IDEA agriculture land reform IDEA RESTRICTIVE conditions set by past agrarian reform laws have prevented farmers from reaping the full benefits of land ownership, according to a group of economists.
According to the Institute for Development and Econometric Analysis, Inc. (IDEA), ample credit remains beyond the reach of agrarian reform beneficiaries (ARBs).
“The presence of a bank facilitates spending through credit [and in turn] spending facilitates growth in a region, province, or town. But this growth may not be inclusive because there may be sectors left behind, especially those who were not able to access credit, “IDEA said.
“The banking industry is hindered by our flawed agricultural and agrarian policies,” the group said.
More than four decades since land reform was first implemented nationwide by the late President Ferdinand E. Marcos, Sr., the government has distributed several million hectares of agricultural land to more than two million farmers.
Following Marcos’ ouster, his successor, Corazon C. Aquino, pushed for the passage of the Comprehensive Agrarian Reform Program (CARP) as her centerpiece social-justice program. The enactment into law of the CARP came more than a year after the fatal shooting of 13 farmers holding a protest rally several meters away from Malacañang on Jan. 22, 1987.
The fatal shooting was dubbed the “Mendiola massacre”, whose 30th anniversary falls on Sunday.
In 2009, President Gloria Macapagal-Arroyo successfully pushed for the extension of CARP, which was renamed CARPer, in line with RA 9700, or the CARP Extension with Reforms Act.
In 2014, the CARPer Law expired after President Benigno S. C. Aquino III failed to push for a second extension of his late mother’s centerpiece program.
Latest data from the Bangko Sentral ng Pilipinas showed that only P29.98 billion or 0.96% of loans in the Philippine banking system went to ARBs, a very small percentage compared to the 10% minimum quota set by the Republic Act (RA) 10000 or the Agri-Agra Reform Credit Act of 2009.
“The limited size of the land owned by the farmers does not help entice the banks to lend to them and it would be imprudent for banks to put their depositors’ money at risk,” IDEA said.
Agrarian reform programs — from Marcos’ Presidential Decree No. 27, s. 1972, to RA 6657 and its extension, RA 9700 — cap land distribution to a maximum of three hectares per ARB.
Landowners, on the other hand, may only retain up to five hectares. IDEA cited several reasons why such an arrangement is a disincentive to bank lending.
“Firstly, these can’t be transferred or sold within 10 years from award, so banks can’t foreclose on them and transfer their titles to them. Secondly, the Landbank (Land Bank of the Philippines) has prior lien on these properties on the basis of the amortizations that farmer beneficiaries must pay Landbank. Thirdly, the market for foreclosed CARP lands is limited since by law, it can only be sold to qualified CARP beneficiaries.”
Farmer beneficiaries shall pay for their land in 30 annual amortizations to Landbank at 6% interest per annum. Meanwhile, if a CARP beneficiary wants to sell or transfer a landholding within the 10-year lock-in period, the only eligible recipients are the spouse or heirs, another qualified beneficiary, or the State through Landbank. After 10 years, the land may be sold to the State or to an individual qualified under CARP, who owns not more than five hectares of agricultural land and must be a direct cultivator.
“Moreover, the fact that the majority of CLOAs or Certificate of Land Ownership Awards are still collective (i.e. not broken down into individual parcels) prevent farmer beneficiaries from accessing credit on an individual basis,” IDEA said.
So far, around 4.7 million hectares of agricultural land has been distributed by the Department of Agrarian Reform to 2.2 million beneficiaries.
Between 1972 and 2015, the agriculture, forestry, hunting and fishing sector’s annual output, as measured by gross value added, has grown 157% but their share of the country’s gross domestic product contracted to 9.5% from 19.6%.
To encourage lending in the rural sector, IDEA suggests amending the Agri-Agra Credit Act while at the same time, addressing property rights restrictions on rural land.
“Allowing the farmers to own lands the size beyond the set ceiling is one condition. There will then be demand from these qualified borrowers with their bankable assets,” IDEA said.
“Another condition is that banks should not be required to hold the foreclosed properties up to five years, as required by the Agri-Agra Law, to make whatever bankable assets the farmers have less risky for banks to accept as collateral.”
— Jochebed B. Gonzales To encourage lending in the rural sector, IDEA suggests amending the Agri-Agra Credit Act while at the same time, addressing property rights restrictions on rural land. — AFP
