Batang SAKADA

Second Segment of BALITANG K
Hosted by Korina Sanchez
Aired June 28, 2009 on ABS-CBN

Writer: LEN B. JAVIER
Researcher: VKY DIO MENDOZA
Segment Producer: ANTHONY DASALIA

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CARP: Little to Do With Good Economics

By: Joel Pablo Salud
Published in: Phlippine Free Press, April 18, 2009

RECENT declarations by the Department of Agrarian Reform (DAR) that the Comprehensive Agrarian Reform Program (CARP) is a success to justify its extension-citing the math behind the number of distributed land- only made Benjamin Franklin’s words truer than it was first broached, that “success has ruin’d many a man”. The CARP, by virtue of its constitutional mission of rendering “full employment” to farmers and as the engine of rural development, is naturally a moral enterprise whose success must never depend solely on numbers. By constitutional mandate, land distribution should be the least of CARP’s worries. As the engine for national reform and rural progress, benefiting the farmers, thus humanity, ought to be its prime achievement.

The fact that DAR has cited figures relating to land distribution spoke volumes on how much of a failure CARP has been. Reports show that as of December 2005, DAR has acquired and distributed 3.639 million hectares of agricultural land, representing 85 percent of its supposed target, which, according to the agency, has secured the land tenure of 2.1 million farmers. This is in addition to the 2.937 million hectares distributed by the Department of Environment and Natural Resources (DENR). The distributed 3.6 million hectares, the DAR has spent P103.9 billion from the Agrarian Reform Fund.

No Economics in Land Distribution

There is, however, one drawback: where is the economics in land distribution? Every good economist knows that mere land distribution does not and will not account for any economic advancement in the rural countryside. Farmer-beneficiaries, after all the hype and glamour of land distribution, after the string of media coverage and photo-ops, will inevitably need government support- capital infusion, for one- to jumpstart management and operations of their land. Without capital infusion, technical know-how and mechanization will not be possible. This alone reeks of bad economics: trying to reap what one does not care to sow Capital as well as labor, are key ingredients in good and successful economics, serving as the fuel for operations. And since CARP is sowing in the field of its own slow and excruciating destruction, without capital infusion, it won’t be long before the countryside reaps the already rotting fruits of the law’s failure.

Lagging Behind Global Trends

For many years, the Philippines had been a key exporter of rice. Even as early as the 1930s, the country has been knocking heads with western countries out to grab the burgeoning market of sugar. In fact, a behind-the-scenes look at America’s decision to grant the Philippines its tutorial independence relied much on the lobby of sugar planters in the United States, who pushed the US Congress to free the Philippines from American hold, thereby releasing America as well from the agreement to purchase sugar from the Philippines. Needless to say, we were a force to be reckoned with agriculturally.

Today, the country has been rendered weak by the CARP, its lands segregated, fragmented and given to farmers who have no resources to operate it, making agri-business nearly unreliable as a viable investment venture. Having trained in the past students from different countries in the field of agriculture, the Philippines now stands as a blundering amateur waiting to be called into a global audition. The Department of Agriculture itself, in its DAR-GTZ (Comprehensive Agrarian Reform Program: Scenarios and Future Development) report funded by the German Technical Cooperation (GTZ) says that CARP is “out of sync” with global economic trends.

Philippine Agriculture State of Distress

Simply said, due to CARP, the whole agriculture sector is in a state of distress. Wonder why DAR has remained mum on the economic benefits of CARP? Because there is no figure to quote. After 18 years of CARP and 14 years of operation land transfer, there is no difference in rural poverty levels. If at all, figures show that there has been an increase in rural poverty growth rates.

CARP is now doubt an expensive failure, with DAR spending over 200 billion for land distribution alone. That amount could have kick-started rural development with more than enough to spare for small and medium-scale enterprise. Notwithstanding the billion peso expenditure, the DAR-GTZ report says that financing is still inadequate. If it’s inadequate, then where would government funding to support the farmers and their new land?

Misallocation of scarce resources has been the primary hurdle, the repost makes clear. Top this with the low collection on amortizations payments that was pegged at 18 percent. We don’t even need to tackle the effects of globalization, trade liberalization, skyrocketing prices of fuel and fertilizers to get a glimpse of the downward fall of the Philippine agriculture. The proof is clear: the Philippines has been transformed from being a net exporter of agricultural products to net importer by the mid-1990’s.

Turning from the Constitutional Mandate

That the CARP is unfaithful to the mandate of the Constitution of “full employment” to the farmers, and development of the rural countryside, is beyond argument. This simple diversion has cost the country billions of pesos in what could have been funneled in the first place into rural development projects. And the Philippines is slowly reaping the consequences of its inaction. In 1981, the country’s trade balance of $1.2 billion has been reduced significantly to $49 million by 1991. By the turn of the new millennium, in 2001, the Philippines posted negative $1.1 billion, turning the country into a net agricultural importer. The downtrend can be gleamed from the following figures: According to the Global Agricultural Information Network (USDA), production cost of one kilo of palay in the 1990s went down except for the Philippines: Vietnam-P2.33; Thailand- P4.30; Philippines P5.71. At this same time frame, prices of rice per kilo have gone down save for the Philippines: Vietnam- P6.36; Thailand-P7.54; RP-P14 (NFA Rolling Stores). The country’s first competitive advantage has deteriorated immensely.

The Politics of Bad Economics

The question therefore is this: Why is the country importing agricultural produce it the CARp is, as DAR declares, successful? With 7.1 million hectares distributed to tenant farmers (92% of all agricultural lands) and four million agrarian reform beneficiaries working on their lands, as DAR claims, then why is the Philippines still at the mercy of other countries in terms of agricultural products? The fact that the country is a net importer is proof undeniable of the failure of CARP.

Much of what is now considered as figures behind poverty statistics in the rural areas always includes farmer families. These families are not only below the poverty line, after having mortgaged their land due to lack of capital to operate and manage it, most are now unemployed.

The number of poor Filipinos had grown significantly from 23.8 million in 2003 to 27.6 million in 2006. The number of Filipinos who cannot afford even the basic food for meals have jumped 14 percent over the same period, according to the National Statistical Coordination Board (NSCB). The same report said that 47% of farmers live below the poverty line. IBON Foundation pegged the figure at 72% of Filipinos who considered themselves poor. These figures fly in the face of government claims that CARP has by and large been successful.

Nothing can be further from the truth. Filipinos don’t even have to grapple with heavy statistics. Just visit a farmland in Iloilo or Negros to know that the country is in the throes of an agricultural decline.
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Just Compensation & Affordability in the Face of the Global Meltdown

How much does Land Bank offer to pay for productive agricultural land these days?

At a high of P200,000 per hectare, or P20 per square meter, the price offered nowadays for productive agricultural land is DIRT CHEAP.

P20 per square meter is equivalent to the cost of:
• 1 kilo of rice;
• 1 newspaper;
• 2 coconuts;
• 5 bananas;
• 1 cheap ballpen; or,
• P10 less than the rate of a taxi flag down.

The Supreme Court has repeatedly defined just compensation “the fair market value or the price which a buyer will pay without coercion and a seller will accept without compulsion.” Yet, historically, the average price government has paid for agricultural land has been less than half of the P20 per square meter.

Why does this happen?

Apparently, the government has a balance of almost a million hectares that is unpaid. At the price of P200,000 per hectare, the funding needed for this backlog is already P200 Billion. The additional 1 million hectares that government wants to cover under CARP would cost another P200 Billion.

Obviously, the funds are not enough for the land taken.

That is why, in APO FRUITS CORPORATION vs. COURT OF APPEALS (G.R. No. 164195, February 6, 2007), the Supreme Court lamented that it took the landowner over 10 years to recover the price of land it had voluntarily offered to sell:

The concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered "just" inasmuch as the property owner is being made to suffer the consequences of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss.

After giving out over 7 million hectares to 4 million beneficiaries, RP has indeed had the world’s most ambitious agrarian reform program. In the face of the global economic meltdown, it is time for government to rethink about its ambitions, consider what it can afford, and respect the right of landowners to just compensation. Productive agricultural land should not be taken dirt cheap.

Atty. Gil Alba
Legal Counsel
Confederation of Sugar Producers Assns. Of the Philippines
03 December 2008

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CARP and the Global Financial Meltdown

Will the Philippines be affected by the global financial meltdown?

Some say we are going to be exempted, because we are not so integrated in the global economy, and the effects would be indirect—through the jobs that OFWs lose. We are not in the “Main Event,” so to speak.

Many do not realize that we have already had our own financial meltdown for the last 20 years: The Comprehensive Agrarian Reform Program (CARP) was envisioned to be the power reactor to energize the rural economy. But after two decades of experimenting with CARP—the costliest, most ambitious and longest-running agrarian reform program of the world—poverty has grown in the countryside.

The CARP disaster has been of such a magnitude that it has damaged our country’s economy to the very core.

FIRST. On the macro-level, the earliest cracks in the financial design of the program appear as the “LBP FUNDING GAP,” ingrained in the CARP Law. Here, the Land Bank of the Philippines (LBP) has to finish paying landowners within 10 years. But the agrarian reform beneficiaries (ARBs) are given 30 years to repay the Land Bank.

In a perfect-world scenario, the Land Bank must fully pay the landowners at the end of ten years and will be left holding twenty more years of receivables from the agrarian reform beneficiaries.

But, we live in an imperfect reality: According to the DAR-GTZ Report, the agrarian reform beneficiaries’ amortization payment record is only 17.8%. Less than 1 in 5 beneficiaries have repaid Land Bank their amortizations!

This means our Land Bank has been engaging in exactly the same financial practices that brought down LEHMAN BROTHERS. The Land Bank of the Philippines has been forced by law to lend to borrowers who have no capacity to repay the loans.

No wonder the pro-CARP forces are insisting that the funding for CARP has been inadequate. No wonder the CARP proponents are insisting on an extension of the law—which is really call for a CARP bailout.

SECOND. On the micro-level, more cracks appear in CARP’s financial design as the agrarian reform beneficiary’s THREE-TIERED DEBT BURDEN: (1) debt on the land, (2) debt for operating capital, and (3) debt for their family’s basic needs.

The LAND DEBT arises when the land title is transferred to the agrarian reform beneficiary, and the land is automatically mortgaged to the Land Bank. For the next 30 years, the prospect of foreclosure hangs over the beneficiary’s head, like a sword of Damocles, ready to cut his ownership in case he does not pay his amortizations.

The OPERATING CAPITAL DEBT must be incurred by the beneficiary to fund farm operations. While the landowner used to provide management and capital, everything from seedlings, fertilizers, chemicals, and other farm inputs must now be funded by the beneficiary from borrowings. This is usually done through loan sharks, or suppliers who impose exorbitant rates for indebtedness on fertilizers and other supplies.

To remedy this situation, some quarters propose to allow beneficiaries to use their land titles as collateral. But a closer look shows that this arrangement asks other financial institutions to play exactly AIG’s role in the global meltdown—they are now being asked to accept a second mortgage on the beneficiaries’ titles.

These financial institutions are being asked to take on the same risk as AIG. As Second Mortgagees, they have to pay Land Bank in case the agrarian reform beneficiaries default on their land amortizations. Unless they erase the Land Bank’s first mortgage, they cannot proceed to foreclose on the second mortgage to get back their capital.

The BASIC NEEDS DEBT arises because the agrarian reform beneficiary no longer receives the regular wages that the landowner used to pay him. Now that the land is titled in his name, the beneficiary is on his own. He must incur more debts to pay for food, education, clothing, transportation, hospitalization, medicine, etc. as he no longer has the safety net of having an employer to turn to.

At harvest time, the beneficiary’s problems are not over. . . He must pay Land Bank the amortizations for the cost of land. He must repay loans he used for operating capital. He must repay debts incurred to support his family’s basic needs until harvest. And when he has harvested his produce, he is left with an amount so meager he must again enter into debt to fund the coming year’s operations.

THIRD. The agrarian reform beneficiary must face even greater odds. . .
He must contend with nature’s unpredictability, which has been growing with global climatic changes. He must be subject to global economic volatility: Supply and demand situations in the world market will affect him. He must take on worries formerly faced by the landowner—fuel prices, fertilizer supplies, bumper crops in other nations which will lower demand for his products, the entry of cheap imports with the impending implementation of the General Agreement on Tariffs and Trade (GATT), etc.

His new situation requires him to have good financial planning/management skills, in addition to other skills required, as he must now be both laborer and farm manager. Because the agrarian reform beneficiary is not adequately trained and educated on the various aspects of management, he must have a crash course in all aspects of farm operations, financial management, planning and resource allocation, marketing, etc. Unfortunately, this training must be delegated to government bureaucrats and technicians who mostly have not run farms themselves.

Consider then the agrarian reform beneficiary’s plight: He starts with an already a shaky financial situation. Because of CARP, he is suddenly abandoned by the landowner who used to be his partner in running the farm. A season or two of poor harvests or low prices increases the burden of the agrarian reform beneficiary for the future years. A typhoon that destroys his standing crop would mean he is unable to repay his loans and that he will have to come up with ever bigger amounts to repay his loan interests and penalties.

During the past twenty years, the Marcos wealth and foreign grants provided major funding sources for CARP, and delayed the need for country to face the reality of CARP’s failures. Unfortunately, this source is DEPLETED—which is why the Department of Agrarian Reform and the Land Bank have to lobby for ADDITIONAL FUNDING via CARP Extension. This means you and I will have to pay with our tax money, no matter how much CARP has been bungled by our bureaucrats.

The CARP Situation will surely worsen as 1st World Funds dry up as they try to remedy their own problems from the deepening Global Financial Crisis.
We should not be so smug about our own situation.

ATTY. GIL ALBA
Agrarian Reform practitioner
12 November 2008

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"Lupang Hinirang, Bakit Pinabayan?" Part 2

Kasangga mo ang langit
Hosted by Rey Langit and JR Langit
Part 2 aired on June 7, 2008 on IBC 13

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2 of 2

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"Lupang Hinirang, Bakit Pinabayaan?"

Kasangga mo ang langit
Hosted Rey Langit and JR Langit
Part 1 aired on May 31, 2008 on IBC 13

1 of 3


2 of 3


3 of 3

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A CALL TO ALL FILIPINOS: SAY NO TO CARP EXTENSION WITHOUT REFORMS!

Statement read at the Senate Committee Hearing on May 21, 2008, Wednesday.

We are deeply concerned about the way the CARP extension is being rushed through both Houses of Congress. Even the records of the CBCP’s Rural Poverty Seminar, show that everybody agrees that the program has failed. Yet, the nation is being asked to extend the program and to provide an additional P 100 Billion funding before Congress adjourns on June 13, 2008.

Bt that time, the amendments are not likely to be in place, so it will just be a simple law providing for an extension period and funding, like the 1998 extension of the law. Just provide the money now, ask questions later.

We may have here a prodigal son asking for the rest of his inheritance because he is in a bad way.

According to the DAR-GTZ Report, P130 Billion has been spent for the program. This is on top of over P300 Billion that Land Bank is asking Congress to fund payment of about 600,000 hectares already taken but not yet paid for.

As of December 2007, RP’s outstanding agrarian reform loans was over US$ 464 Million. According to the Freedom From Debt Coalition paper presented to the CBCP Rural Poverty Seminar held on January 22-23, 2008, DAR is projected to be directly responsible for as much as US$ 526 Million if our country’s external debt. That paper laments that, because of agrarian reform, we are sinking deeper and deeper into and INDEBTEDNESS QUICKSAND:

“A total of about US$ 40.48 Million or about PhP 1.62 Billion has been earmarked for debt service this year. This is composed of US$ 27.92 Million for interest payments and US$ 12.56 Million for principal amortizations. Added borrowings, through Overseas Development Assistance (ODAs), are projected to amount to US$ 74.93 Million, much more than what has to be paid to debt service. Thus the total agrarian reform debt jumped by US$ 62.37 Million from last year’s US$ 464.16 Million to this year’s (2008) US$ 526.53 Million… Sadly the government will go on paying for AR-related debts but which do not benefit equitably all agrarian reform beneficiaries.”

“… Since the automatic appropriation on dent services exhausts the country’s resources, the government is forced to borrow in order to support its budget and pay its debts, resulting in a never-ending debt cycle.”

Where did all the money go? We are being asked to rush the approval of CARP extension and ask questions later. This is like giving our prodigal son the rest of the family’s treasure without asking to what kind of addiction he has lost in his inheritance.

According to another paper presented at the CBCP’s Rural Poverty Seminar by Center for Research and Special Studies (CRSS): “Except for a fer winner crops… Philippine agriculture is a disaster.”

Now we find ourselves in the midst of a rice crisis, being the world’s No. 1 rice importer.

Today, DAR says 6.5 Million hectares have been distributed to 4 Million beneficiaries. The distribution level is 85% for all agricultural lands and 92% for rice lands. Only 15% of all agricultural lands and 8% of all rice lands have not yet been distributed under agrarian reform. Yet, CARP-extension advocated are still blaming landowner resistance for the deteriorating performance of agriculture, the rice crisis, and growing poverty in the countryside.

Another favorite scapegoat for agriculture’s poor performance is land conversion. However, according to the DAR-GTZ Report, conversion accounts for only 42,000 hectares, which is less than 1% of all lands distributed.

The rice crisis, the growing agrarian reform debt, the present agricultural disaster. These are all traceable the CARP. We must all get our act together to get to the real ro9ot of this problem. We must all put our foot down about our problems: There must be NO CARP EXTENSION UNLESS WE HAVE THE CORRECT REFORMS.

Otherwise, we will all sink deeper into the QUICKSAND of poverty, hunger and indebtedness.

Written by Atty. Gil Marie M. Alba, Legal Counsel
CONFEDERATION OF SUGAR PRODUCERS’ ASSN., INC.
PANAY FEDERATION OF SUGARCANE FARMERS, INC.

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