The biggest problem in Philippine agriculture, according to economist Toti Chikiamco, is land fragmentation.
Chikiamco has viewed it as such for years, emphasizing that the small size of our farms is the issue, not the lack of budget or smuggling or agricultural imports.
He believes this structural problem cannot be fixed solely by increasing the government budget.
Low agricultural productivity results from land fragmentation, resulting in the historic rise of food prices over the past year.
The record-high inflation rate of 8.7 percent in January, as highlighted by Chikiamco, was primarily due to insufficient domestic agricultural output, particularly in sugar and onions, and the limited importation of agricultural products.
Former chairman of the Board of Trustees of the International Rice Research Institute, Keijiro Otsuka, a Japanese agricultural economist, has warned that the decrease in farm size is particularly pronounced in the Philippines.
He attributes this phenomenon partly to rapid population growth and partly to the failure of nonfarm sectors to absorb rural labor.
Otsuka suggests that if the trend of farm size reduction continues and the economy maintains a relatively high growth rate, the inefficiency of the agricultural sector could become a significant constraint on further economic growth.
In light of these challenges, the second Marcos presidency requires a drastic remedial measure that addresses the flaws in the agrarian reform law implemented during his father’s and Cory Aquino’s administrations.
One of the six passed laws by Congress may be the key to resolving the farmers’ problem.
A new law has been enacted to forgive the unpaid debts of agrarian reform beneficiaries (ARBs) under the Comprehensive Agrarian Reform Program (CARP) and other agrarian reform programs and laws.
This includes all outstanding amortizations, interests, penalties, and surcharges.
Under CARP, the government acquired private lands and transferred ownership to farmer beneficiaries who were given a 30-year period to repay the debt.
Farmers have been unable to fulfill their debt obligations due to dire financial circumstances.
Trapped in a cycle of poverty, they rely on loans from traders and usurers to cover the costs of farm inputs before the planting season.
However, the income generated from their harvests often falls short of covering their debt payments, leaving them with land ownership but insufficient funds to support their families’ daily needs.
Condoning the farmers’ unpaid debts is essential to breaking the chains of poverty among them, enabling them to focus on improving the productivity of agrarian reform lands.
President Marcos has certified the New Agrarian Emancipation Act as one of the priority legislative measures to mitigate high inflation.
The Land Bank has allocated a total amount of P57.6 billion for debt condonation.
According to Deputy Speaker Ralph Recto, nearly 80 percent of agrarian reform farmers cannot repay their debts, which amounts to about P49,000 per hectare.
Recto estimates that each qualifying farmer would receive an average debt relief of P94,000.
A study by Cristina David in 2003 indicates that the restrictions imposed by CARP have devalued the collateral value of land, limited access to credit, hindered the transfer of land to more productive uses, restricted the adoption of efficient contractual arrangements, and diminished the value of the awarded land.
This study implies that the government bears some responsibility for the failure of farmer beneficiaries to repay their debts.
Numerous economists, including national scientist Raul Fabella, have advocated for a debt condonation program for agrarian reform beneficiaries.
Condoning debts would help free up the rural land market, enabling agrarian reform beneficiaries to sell or lease their lands.
Regarding the benefits of the new law for farmers, Chikiamco, the Foundation for Economic Freedom (FEF) president, explained that the key consequence of the condonation is the ability to sell or lease.
He emphasized that this reform is a game-changer, facilitating farm consolidation through leasing.
Given Asia’s aging population and shrinking rural workforce, land consolidation becomes essential for optimal farm mechanization.
The condoned lands, formerly privately owned and subject to compulsory acquisition, are the most fertile and productive under CARP.
In contrast, the government-distributed lands are predominantly non-irrigated and less productive.
Additionally, the government lands face the issue of collective certificates of land ownership awards, as opposed to individual titles.
Moreover, the ongoing discussions surrounding the National Land Use Act specify that agrarian reform lands cannot be converted for non-agricultural purposes, preventing subdivision developers from encroaching on agricultural lands.
Farmers can also explore the option of pooling their lands through cooperative setups, although the success of cooperatives in the Philippines has been limited.
Nevertheless, consolidation through leasing becomes a viable alternative with the condonation law in effect.
Large corporations engaged in agricultural ventures prefer leasing over land ownership.
The need for farm consolidation, as highlighted by Toti, stems from various factors.
First, rural labor is becoming scarce as young men opt for higher-paying jobs in construction and other service sectors.
Second, most farmers are now part-time due to the minimal income generated from farming one hectare of land.
Third, the average age of farmers is approximately 55, and their educational attainment averages Grade 5.
Fourth, bigger farms allow for economies of scale.
Finally, larger farms are better equipped to implement biosecurity controls, such as preventing the spread of the ASF virus or avian influenza.
Agrarian reform farmers nearing retirement age can lease their land to earn income.
Alternatively, they can become farm laborers in larger agribusiness enterprises, receiving fixed salaries and additional benefits.
The next challenge lies in drafting the Implementing Rules and Regulations by the Department of Agrarian Reform.
These rules must refrain from suffocating the new law with excessive bureaucracy, as it would undermine the intention of significantly enhancing our ability to achieve food self-sufficiency.
Mr. Jaycee de Guzman is a self-taught agriculturist and the patriarch of Alpha Agventure Farms, the number one backyard farm in the Philippines. His experience in livestock farming is rooted back in the early 90s. Mr. de Guzman is a computer scientist, a digital marketing strategist, an equity analyst for more than 20 years.