CARP did more harm than good to farm sector, says economist

By: Karl R. Ocampo – Reporter, Philippine Daily Inquirer, 21 Aug 2020

The government’s Comprehensive Agrarian Reform Program (CARP) has triggered severe fragmentation of agricultural lands, ultimately disempowering farmers who do not have the capital to sustain production on their own while struggling to pay their obligations so they can get their land titles.

According to economist and national scientist Raul Fabella, the government lost as much as P340 billion in forgone farm production in 2019 due to CARP. He warned that the same amount of losses might be seen in the coming years.

The figure was computed by factoring in the sector’s contribution to the economy and the estimated potential losses brought about by the land reform law.

Based on a study, the program reduced the country’s average farm size by 37 percent and the average output per hectare by 17 percent, resulting in losses amounting to P340 billion.The land reform program was meant to empower farmers by giving them their own lands, but 22 years since it was enacted into law, the opposite has happened.

Without consistent distribution of support services to the beneficiaries, some of the landholdings that were given to ARBs (agrarian reform beneficiaries) were now being illegally leased out, while some became idle lands as farmers do not have enough capital to sustain production.

Under the law, land beneficiaries may sell their landholdings only after 10 years.

“The effect of fragmentation is really serious,” Roehlano Briones, senior researcher of the Philippine Institute for Development Studies, said. “A lot of the beneficiaries [of CARP] are delinquent payers and are held back by their debts to lease or sell their lands. If they want to use their lands for any transaction, they need to have clean titles.”

The enormous losses have prompted lawmakers to consider extending partial debt condonation to ARBs, which would enable them to have clean titles and allow them to either lease or sell their lands. This, in turn, presents opportunities for both the government and the private sector to venture into commercial crop production.

Fabella said the proposed measure would result in losses to the government amounting to only P58 billion, versus the potential gain from freeing up landholdings from CARP.

Currently, the ARBs’ obligations for the land transferred to them under the land reform law are slapped with an annual interest of 6 percent and should be paid in 30 years. However, only 17 percent of ARBs are paying their amortization, resulting in massive loan defaults.

Agriculture Secretary William Dar, who was the first secretary to institutionalize farm consolidation, was also receptive to the debt condonation proposal.

He stressed that debt condonation would allow land markets to operate with much ease, including the buying and selling of lands for agricultural purposes. However, the secretary also aired his reservations.

“[The proposal] should be accompanied by accelerated individual titling of lands still under Cloas (certificates of land ownership award), and there has to be an increase in land ownership retention ceiling to around 25 ha for economies of scale to be achieved by agricultural investors,” he said.

He added that the retention ceiling would “not result in monopoly ownership of land or landlordism, as certain quarters feared.

Federation of Free Farmers national chair Raul Montemayor said debt condonation would finally give land reform beneficiaries the freedom to decide on what to do with their lands.

“Some may sell their lands and distribute the money to their children. Others may just enjoy the money. Our farmers are already old. This could give them relief,” he said.