How to Help the MSMEs post-Covid19

It came out on April 11, 2020 at the GMA News Online website that House Ways and Means Chairman and Albay 2nd District Representative Joey Salceda proposed a P45-billion wage subsidy scheme for some six million workers in micro, small, and medium enterprises (MSMEs) hit by the Luzon-wide enhanced community quarantine.

The lawmaker, citing his note to the President, said that a payroll support program would likely be necessary to support MSMEs that faced liquidity issues in the wake of the enhanced community quarantine “as well as their workers, who are at risk of being terminated if these MSMEs are unable to pay their wages and maintain operations.”

Well, that and/or the BIR to refund to the MSMEs their prepaid taxes that have accumulated in the hands of BIR as excess withholding taxes (WHT). These monies are actually booked as assets in the MSMEs balance sheets, but they cannot use these financial assets because it is hard to refund them from BIR. The liquidity will help in the post-Covid19 recovery of MSMEs, so it should be seriously considered. Doing this veers away from dole-out, and cleans up the accounts payable of government to MSMEs. 

POST-COVID19 - THE URBAN PLANNER’S ANGLE TO THE TWIN PUBLIC HEALTH CRISIS-ECONOMIC CRISIS DILEMMA

As an intermittent economist and spasmodic physical/urban planner, I keep thinking about how our country can be cushioned from the massive economic slump that awaits us at the end of this fight against Covid19. As I discussed last time, our government is giving priority to public health solutions, and rightly so. But we know that we are likely in a situation now where the cure can just be as painful (or deadly) as the disease, figuratively speaking. A prolonged lockdown will slowly kill our economy, unless we find ways to keep it grinding.

What gives me hope is that we are an archipelago. Our islands are natural enclaves, and many have, through the years, developed some degree of self-sufficiency especially those that continue to be literally off-grid (power-wise), and still grographically separated even with the advent of transportation technologies.

I keep mentioning this word: enclaves, because this is a key, operative word in our recovery. Enclaves can be islands or areas that have enforcible boundaries like SBMA, or Clark, the peninsula of Bataan, the mountain city of Baguio, the Northern end point of Cagayan (Sta. Ana), etc. Enclaves are useful both in 1.) keeping Covid19 out, or 2.) trapping Covid19 in, depending on the situation of the enclave.

Let me cite a specific example, and let me use my home province Catanduanes, for this purpose. According to news it had one suspected case, a man who apparently boarded a bus from Pasay to Virac, and died of heart attack in the hospital from 3 weeks ago. But since then no one else has been deemed a suspected case, so it appears that the Island Province is clean of Covid19 (good for the sake of this example).

If the LGU of Catanduanes bites the bullet it can choose to implement a full lockdown with a policy to create an enclave to keep Covid19 out. They have to shut down their ports and airports from the rest of the country. They have to feed themselves out of what they have. They can fish, they can plant staple food, they can nurture their own animal farms, and so on. They will have no hotdogs, sardines, pack of noodles, chocolates, etc. So they will have to eat healthy food for a change (bit of levity there). But they also have to care for their own sick for the time being, so they will have to rely on homegrown, in-situ healthworkers.

These enclaves will be like small economic engines that will keep grinding while the big engine is unable to run efficiently. They must endeavor to produce surpluses so they can send them out. In the case of Catanduanes, out to the Bicol Region thru Albay or CamSur.

Meanwhile, upon success in flattening the local curve (19 cases today), the Bicol Region can also isolate itself from the rest of Luzon by agreeing with Quezon about creating a well-managed checkpoint at the border of Calauag, and closing its port in Sorsogon from entry of people/goods from Allen, N. Samar. Masbate as an Island can do the same as Catanduanes. On the other hand, the whole Island of Samar can also group together (Northern, Western and Eastern Samar) and create an enclave by closing off the port in Allen, the San Juanico Bridge, and other trading ports towards CARAGA. But I digress.

Later, the whole Bicol Region can regroup and create synergy so a larger regional economic engine can be made out of the smaller provincial engines.

The same can be done for Peninsular Bataan, which can regroup with SBMA later. Region II can isolate itself by closing off Claveria from Ilocos Norte and by making a checkpoint/barrier somewhere in Nagcarlan and in Kayapa (where the Ambuklao Road from Baguio/Benguet connects with Nueva Vizcaya). Baguio City will have to close off Kennon Road, Rosario-Pugo/Marcos Highway and Naguillan Road. Ifugao needs only to close off the road from Bagabag, I think.

Other places like Bohol, Guimaras, Panay Island, Mindoro, Sta. Ana, Cagayan, Aurora, the Bondoc Peninsula, etc. can also create their own enclaves and like the Catanduanes example, focus on food production and export surpluses to the Covid19 hotspots/provinces without any intention of importing.

By now you would have already figured out that the policy of creating enclaves is not just a public health policy, but is also about creating food production centers to keep feeding the country, to keep producing raw materials, to keep creating surpluses as economic fodder for the larger economic engine and keep it from running into the ground. These enclaves will also be able to keep their purchasing power, and lead the consumption-based path to full recovery once the Covid19 is eradicated.

In Metro Manila, the goverment should pass a strict policy to allow Covid19-free natural enclaves like gated subsivisions and condominium complexes to disallow any move-ins without risk of being hauled to court. People should stay where they are right now and not move residences. Hotels should be commissioned to house healthworkers, with full cost charged to government’s account. They should not be going home to residential areas everyday and put the lives of their families at risk. They should not waste time commuting while they can use the time better by resting in hotel rooms. They are “prized possessions” of the country and must be kept in tip-top shape. Meanwhile, hotel workers should be treated as frontliners and should also be housed in the same hotels until the outbreak is contained.

There are aspects to the problem at hand that can benefit from the physical/urban planning profession, and we have high-caliber planners here, say, from UP-SURP. We should get some of those guys into the TWGs that feed policy ideas to the IATF.

My 2 cents.

Covid19 - Raising Funds for the Social Amelioration Package

Since we have been told that government”s cash position is low, we need to pitch in ideas on how to source funds for the social amelioration package. I recall there apparently is an unpaid Php50B taxes from POGOs. Now may be a great time to issue collection notices for it, so government can borrow Php50B more from Bangko Sentral against that AR.

Covid19 Lockdown - Government can do Gamification

As the key is still to keep people in their houses, I am reposting this mindmap to mention that a small box in here says “GAMIFICATION”. It means that government can use elements of game-playing on national TV to keep people at home because they have to read codes flashed on the TV screen to confirm that they won. The prizes can be from government or from private companies, and TV personalities can be asked to volunteer and host these “games”

Covid19 Pandemic: The Twin Public Health-Economic Crises Dilemma

By now, many of us are already aware that there are 2 kinds of crisis we are facing: a public health crisis and an economic crisis. And there is an inverse relationship between the effects of available solutions to combat Covid19 as a public health crisis and the looming economic crisis. That means, obvious solutions such as social distancing, total lockdown/community quarantine, etc. are the right medicines towards the public health crisis, but will put a lot of pressure on the economy as these measures slow down the whole economic machine. The dilemma lies in the fact that government needs to keep collecting taxes as it needs to fund with cash the social amelioration package that it needs to effectively roll out to keep people out of the streets. But as there are no economic activities, what is to tax? It can of course borrow from the public l thru bonds or from Bangko Sentral as IOU, or borrow from IFIs. Whatever government does, it has to somehow try to keep the economic engine running lest it grounds to a full halt.

While on lockdown, people will still need to eat, so they need to buy food, medicines, and other basic needs like utilities. With the social amelioration package they will have some purchasing power. The problem however is that the lockdown’s physical aspect cuts off food producers from consumers. It also cuts off raw material suppliers to food manufacturers, and prevents medicine and other basic stocks from reaching the shelves. It can also prevent coals from reaching power plants, although the renewables will keep producing power albeit intermittently, i.e. hydros will keep running as long as rivers do not go dry come summertime. There is also an effect on mobility of workers in food production, manifacturing and in the various utlity subsectors. So the efficiencies will also suffer.

The key to break the impasse is for government to be more creative. That is, to try to impose the public health solutions but creatively keep the economic machine running even just on low gear. Now, it easier said than done, so I will try to give a few concrete examples:

1. Create “food highways” out of the armed forces. One of the scares often cited by exponents of full lockdown is that our citizens do not have the discipline. But the soldiers are our most disciplined lot. They will wear PPEs when told. So let them be our transportation backbone. Anyway, this is, by all definitions, a war. 

2. Healthworkers should work and many if not all will work, but they need mobility in order to work. Moreover, suppliers of PPEs need to also keep making their products continously. Government can create a PNP P2P transport system for both. Let our cops drive police cars and motorbikes to ferry healthworkers (wearing proper PPEs). And also transport PPE supplies and donations. 

3. Supervise private food/medicine/basic goods manufacturing companies in the creation of sterile workers enclaves. These enclaves are like free accommodations for workers that are shielded from possible viral contamination by ensuring no interaction with the “outside world”. This concept can be done also for construction camps so infra projects can continue especially in places that are far from Covid19 hotspots. 

4. Government should focus on cordoning off hotspots so the public health policy can slowly shift from full lockdown (keeping the virus out) to trapping the virus transmission within enforceable borders (keeping the virus in) so that the rest of the country can reclaim normalcy. 

5. Needless to say, supermarkets, groceries and banks need to be open. So workers/employees for these services should continue to work. But government needs to give guidance to supermarkets and grocery stores to hire people based on closest proximity to avoid long commutes. Hire people from next door. Banks should shuffle staffs so that they are reporting to the branch closest to them.

Any more creative ideas?

The New Normal in Post-Covid19 Era

Two buzzwords will be trending in a couple of months from now.:"New Normal," which is not that new, and "Post-Covid19," which is a novel word. :-) Let me try to use both.

Businesses will now be more attuned to working from home (WFH) for certain activities, especially now that they have an ample dry run during the ECQ, and now have the knowledge and experience as to what will work and what will not.  Bonuses will also shift from cash to faster internet/wifi connections at home,to ensure that employees are investing bonuses towards better resiliency. Home offices might even become fully-funded by employers.

Consumers have also tried and tested which online and delivery companies are reliable and resilient during crunch time. They also became aware of the heartaches that come with wrong deliveries, billed-to-credit-card-but-not-sold-out woes, and the list goes on. They would have become online-buying savvy already, and why go back to the old ways if one can have groceries delivered to his/her doorstep without having to interrupt online yoga.

As there will be a new normal for businesses and consumers, there should also be a new normal in government, especially in the aspect of national budget allocation. Obviously, in the post-Covid19 era, we should be ushering in a new normal of giving public health the lion's share rather than the current bias towards intel funds. Governance concepts will have to be revisited, and questions whether senators are expected to do repacking of goods during crisis will have to be answered by candidates. 

Ah. Ms. Universe Q&A will definitely go into a new normal as well, Gone are the days wherein any answer bordering on the essence of a woman will win the crown. The Ms. Universe will now be expected to have knowledge of the science of viruses, the dynamics of human-to-human transmissions, and  data analytics towards flattening the curve.

Post-Covid19 Recovery Planning

I will hazard a guess that a new PPP format of infrastructure investments will be our path to recovery post-Covid19. FDR's New Deal in the US worked before as a purely government-led undertaking, and it worked. But government this time will be hard-hit and will have empty coffers.

Big businesses will lead but the middle class which holds a significant amount of savings when pooled together will form new infra companies, and entering into a new PPP format construction deals will help us bottom out. This will fuel grassroots employment, restore buying power and kickstart a consumer-led, consumption-based upswing in GDP. This is my fearless forecast.

The key therefore is for the NEDA and the PPP Center to be creative in putting together a new, out-of-the-box PPP contractual deal that will attract the middle class to invest.  It is not impossible to put together, just a matter of forward-thinking, given the pressures of the current situation.

Here is one idea. New companies can enter into LGUs to do PPP projects, using the net present value of future taxes as the LGU's counterpart in the PPP venture, a case of securitizing future income from taxes. So, the future tax is the LGU asset to be securitized (backed by LGU Board Reso of pre-allocation of IRA, for example), and there is only one borrower (the LGU) and there is only one taker/investor (the business). The sticky part is agreeing on a discount factor.

The LGU becomes a part owner of the infra business, and gives stability to the deal because it will have to rest its future income from the success of the business rather than a fixed tax on both property and income of the business.

It will work. Government simply needs to provide the enabling policy.

 

Political Dynasties

Family dynasties had always been in the Philippine political landscape, taking its roots from the aristocratic families during the Spanish and American period.

I heard from a very credible source that by 2040, 70 percent of the Philippines' local government units (LGUs) could by dynastic in the political sense. Whoa. The same source quoted an AIM study citing that today, the LGUs are already close to 50 percent dynastically governed. History will tell us that political dynasties  are directly proportional to the poverty situation.

What happened to Senate Bill 2649, the Anti-Dynasty Bill filed by the late Senator Miriam Defensor Santiago? It was supposed to give flesh and teeth to the principle enshrined in our  1987 Constitution of the Philippines, which states in Article II Section 26, that "The State shall guarantee equal access to opportunities for public service, and prohibit political dynasties as may be defined by law."     

The Urban Design Planner as a Key Player in the Urban Development Process

Wooley (1985) indicated that architects are vital players in the  planning arena because they can use  figures,  drawings and other visual aids as a means of thinking through seeing. In  the same manner, the urban design planners are the  ones who can effectively connect the concept of beauty  (aesthet­ic) with usefulness (practicality), and structural integrity (engineering)  with other positive attributes essential to a satisfactory  physical environment e.g.  robustness,  perme­ability,  etc. (responsiveness). These are interlinked  con­cepts,  and the achievement of a good balance of these  con­cepts  is  vital  to the success of  the  urban  development plans.

According to Bentley, et.al.  (1985), structures and  spaces should  offer its users a wide array of choices in order  to maximise  their benefits. The built environment should  pro­vide  its  users  with an  essentially  democratic  setting. Again,  among  all those involved, it is  the  urban  design planner who is the most capable one in ensuring this  aspect given his background discipline.

A  good  urban design planner does not strictly  need  well-honed skills in design analysis. But he/she certainly has to know  what  to look for and what questions  to  ask.  He/she always  must  recognise that  there  are  limits  to his/her  own experience and outlook and  therefore,  working  with  others  and consultations with those  whom  the  urban design  and plans are intended for  will always have  better results  in  terms  of responsiveness.  Working  with  other players too is important. Moreover, they must go out and  be in touch with the reality that is happening outside of their office. What is learned in the four corners of the classroom should  be  supplemented  with hands-on  experience  in  the field. That "experience is the best teacher", is true.

Urban Design as a Continuous Process

  An Environment that cannot be  changed invites its own destruction.  We prefer a world that can be modified progressively against  a  background of valued remains, a world in which in which one  can  leave  a  personal mark alongside the marks of history.

            --Kevin Lynch, “What Time Is This Place?”,  cited  in  Roberta  Brandes

            Gratz’s “The Living City”.

Similar  to what modern urban planners had repeatedly  advo­cated  that  the  practice of  planning should  continually evolve as a process,  Alexander  (1987) pointed out that urban design  should  be likewise.  To such a notion, Jackson (1972) added that:

"the city of tomorrow   is  something  which  is   slowly  and   continuously created. It may contain new ideas  new  thoughts,  but  it  is   not  a  new creation because of the process of continuity and through the regular addition and frequent amendments to an  existing  urban  fabric... The  future  exists  in  the  city of  today,  and   as the circumstances of today move forward inexorably into the city of tomorrow,  society can if  so  wishes  bend, control, direct and lead the city as it now exists towards its horizon”.

Consistent with  the above  is  what Shirvani (1985) emphasized that urban design extends in both time  and space and therefore, the solutions put forward  by urban design planners must not only respond to the needs  of the present but should also be able to foresee the needs  of  the  future,  and,  the solutions developed  to  respond  to issues  in  one place can be used only as a basis  but  will need  to be reconfigured to fit the unique  requirements  of another place.  This, in essence points towards the  concept of sustainability.

The key to sustainable urban design is responsiveness  (with due  reference  to  the concept  of  responsive  environment propagated  by Bentley, et.al., 1985), that is, to draw  designs  not too constrained as to just respond to a  specific need  of a specific individual or a homogeneous group  at  a specific  time but rather should be flexible and generic  as not to be exclusionary and time bounded.

The  exclusion of other groups does not only happen  because walls  were built or gates were installed. Often, the  built form  can exclude people by not being able to  resolve  conflicts between car and pedestrian, by not being  considerate to the needs of the disabled, and by imposing too much order and neatness. A pitfall to an urban design  planner who  had been car-dependent all his life is to design something which will  tend to be pro-car. Moreover, without the prodding  of more  sensitive people (who normally would be  our  everyday citizen and   not  those who are in the saddles of power),  a  physically-able urban design planner can tend to disregard accessibility for those who are physically impaired. Being exclusionary often  is not intentional. It becomes a tendency as  may  be dictated by how far one has gone and how many cases one  has seen. It is like an economic consultant who has not gone  to other countries and experienced the realities of life  there but is prescribing solutions to their problems. That is  why ,an   urban  design expert, to really be  effective  in  his craft,  should go out of his office and look  around,  feel, and  if  necessary, suffer from the common  people's  standpoint. This is what sociologists would term as the  participatory approach to sociological research wherein they go out and be beggars in the streets in order to analyse the situation  of street people in the social fabric. The  importance of  the information a professional planner can gather  while being really there is incomparable and can not be learned in the  classroom.  This bit of knowledge, combined  with  what others  have  discovered on their own can make up a  set  of realistic  objectives which the group can aim to fulfil  as they draw the design and build things from the ground.

It is important to bear in mind that what makes a  structure essential is its usefulness in the public realm. A structure with  maximized accessibility and permeability can  sustain­ably  be useful because of the very fact that it  does  not create  nuisance  to everybody, and it does not  just  serve only  a selected few. It does not hamper  people's  movement but  rather, it can actually aid them. As regards usefulness over time, the concern is not just  to secure  the physical integrity of the structure  (resistance to  earthquake, typhoon-proof, and so on) but also  to  make the design flexible so that it can easily be altered to suit changing  needs.  A  house may need to be  enlarged  as  the family grows, a wall may need to be knocked down, or a  room may  need  to be converted to a home-office.  A  sustainable design  can foresee all these probable needs in  the  future and  can  provide for them in the current format. In  buildings,  the sustainability of usefulness may be provided  for by considering access, building depth, height, hard  (lifts, stairs,  vertical service ducts) and soft areas, and  active and passive areas. Organizing the inside of the building can give  rise  to robustness, it being  the  characteristic  of being  able  to offer many different uses/purposes   to  its users  (Bentley, et. al., 1985).  Again, urban design  planners  can have a very limited view about what would  be  the future  needs of the family occupying a certain  house.  The limitation  can  be  caused by the extent of  what  one  has experienced  with his/her own family, for  instance,  he/she grew  up in a nuclear family and would fail to envision  the needs of an extended family).

To reiterate, because urban issues evolve, the expertise and knowledge of urban design planners should likewise do so. To be  able  to plan and design in a continuum,  they  have  to accept that learning is also a  process and ideas will  have to be kept up-to-date with the changing urban setting.

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.