, planting and plowing to make the land they till productive. But the Aquino administration, like the 14 administrations that preceded it, has failed to do its part in alleviating the condition of majority of the poor and hungry in the rural areas where the worst poverty and hunger can be found.”
The biggest weakness to me is the ALL approach. There is no concession to the reality in agriculture: that some crops need to be grown on a large scale to be competitive, to give consumers products at the lowest possible price. This, together with giving farmers (not middlemen) a decent living, is what agriculture should be all about.
Australia has plantations so large you can drop the Philippines in a corner and forget where you put it. And cooperatives, far too often, don’t work. There is enough agricultural land in the Philippines to allow both small and large farms to coexist.
Would you prefer to grow crops inefficiently with little ability to get a good price for them? (The average daily income of farmers today is P170, or about a third of the daily minimum wage in Metro Manila.) Or would you rather have a full-time job with an agricultural business that gives you a decent income regularly for 12 months a year? Given a small house, schooling for the kids, free medical service by a responsible plantation owner, or scrabble for a living?
As it is now, 5.05 million hectares of agricultural land have been distributed to small farmers. Some 5.37 million hectares were targeted for distribution, so what has to be done? Why extend CARP? It makes no sense, particularly as CARP hasn’t worked, and farmers have not been lifted from poverty. The reality, too, is that farmers haven’t gotten the five hectares allowed; the average ownership is 1.2 hectares—way too small to be efficient.
So what would it take to make growth more inclusive in rural areas? Definitely, no more CARP extension. Focus instead on providing support to agrarian reform communities in terms of postharvest facilities, infrastructure, marketing, etc. And take the National Food Authority out of rice trading; it has no business being there. Let the market do it—opening markets is a proven success strategy.
Aside from the nonextension of CARP, tradability of land/land use should also be allowed to enable the land’s highest and best use for agriculture. The government should also encourage private investment in agriculture by not imposing ceilings on the area of land for cultivation. Do the sensible: Allow plantations, and focus on high-value crops such as tropical fruits, vegetables, coffee/cacao and other exportables.
As for middlemen, an article in this paper on Monday says farmers get P11 per kilogram for white onions. I asked my wife what she pays in the supermarket: P60! This is outrageous. What the hell is the government doing to stop this unscrupulous rip-off? I’m sure it’s happening in other produce, too. And usurious lenders charge 10 percent per month! Isn’t there a law against that? No wonder farmers are the bulk of the poor.
When will the government stop the platitudes and actually do something? The reality is that there’s been no real reduction in the number of people (not percentages) who are dirt-poor (literally, they live on it) in the past four and a half years.
Mr. Aquino, you have 15 months left. Get tough, force action, give the poor a decent life.