The cost of extension: Should we continue with agrarian reform?

On 10 June 2008, Republic Act No. 6657, as amended, codifying the Comprehensive Agrarian Reform Program (CARP) expired 20 years since it was first approved in 1988. Unfortunately, in the last 20 years, the Department of Agrarian Reform (DAR) – the principal office tasked to undertake CARP – has failed to complete the acquisition and redistribution of the remaining 1.3 million hectares (as of 2007) to farmer-beneficiaries.

Debates are rife regarding the future of the agrarian reform. Some posits that CARP should be allowed to expire, while others demand its extension. Thus, the primordial issue that needs to be resolved is whether or not CARP should be extended. Further, granting that agrarian reform is extended for a still-to-be-decided period, what kind of agrarian reform program should Congress enact?

Historical perspective

RA 6657, as amended, was hailed by some as a breakthrough legislation, considering that the Eighth Congress – which approved it, was composed mostly of big landowners. Many thought that such a bill, which threatens the existence of these landowners, did not stand a chance of being passed.

CARP is intended to democratize land ownership by redistributing vast tracks of land to those who till and farm them, but don’t own the land. According to the Declaration of Principles in RA 6657, as amended, “The agrarian reform program is founded on the right of farmers and regular farm workers, who are landless, to own directly or collectively the lands they till or, in the case of other farm workers, to receive a share of the fruits thereof.”

CARP is divided into two major components: Land Acquisition and Distribution (LAD) and support services. The two are consequential: land must first be acquired before being distributed to farmers, with the corresponding support services to make them productive.

LAD is the core component of CARP. As originally stated in the agrarian reform law, LAD should have been accomplished in 10 years, or by 1998. Since the government failed to do this, the law was amended by Republic Act No. 8532, extending LAD for another 10 years, which expired on 10 June 2008.

According to a 2007 report on CARP accomplishment, DAR and the Department of Environment and Natural Resources (DENR) have acquired a total of 6.95 million hectares of land out of 9.12 million hectares identified for agrarian reform. Out of the total acquired lands, DAR has distributed 3.86 million hectares.

Latest DAR statistics indicate that most of the lands that have yet to be acquired and distributed are found in Western, Central, and Eastern Visayas, and SOCCSKSARGEN in Mindanao.

Flawed from the start

A major stumbling block in implementing agrarian reform is the government’s insufficient amount of appropriations for the program. DAR has cited this reason to justify its low performance in LAD.

In fact on 05 November 2006, DAR Secretary Nasser Pangandaman said that his agency has been using an annual average of Php5.47 billion from the Agrarian Reform Fund to compensate its LAD efforts. Further, in his speech on 28 September 2007, Pangandaman said, “the total amount which has been obligated by the different CARP implementing agencies has already exceeded the authorized allocation of 100 billion provided under RA No. 6657 and RA 8532.”

Aside from the funding issue, some allege that the mostly landowning 8th Congress that enacted the original CARP passed a law full of loopholes, making it difficult to enforce.

One such loophole is the ease by which landowners can evade agrarian reform through land conversions. A 1990 Supreme Court decision buttressed the ease in land conversion. In Luz Farms vs. Secretary of Agrarian Reform (192 SCRA 51, 04 December 1990), the Supreme Court ruled that lands devoted to livestock are not agricultural lands and hence, exempted from agrarian reform coverage. This ruling gave landowners some cover to exempt their lands from agrarian reform by transforming their agricultural lands into livestock production use.

DAR tried to cushion the Supreme Court decision by issuing Administrative Order No. 9 Series of 1993, regulating exemptions of lands devoted to livestock-raising.  The AO sets a land-animal ratio—one head to one hectare—as basis for an exemption in lieu of blanket exemption.

However, on 19 October 2005, the High Court declared DAR AO9 as ‘unconstitutional’ when it ruled with finality the CARP exemption of some 3,020 hectares of property owned by lawyer and rancher Delia Sutton.

Aside from the Sutton case, 11 similar exclusion cases have been documented by the Masbate Center for Rural Development Empowerment (MACARADE) in six towns in Masbate covering 12, 026 hectares and affecting some 2,014 farmers.

But no loophole can top those actions done outside the law. Landowners simply hire goons and private armies to intimidate farmer-beneficiaries and even agrarian reform officials from taking over lands. They use force to harass, if not kill, beneficiaries.

Richard Sarroza, chairperson of the Kilusang Magbubukid ng Pilipinas (KMP, Philippine Peasant Movement) in Negros related how their place became witness to the bloody confrontations between CARP farmer beneficiaries and landlords or their proxies.

He cited the case of the holders of Certificate of Land Owners Award (CLOA) of Hacienda Naval in Barangay Talaban, Himamaylan who for years have allegedly been prevented by people closely identified with Jose Mari Javellana from taking over the 144-hectare plantation. The same situation exists, he said, in Hacienda Kiwi, Hinigaran where CLOA holders are prevented from taking possession of the land by alleged “armed goons” of the haciendero.

In all these cases, Sarroza said that the DAR and the Philippine National Police (PNP) have been helpless in implementing land distribution.

Another major contentious point coming from landowners is the issue of economic sustainability. Landowners from Negros, for example, claim that sugar plantations must remain on status quo to continue being profitable and efficient. They cite that the farmers-owners’ lack of technical know-how in profitably running farms will lead to decrease in earnings for local governments that, in the long run, will harm the countryside economies.

In their book Struggles for Land and Livelihood, Saturnino Borras Jr. and Jennifer Franco said, “The more productive modern plantations have been spared, for the simple reason that they have been considered by state policymakers to be efficient contributors to the process of private capital accumulation in the rural and national economy.”

Plugging the loopholes

No doubt, agrarian reform is an important social legislation to redistribute wealth and capital. Land ownership, as a form of property right, is invaluable in developing a stock of useful capital that can produce value. Peruvian economist Hernando de Soto pointed out in his seminal work The Mystery of Capital (2001) that assets are valuable only when they can be linked and combined with other assets to produce useful capital. This valuable asset can be produced when legal ownership is established, and property rights are enforced.

Congress therefore should extend agrarian reform, but only for a limited period. Albay Representative Edcel Lagman sponsored House Bill No. 4077 on 14 May 2008, aiming to extend CARP. Under HB4077, the program will be given another Php100 billion for the next five years.

But that amount may not be enough to fully finance the program. In a resolution issued on 05 February 2007, the Presidential Agrarian Reform Council (PARC) Executive Committee projected that CARP needs a total of Php327.30 billion to complete the program that includes land tenure improvement, agrarian justice delivery, and program for beneficiaries’ development. Assuming that we consider the projections made under HB4077, it would mean extending the program for another 15 years!

Since a long extension will not be acceptable, Congress and PARC must come up with a shorter time frame, and at the same time, formulate an optimal amount of program expenditure vis-à-vis realistic financial conditions.

At the same time, the extension of the agrarian reform law must include several amendments or new provisions that would ensure the success of the program.

For one, Congress should use sound economics and formulate optimal-sized land areas for distribution in order to ensure that the spirit of agrarian reform, which is to establish “economic-sized farms” that can benefit their owners, will be realized. In this regard, economies of scale must guide Congress in determining at which size a land becomes more productive, thereby redounding to more economic benefits for the tillers and the economy in general.

Agrarian reform and the democratization of land ownership will be a dead-end if the new owners cannot participate in economic activities. Mere ownership does not automatically translate to economic benefits. To be truly productive, owners and their lands must be provided with the necessary support system such as physical infrastructures that include farm-to-market roads, tractors, effective irrigation systems, and access to farming implements and fertilizers.

The system should also include social infrastructure like micro-credit and micro-finance, capacity-building measures and trainings on entrepreneurship, and social integration program and counseling activities that will psychologically prepare the new landowners to take part in formal economic activities.

Further, the new agrarian reform program must provide for a comprehensive development package that will allow farmer-beneficiaries to use their lands as a source of economic strength. The “farmland as collateral” component must be made an integral part of the new agrarian reform law.

In addition, any agrarian reform program must be supplemented and strengthened by the following integrated policies:

Rationalization of Land Conversion and Land Use. On 14 July 2008, President Arroyo issued Administrative Order No. 226-A, suspending the conversions of rice lands for two years. The suspension includes rice lands covering irrigated areas, and all irrigable lands covered by irrigation projects.

To further strengthen this directive, land conversion and use must be rationalized in order to protect agricultural lands and buttress food security. Possible requirements in rationalizing land conversion and use include the submission of cost-benefit projections and feasibility studies to determine whether or not land conversion will redound to economic benefits vis-à-vis remaining as agricultural lands.

Food Security. Related to the rationalization of land use, agrarian reform must be an adjunct of any government policy aiming for food security. Agrarian reform communities (ARCs) must be models of modern agricultural practices.

Super Regions. To be truly sustainable, agrarian reform must be geared towards a more programmatic and rational production based on product niche and regional peculiarities. This is where the Super Region concept can help.

End-game

Twenty years of agrarian reform without significant improvements in the lot of agrarian reform beneficiaries and the country’s socio-economic stability is indefensible. The delay is bad for farmers and tenants who wish to take part in the productive utilization of lands to propel their social status. Equally, the delay is bad for landowners and investors who wish to invest in these productive endeavors.

When the 14th Congress opened its Second Session, it has identified agrarian reform as a priority legislative measure. House Speaker Prospero Nograles created a Special Committee to craft amendments to HB4077, with the end-view of having a perfected bill for Congressional approval on or before 31 December 2008.

It is imperative to finish land distribution and the identification of legal land owners as pre-conditions for these tenants-now-owners to join the country’s economic activities.

The end-game should, more than ever, take into utmost consideration food security and the innate role of nations to take care of their own. Such a policy should enhance economic sustainability and viability and should be based on social justice considerations that are in the mould of 21st century realities.

---

Disclaimer: The views and opinions advanced in this article is the author’s own, and may not necessarily represent the views and opinions of THE LOBBYiST, its editors, or its publishers.

Factual Errors? Email us at editorial@thelobbyist.biz.

Copyright 2007 The LOBBYiST. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without the expressed permission of The LOBBYiST.