Historical Inequity into Economic Reality: A Critique on DAR’s Agrarian Reformation in the Philippines
November 2024
As with many postcolonial countries, the Philippines was presented with a land tenure system with strong colonial roots. The said system which was widely acknowledged to be characterized by the existence of very large agricultural lands owned by only a few wealthy families (oligarchs) caused extreme gaps in wealth and power. The general trick in mushroom farms, primarily the main driver, were the ones who had to bear the brunt, accepting low wages and working in precarious conditions, and they were never the owners of the land they cultivated. The Philippine land reform responded to the historical injustice and economic disparity caused by the system.
In the 20th century, the Philippine agrarian system was characterized by a stark divide between large landholdings and small-scale farming (which for simplicity we will classify into types A, B, and C). Type A, prevalent in Central Luzon and Visayas, involved concentrated land ownership by a few wealthy families who rented their land to tenants. Tenants shared the harvest with the landowners and often found themselves in debt due to the risks associated with farming. Type B, more common in the Visayas, featured smaller landholdings and a system of hired laborers. Type C involved government-owned land leased to individual families, typically for pineapple cultivation.
The 1963 Agricultural Land Reform Code marked a significant step towards addressing the inequities of the agrarian system, particularly for rice and corn tenants. However, it failed to address the broader issues of land distribution and the plight of farmers in other sectors. President Ferdinand Marcos's Presidential Decree 7, issued during martial law, sought to further reform the agrarian system by distributing large landholdings among small farmers. The Masagana '99 program, which provided subsidized inputs to rice farmers, led to a temporary increase in production but did not address the underlying structural problems.
While the Philippine agrarian reform movement has achieved some progress over the years, the challenges faced by small-scale farmers persist. Issues such as land tenure, access to credit, and the impact of climate change continue to hinder their livelihoods. Understanding the historical context of Philippine agrarian reform is essential for developing effective policies to promote agricultural sustainability and social justice.
- History of Organization
To address this issue, the Corazon Aquino administration implemented the Comprehensive Agrarian Reform Program (CARP) as a response to the deep-rooted issue of land inequality in the Philippines. CARP aimed to redistribute all covered agricultural lands within a ten-year timeframe, by 1998. This ambitious program was a key component of Aquino's campaign platform and sought to address the rural poverty exacerbated by the colonial and post-colonial landholding system.
The implementation of CARP was motivated by several factors. First, like many developing countries, the Philippines sought to increase its gross domestic product (GDP). However, the agricultural sector, while labor-intensive, often generates low-value-added products. This means that despite significant inputs and effort, the economic returns from agriculture are relatively limited. Second, the global agricultural market, particularly for commodities like sugar, was heavily influenced by former colonial powers and their trading partners, such as the United States—this unequal relationship further disadvantaged agricultural producers in countries like the Philippines, which faced competition from better-supported and more efficient foreign markets. Coupled with the Cronyism and protectionist policies, it led to these industries becoming stagnant. The government often absorbed the costs of unprofitable agricultural businesses, leading to stagnation in the sector, persistent trade deficits, and balance of payments crises. Under these circumstances, the Philippines continued to lag behind its other Asian counterparts as they focused on export-oriented industrialization and higher-value goods instead of intermediary goods (De Dios et al., 2021). This calls for the Philippines to shift away from traditional low-value agricultural-oriented products in favor of more value-adding activities like manufacturing. By redistributing land through CARP, the government aimed to encourage farmers to diversify their livelihoods and explore opportunities in other sectors.
From an economic standpoint, agrarian reform aimed to deal with low productivity and inefficiencies in the agricultural sector. The economic theory of comparative advantage states that different countries should concentrate on different sectors based on relative efficiency. By contrast, the economy of the Philippines as developed capitalism seemed to be entangled in low-valued activities through the cultivation of commodity crops such as sugar and coconuts. The basic premise of CARP was to promote small farmers by giving them land, which would also encourage diversification and allow such farmers to move from low-valued agriculture to richer value-adding sectors such as manufacturing and agribusiness. The economic vision in the implementation of CARP was not only the alleviation of rural poverty but also the restructuring of the economy by shifting from agricultural-oriented growth as well as expanding the industrial output.
Nonetheless, there were several drawbacks that CARP encountered. Although the land was allocated to the rightful beneficiaries, most of them could not access the required financial, technological, and other essential service means for efficient land utilization. This lack of institutional support made it difficult for the region’s agriculture to improve, resulting in what economists refer to as ‘subsistence farming’, that is, farmers managed to grow just enough for their families with no excess grown for commercial purposes or reinvestment. In addition, some observers expressed concern over the slow pace of the project, citing issues like the delay in the redistribution of land which left many farmers in limbo.
The Department of Agrarian Reform (DAR) remains an integral force in the Philippines, managing land reform projects and carrying out its functions even after the original time frame of the Comprehensive Agrarian Reform Program (CARP). Due to the subsequent introduction of CARP Extension with Reforms (CARPER) in 2009, DAR has been able to retain its functions. Therefore, it is now clear that land redistribution is no longer the only concern of DAR as there is also a focus on capacity building of agrarian reform beneficiaries (ARBs) through different agricultural development and rural entrepreneurship programs.
Key Functions of DAR Today
DAR's primary role is still centered around implementing land redistribution and resolving agrarian disputes. However, its mandate has expanded to include providing ARBs with access to essential support services. These services encompass credit facilitation, farm support, and livelihood assistance, which are crucial in helping farmers transition from subsistence farming to more sustainable and productive agricultural practices. Initially aimed at redistributing agricultural lands to tenant farmers, the program has encountered significant hurdles, resulting in extensions such as CARP Extension with Reforms (CARPER) (Fabella, 2017). Despite criticisms, DAR remains pivotal in addressing rural inequality and fostering agricultural development. From 2007 to 2009, the focus shifted towards transforming farmers into agripreneurs, which required not just land distribution but also enhancing managerial skills among ARBs to ensure they could maximize the economic potential of their lands. Unfortunately, the protracted timeline for land redistribution weakened the reform's impact. Key structural challenges included fragmented landholdings and inadequate government support systems, such as poor infrastructure and insufficient financial aid for small-scale farmers.
Structural and Implementation Issues
Fabella's (2017) analysis highlights several systemic problems. The program's rigid land redistribution structure, coupled with poor institutional support, led to economically unviable farm sizes and diminished productivity. Moreover, the underground market for land consolidation reflects a failure to recognize the practical need for larger, more efficient farming operations. These challenges have undermined CARP's economic objectives, contributing to slow productivity growth and persistent rural poverty.
Persistent Challenges and the Future of Agrarian Reform
A significant criticism of DAR is its evolution into a "permanent bureaucracy," with legislative measures continuously extending its mandate. While the program has delivered some socio-economic benefits, such as improved public amenities in Agrarian Reform Communities (ARCs), its broader economic impact has been less impressive. Fabella argues that CARP's design flaws and the government's limited capacity have prevented it from achieving its full potential (Fabella, 2017). Moving forward, DAR must address these structural issues and improve support for ARBs. Greater flexibility in land ownership policies, alongside enhanced investment in agricultural infrastructure, could help maximize the benefits of agrarian reform. However, without significant reforms, DAR risks perpetuating inefficiencies that hinder the program's success.
- DAR’s Effect on Agriculture
Agrarian reform in the Philippines, particularly through CARP, has had significant economic implications on the agricultural sector. While it aimed to address historical land inequalities and reduce rural poverty, the program’s economic effectiveness is a topic of ongoing debate. The primary goal of CARP was to promote equitable land distribution, hoping to enhance agricultural productivity and reduce rural poverty. While CARP beneficiaries gained land, their productivity and incomes often failed to improve significantly, which is a critical issue in the fragmentation of landholdings, hampering economies of scale and limiting farmers’ ability to adopt modern and efficient farming methods. Agricultural productivity growth in the Philippines has remained sluggish, with total factor productivity growing at only 0.31% annually between 2006 and 2016, far below regional peers like Thailand and Indonesia (Briones, 2021). This low growth rate reflects structural inefficiencies, poor infrastructure, and limited support for technology adoption.
One of the significant barriers to economic success under CARP is limited access to credit. The program's landownership ceiling of five hectares makes ARBs less creditworthy, as their land cannot serve as effective collateral. This constraint restricts farmers' ability to invest in improving their agricultural practices or diversifying their income sources (Setboonsarng, 2008). Additionally, the lack of financial support has also led to an underground market for land consolidation. While such consolidation could improve productivity by creating larger, more viable farm units, its informal nature adds instability and high transaction costs (Fabella, 2017). Taking this into account, another issue is the inadequate infrastructure support as public investment in rural infrastructure– irrigation and farm-to-market roads, remains insufficient, since this lack of infrastructure exacerbates the productivity challenges (Setboonsarng, 2008). This makes it harder for farmers to maximize the potential of their land. Moreover, the general approach of CARP fails to account for regional differences in agricultural needs and market access, which can impose higher transportation costs and limited market opportunities in rural areas. Without addressing these systemic issues (i.e. infrastructure deficits and financial access), these efforts may fall short of transforming the agricultural sector and impacting the program economically. With this, it must call for the government to 1) reform land ownership policies to facilitate better credit access, 2) invest in rural infrastructure to support productivity and market integration, and 3) promote diversification and cooperative models that leverage collective resources for economies of scale.
- State of Agribusiness
Agribusiness can be broken down into three parts: the agricultural input sector, the production sector, and the processing-manufacturing sector. The interaction of these three aspects greatly affects the productivity of the overall sector. In turn, these three sectors can aid in economic growth through the means of a marked increase in the efficiency of the farm sector due to improvements in the input sector. Enchanted seeds and feeds, superior farm machines and tools, and services rendered to farmers all help improve the output-to-input ratio (Ilupa, 2012). In the case of the Philippines, the issues are compounded by the fragmentation of the sector, where smallholder farmers dominate but often lack the necessary resources and support to scale up their operations effectively. Unfortunately, it indicates how the state of agribusiness presents a complex landscape characterized by both significant challenges and promising opportunities. Despite its critical role in the economy, the agricultural sector has experienced slow growth, hindered by several persistent issues. Briones (2021) highlights how the agricultural sector of the Philippines is not globally competitive due to limited expansion in production factors and total factor productivity. The poor infrastructure (i.e. farmers lacking proper road networks, inefficient irrigation systems, and use of old technology) within the rural areas puts a spotlight on how the agricultural sector continues to underperform.
There still is innovation within the sector. Taer and Taer (2024) found that image analysis and sustainable farming systems represented the largest shares of innovation, at 26% and 23%, respectively, reflecting advances in technology and environmental focus, but rice-based innovations dominated (33.33%), while high-value crops, livestock, and remote farming were underrepresented. One issue they found was the lack of research outside of Luzon leading to geographical discrepancies. These advances are central to solving some of the structural challenges afflicting the sector, such as productivity and efficiency.
This calls for policy reforms, investments in infrastructure, and support for technological adoption are crucial to enhancing productivity and competitiveness. The aim is to foster a favorable climate for sustainable agribusiness development and growth so that this sector of the economy can make a larger contribution.
- Conclusion
The historical roots of the agrarian reform in the Philippines highlight a deeply entrenched system of inequality. Through initiatives like the Comprehensive Agrarian Reform Program (CARP), the government has attempted to redress this imbalance by redistributing land to tenant farmers. While CARP succeeded in redistributing significant hectares of agricultural land, its economic outcomes have been underwhelming. Key structural issues, such as fragmented landholdings and inadequate support for farmers, have limited its potential to transform the agricultural sector into a robust economic contributor. Financial constraints have further exacerbated these challenges. The five-hectare ownership ceiling imposed by CARP limits farmers' ability to use their land as collateral, stifling investment and innovation in the sector. This policy, coupled with insufficient rural infrastructure, has perpetuated inefficiencies, preventing farmers from achieving economies of scale and accessing broader markets. Without the necessary support mechanisms, many beneficiaries remain trapped in subsistence farming, unable to generate surplus income or invest in productivity-enhancing technologies.
In the current Philippine context, where food security and agricultural resilience are pressing concerns, the shortcomings of CARP remain highly relevant. Reforming land ownership policies to facilitate better credit access, investing in rural infrastructure, and promoting cooperative farming models are critical steps. While agrarian reform in the Philippines has made strides in addressing social justice, its economic impact remains limited due to systemic inefficiencies and policy shortcomings. Addressing these issues is vital to realizing the program's potential as a driver of agricultural and economic growth, especially in light of contemporary challenges. The success of these reforms will determine the resilience and sustainability of the country's agricultural sector in the coming years.
References:
Briones, R. (2021). Philippine agriculture: Current state, challenges, and ways forward (pp. 2021–2033). https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidspn2112.pdf.
De Dios, E., Gochoco-Bautista, S., & Punongbayan, J. (2021). Martial law and the Philippine economy. In EconStor. https://www.econstor.eu/bitstream/10419/266061/1/1780719590.pdf
Fabella, R. (2017). Comprehensive Agrarian Reform Program (CARP): Time to Let Go Public Policy Fabella. https://cids.up.edu.ph/wp-content/uploads/2022/03/ppj-16-17-fabella-2017.pdf
Ilupa, N. A. (2012). Players of the Agribusiness System and their Problems: Philippine Case Studies. JPAIR, 7(1), 1–14. https://doi.org/10.7719/jpair.v7i1.150
Setboonsarng, S. (2008). The Impact of Rural Infrastructure and Agricultural Support Services on Poverty: The Case of Agrarian Reform Communities in the Philippines. https://www.adb.org/sites/default/files/publication/156749/adbi-dp110.pdf
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