From triumph to trouble

By Marvin A. Tort / Sway

THE Supreme Court has affirmed its order for the distribution to farmers of Tarlac’s Hacienda Luisita. Luisita is the sugar plantation controlled by the maternal relatives of President Aquino. Sadly, the court ruling may end up becoming an empty promise for farmers. This is given issues long plaguing the government’s agrarian-reform program.

Moreover, farmers belonging to the Kilusang Magbubukid ng Pilipinas (KMP) were quoted as having said the “Cojuangcos will use every trick in the book, every anti-peasant provision and scheme in the sham CARPer [Comprehensive Agrarian Reform Program with reforms], and use their influence and arm-twist the Aquino-controlled Department of Agrarian Reform [DAR], in order to block Hacienda Luisita’s distribution.”

As KMP Deputy Secretary-General Randall Echanis puts it, “the Cojuangcos will not simply give away the lands and abide by the Supreme Court decision. We expect the President’s family’s stiff resistance to land distribution. But still, the fiercer battle will be inside the hacienda. Knowing the style of the Cojuangcos, they will surely employ deception, sow disunity among the farmworkers, coupled with harassment and violence.”

And while the DAR has said it was ready to implement the court decision on the Hacienda Luisita case, it remains uncertain how long the process will take. As with many other court cases long resolved, implementation almost always has a timetable—and mind—of its own.

A problematic issue with the court order is tied to economics. The court ordered the distribution of about 4,300 hectares—covered by 16 titles divided into 176 lots—to more than 6,200 farmworker-beneficiaries. That results in a farm lot sized below one hectare for each beneficiary, which may not exactly be economically feasible for sugar farming.

Then there are concerns with respect to the farmer-beneficiaries’ capacity and ability to promote modernization, efficiency and productivity. Small farm lots do not exactly promote economies of scale, and rarely amounts to anything more than subsistence production for most lot owners. Not to mention the burdensome cost of seeds, fertilizers, irrigation and land amortization.

There is also the question of whether the government—through the Land Bank of the Philippines—has enough funds to cover the payment to the landowner. Also a cause for concern is the availability of government resources to support the beneficiaries as they try to make something of their land award.

Also an issue is whether the beneficiaries can be compelled to keep the farm lot, work on it and amortize payments to the government for the property. The farm lot will not be given out for free, of course, and farmers will have to earn enough to cover their production costs, daily living expenses and farm amortization. And there is the condition that the farm cannot be pawned or sold.

Fact is, many small lot farmers eventually become unable to sustain themselves, and this prompts them to either pawn the farm—with little chance of redeeming it—or selling their rights to the property often to the very traders who lend them money and buy their produce. The issue of valuation thus becomes doubly important particularly at the get go, not only for landowners but to farmers as well.

Think of it this way. With poor prospects of actually making the farm profit, then farmers will vote for a relatively low valuation as to be able to secure the farm lot from the government at a price lower than market. So that when the time comes that it will make more sense to pawn or sell the farm, then more profit can be expected. It is a simple case of buy low-sell high.

The same formula works for the government as well, with respect to buying low and then selling to beneficiaries at cost—with possible loss on cost of money given long repayment periods and high risk of default. As for landowners, the sell-high portion works best—thus the Luisita valuation issue of P40,000 versus P1 million per hectare.

Once the farm lots are distributed, it may be good to conduct an inventory of the more than 6,000 beneficiaries if only to see how many are profiting from landownership, have kept the farm and their heads above water, have been amortizing their loan, have pawned or sold the property, have gone under, and have actually emerged from a poverty-stricken state.

A report by the Asian Development Bank (ADB) not too long ago already noted that global food prices posted “record increases” in 2011, and that soaring food prices could push millions of people in Asia into extreme poverty. ADB also noted the “fast and persistent increases in the cost of many Asian food staples” since mid-2010.

As noted in a previous column, this particular development tends to be especially problematic for countries like the Philippines, which has yet to attain self-sufficiency particularly in rice production. Over the years, food-supply and food-price problems have already cropped up on and off, but there seems to be little long-term planning being done to address them.

“For poor families in developing Asia, who already spend more than 60 percent of their income on food, higher food prices further reduce their ability to pay for medical care and their children’s education,” noted ADB Chief Economist Changyong Rhee in the report. And seen to worsen the situation is that global food and oil-price increases are expected to persist.

As a remedy, ADB had said that policy-makers should focus on long-term solutions. ADB’s Rhee added, “Efforts to stabilize food production should take center stage, with greater investments in agricultural infrastructure to increase crop production and expand storage facilities, to better ensure grain produce is not wasted.” The writing is practically on the wall, as ADB noted that in the short term, “the pattern of higher and more volatile food prices is likely to continue.”

This, to my mind, entails paving the way for an environment that will promote long-term food security, self-sufficiency particularly in rice production, and a more practical solution to issues relative to agricultural modernization and efficiency. Agrarian reform—or broader land ownership—is just the tip of the iceberg.

The challenge is keeping the farmers’ triumph at Luisita from becoming an additional burden to an already troubled agrarian front.

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