‘Land reform fails to reduce poverty’

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Friday, March 7, 2014

MAKATI CITY -- A top Filipino economist has presented data showing that the more than two-decade implementation of the Comprehensive Agrarian Reform Program (Carp) has not reduced poverty among majority of its beneficiaries.

“Is Carp a poverty-reduction program? My answer is no,” said Dr. Raul Fabella, a professor at the University of the Philippines (UP) School of Economics, in his talk titled “Carp: Time to Let Go”, at the Metropolitan Club here Thursday.

The forum was organized by the Management Association of the Philippines AgriBusiness and Countryside Development Foundation Inc.


Barely four months before the Carp Extension with Reforms (Carper) expires in June and as an extension of another five years is being proposed, Fabella discussed the evidence on economic welfare impact of the land reform program, possible reasons for its failure, and where the program will go from here.

Figures show that by 2014, the Carp shall have distributed 5.05 million hectares, leaving only 321,000 hectares, or an accomplishment of 99 percent.

Fabella pointed out, however, that Japan’s vaunted land reform distributed only 1.76 million hectares of its total 37 million or only 4.7 percent while Taiwan was able to distribute 500,000 hectares of its total 3.62 million hectares or 14 percent.

Philippine figures further showed that 2.6 million farmers shall have gained some form of ownership to an average 1.2 hectares, showing that the government shall have acquired and distributed 16 percent of total Philippine land area.

On yield among beneficiaries in agrarian reform communities (ARCs), rice was 10 percent higher than national average; corn, 50 percent higher; coconut, 40 percent lower; and sugar, 8 percent lower.

As it is, only 54 percent of beneficiaries are in ARCs where most of the aid, both government and non-government, go. From 2010 to 2012 alone, ARC-affiliated individual beneficiaries (ARBs) received on the average P22,446 in credit support and P23,246 in irrigation support.

And yet, 54 percent of households among ARC-affiliated ARBs fall below poverty line. For 2009, Family Income and Expenditure Survey (FIES) shows only 36 percent of farmers fall below poverty line.

Fabella also noted that poverty incidence with non-ARC beneficiaries will be higher. Income of ARBs in communities is greater than the income of ARBs in non-ARCs, citing a 2008 study on “Land Reform, Rural Development and Poverty in the Philippines: Revisiting the Agenda.”

“Carp, it seems has created a new class of farmers – the land less poor,” Fabella said.

He added that “when other factors are controlled for, neither being an ARB nor being an ARC member explains difference in income per capita.”

“This implies that ‘land ownership via Carp’ is an ‘inferior type ownership,” he said.

Fabella added that the design flaws of the Carp include unequal exchange where the productivity of land depends in its capacity to command financing.

“The CAR Law effectively outlawed that capacity, making the land conveyed to the beneficiaries ‘effectively inferior’ to that bought at the market place from the landowner,” he said.

Another is the economic size, wherein if the land at three hectares is not “economic size,” it is a high-default risk and loses the capacity to command the credit, and is worth less than as part of a larger credit worthy-parcel.

“The beneficiary is short-changed and condemned to fail. Economically, unviable property rights are not stable,” Fabella added.

Fabella said it is time to let go of Carp and agricultural focus should be redirected from land equity to farm efficiency.

He pushed that publicly-owned firms listed with the Philippine Stock Exchange should be allowed to own land without limit and efficient farmers should also be allowed to own up to more than five hectares of agricultural land.

He added that banks operating in rural areas should also be allowed unlimited ownership of land and collective Certificate of Land Ownership Awards should be converted to individual CLOAs. (Nanette L. Guadalquiver)

Published in the Sun.Star Bacolod newspaper on March 07, 2014.

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