Factors Contributing to Conversion of Farms and Forest Lands

1. Historical Concept of Ownership and Property Rights

In a report to former President  Ferdinand Marcos regarding the need for a new land policy for the Bagong Lipunan (New Society) in 1974, for Minister Honofre D. Corpuz, in behalf of the Human Settlements Committee, cited the historical concept of land ownership dominating the frame of mind of the people in the Philippines as one of the main issues confronting the land and housing sector. According to H. D. Corpuz, deeply embedded in the minds of the Filipino people is the western notion about private ownership and property rights based on the concept of democracy. The people  believe that with the ownership of a piece of land comes the absolute right to do anything with it  as long as it is done within the physical boundaries of  the property. These absolute rights include the right of the property owners to use the land in any form they want, the right to sell it at any point in time and the right to do nothing with it if they wish so.  The lack of  policy to counter this “democratic” concept  resulted in the rampant  conversion of agricultural and ecologically-fragile lands to urban uses in those years .

As contained in the report, H. D. Corpuz  suggested that there is a need to reorient this historical concept of land ownership. While private ownership and rights should still be honored and highly valued in the Philippines, such rights should be made subordinate to the requirements of public welfare. This suggestion however took 4 years to become the principle behind the  issuance of Letter of Intent (LOI) No. 713 in 1978, which prohibited the indiscriminate conversion of agricultural lands to other uses, and  another 5 years to mutate into a more comprehensive policy, the LOI 1350, which provided for the creation of the National Land Use Committee or NLUC.

Skewed Land Ownership Pattern

The land-ownership pattern in the Philippines is highly skewed. The elite, which largely dominates  Philippine politics, owns and controls most of the lands in the country. These rich families inherited vast tracts of lands from their Spanish forefathers and have capitalised on their real-estate ownership to gain dominance in the society. As estimated by the Census of Agriculture in 1988 or the LISTASAKA I and II (cited in Cornista and Bravo, 1994),  the distribution of land ownership showed that only 0.18 percent of the landowners own 16.36 percent of the total agricultural lands. These are the lands more than 100 hectares in size which often are referred to as “haciendas”. The cumulative figure for farm sizes more than 24 hectares would be 1.45 percent of landowners owning almost 30 percent of the total agricultural area.  On the other hand, about 66.78 percent of the landowners own only 18.50 percent of the total area. These are the lands under the smallest farm size category of 3 hectares and below.

The decision to convert their lands for urban uses comes easy for these large landowners once the economics of rent-producing based valuation of land starts to lean to  their favor. Their livelihood is not reliant on the existence of farming, rather, their landholdings are most often devoted for speculative gains.

The land-ownership situation can be viewed in another way, which is by looking at the labor force involved. Of the say, 10 million labor force in agricultural sector, only 1.5 million are owner-operators and the rest are farm workers with no secured tenurial rights over the land they are tilling (Concepcion, 1992). In most instances, these dislocated farm workers and unemployed people opt to go and till fragile  upland resources (no matter how unsuitable and marginal the soil quality may be for farming) to provide for their basic food needs for survival. In fact, 30 percent of the total Philippine population reside and till the uplands, many of which are in protected, ecologically-sensitive areas (NPFP,  1992).

Again, in the absence of a clear policy to address the above-cited issues, conversion of agricultural lands to urban uses and conversion of fragile uplands to marginal farming uses occurred rampantly.

Biased Macroeconomic Policies

The economic vision for the Philippines 2000 is set forth in the Medium-Term Philippine Development Plan (MTPDP) for 1993-1998. The Investments Priorities Plan (IPP) was formulated, in turn, to help achieve the objectives of the MTPDP. The IPP aims to: a) produce globally-competitive export products; b) develop domestic-oriented industries that are competitive with imports; c) upgrade infrastructure and other facilities needed to support agro-industrial and regional development; and d) disperse industry outside the National Capital Region (NCR). In the light of the significant overall improvement in the country’s investment climate, the IPP continues to encourage the development of industrial estates.

Consistent with the IPP aims, the government likewise created the Philippine Economic Zone Authority (PEZA) in 1995 under Republic Act 7916, in order to provide the framework and administrative mechanisms for the creation, operation, administration and coordination of special economic zones which includes export processing zones, industrial estates, and technology parks. The principle behind the creation of PEZA  is:

The government shall actively encourage, promote, induce and accelerate a sound and balanced industrial, economic and social development of the country in order to provide jobs to the people especially those in the rural areas, increase their productivity and their individual and family income, and thereby improve the level and quality of their living conditions through the establishment, among others, of special economic zones or ECOZONES.-Republic Act 7916

The above development principle assumes that the upliftment of the quality of life of the rural populace can be  achieved by the establishment of manufacturing and processing industries, indicating the bias against agriculture and the environment.

After the Philippine government committed itself to  the principles of sustainable development in the United Nations Commission for the Environment and Development (UNCED) Conference in 1987, the  natural and environmental quality problems have been supposedly elevated as a concern in the hierarchy of national goals. However, the  bias against agriculture and natural resources is still present as great emphasis is still assigned to the policy objectives of growth and development, promotion of exports, and others. With this, O’riardan’s (1976, cited in Remigio, 1995) graphical depiction of national policy priorities and objectives of countries still holds true.

Population Pressure

The growth rate of the urban population in the Philippines has, since 1948, been higher than the rural population but the difference in the two growth rates has risen substantially in 1960s. The National Statistics Office (NSO) data showed that from the 1960s to the 1990s, urban population has grown at an average of 4.3 percent while rural population has been decreasing at an average rate of 1.64 percent.

Official data would show that the rural population decreased from 68 percent (25 million) of the total population (36.7 million) in 1970 to 63 percent (30.1 million out of  48.1 million) in 1980. In 1990, it further declined to 51 percent (31.5 million out of 60.5 million).

Based on the 1990 census, Metro Manila reached a population density of 12, 466 persons per square kilometer, 60 times the average density of the country which is 202 persons per square kilometer (NPFP, 1992). This rapid increase in population exerts tremendous pressure on the finite land resources of Metro Manila and the surrounding provinces. Simultaneous with the population boom is the increase in demand for land to be devoted for urban uses and services such as residential, transportation networks, commercial and industrial sites and others. The pressure naturally pushed growth to spillover to the provinces bounding Metro Manila, hence the unwarranted land-use conversions.

Non-viability of Farms

Non-viability of farming operations is not limited to those farms located in unproductive and marginal areas. Even those farms located in prime agricultural soils  can still run into massive losses due to several natural factors such as natural calamities like typhoons wiping out crops, locusts and other infestations, and drought. However, other factors may exacerbate the situation:

Lack of access to government credit facilities. According to Floro (1987),  some small farmers are forced to  borrow money from trader-lenders who attach tie-in conditions to the loan (locally referred to as tampa). The condition requires farmers-borrowers to sell all their marketable products to their lenders at the price stipulated by the lenders. In many cases, this gives the trader-lender an opportunity to underprice the farmer’s output. The traders-lenders then can sell the products to the government marketing agency, the National Grains Authority or NGA at guaranteed floor prices. Anecdotal evidence gathered by the Department of Economics of the University of the Philippines at Los Banos showed that farmers tend to approach the traders or middlemen when selling their produces because these people pay in cash whereas the NGA would pay in cheques, prompting them to wait for a couple weeks for clearance time.

Lack of infrastructure services and facilities. In some instances, the lack of post-harvest facilities such as reliable storage systems can cause losses to farmers, especially those specialising in highly perishable farm goods such as vegetables and fruits.

Changes in  prices of commodities. General prices may increase drastically so that the price of farm products sometimes can not keep pace with the rise of farm inputs and thus there is a net decrease in farm real incomes. Moreover, changes in world prices could  make prices of farm products fall to  alarmingly low levels. The net effects are  low income for the farmers, their subsequent inability to increase their savings and the stagnation of their purchasing power (Concepcion, 1992).

The culture of  poverty. While poverty exists in both urban and rural areas, the problem in the Philippines is predominantly one of rural poverty. According to the World Bank Development Report in 1990, the percentage of the poor living in the rural areas in the Philippines is about 70 percent. Majority of rural poor are farmers tilling small holdings and marginal lands. Small farm holdings (below 3 hectares) account for about 40 percent of all farms in the country  (Quibria, 1993) and because of the limitations imposed by size,  these small farmers tend be operationally inefficient, which finally lead them to the harsh decision of giving up farming.

According to Remigio (1995), the culture of poverty in the Philippines likewise ensured  the inexorable application of short-term survival logic by the poor rural majority who pursued livelihood opportunities that tended to destabilize further many ecologically-sensitive upland areas.

The Impermanence Syndrome. It may not be only the economics of size that lead small farmers to be operationally inefficient. Concepcion (1992) cited that farmers in the peripheries of urban areas likewise experience insecurity similar to that termed as  “impermanence syndrome” (Bunker and Houston, 1992). This phenomenon, which is also recognized in the United States (Nelson, 1990 cited in Bunker and Houston, 1992) tends to cause farmers  not to invest fully on the sustenance of their operations e.g. fertilizers or crop rotation, because they believe that  sooner or later, they would be swallowed by the rapidity of urbanization that is taking place.

All of the above-cited factors contribute to the farming predicament. They have a singular effect on farm operations and that is the weakening of the economic viability and financial standing of the farms, making them very prone to the pressures of urban encroachment.