Final Report

LAND FOR FOOD OR FOR SHELTER?

REVISITING THE MORATORIUM ON LAND USE CONVERSION
Report submitted to the Subdivision and Housing Development Association (SHDA)
Roehlano M. Briones, Ph.D.
Senior Research Fellow, Philippine Institute for Development Studies
December 9, 2016
Summary
The Philippines is now grappling with a housing backlog of an estimated 5.7 million units.
Scarcity of land contributes to the high cost of housing and dampens investments in real
estate development. However land has other uses, such as food production. A moratorium on
agricultural land use conversion (LUC) is being proposed to safeguard food security. Such a
moratorium will further reduce amount of land for housing. Previous studies uncover an ageold debate on the pros and cons of LUC. Economic studies typically favor LUC to meet
housing and other land use demand. The Philippines has actually managed to consistently
increase food production and area harvested since the late 1980s, despite on-going approval
of LUC, which has reached a total of 152 thousand ha by 2015.
Fears of the negative impact of LUC are based on the displacement model, which posits a
maximal trade-off with agricultural land use: that is, each unit LUC will reduce agricultural
area by the same amount, and reduce total agricultural output by the food output that would
have been obtained from the converted land. The evidence though does not bear out the
displacement model. Instead, the study shows that a more suitable model for understanding
the impact of LUC is the reallocation model. In this model, the trade-off is not so sharp:
instead, the production in the countryside adjusts to LUC in urban and peri-urban areas.
Simulation analysis shows that even a large area for LUC enough to eliminate the
socialized housing backlog will not seriously undermine the countrys food security.
Nonetheless, even if the most extreme version of the displacement model is posited, benefitcost analysis shows that a blanket disapproval of LUC will likely inflict a net loss on society.
The reason is that peri-urban land, suitable for alternative use, e.g. low-cost and socialized
housing, generates a much huger benefit to society on a per ha basis, compared to even staple
food production.
The existing legal and regulatory framework, which reviews each case on its merits,
combined with competent regulation, offers adequate safeguards against excessive LUC. A
government-imposed moratorium will only undermine achievement of other equally pressing
goals of society, such as shelter for all. The proposed LUC moratorium should be discussed
within an institutional framework already in place - where multiple stakeholders are able to
present their views. Government should activate and capacitate its existing institutions for
reconciling the unavoidable trade-off between food and non-food uses of land.

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Acronyms
AFMA
AMPLE
ARMM
CALABARZON
CAR
CARL
CARP
CARPER
CI
DA
DAR
DENR
DILG
DOE
DOJ
DOST
DOTC
DPWH
FAO
HLURB
HUDCC
LUC
LUCD
MIMAROPA
NB-NLUC
NCIP
NCR
NEDA
NFA
NIPAS
PDP
PSA
QR
RLUC
SHDA

Agriculture and Fisheries Modernization Act

Agricultural Multi-market Model for Policy Evaluation
Autonomous Region in Muslim Mindanao
Cavite, Laguna, Batangas, Rizal, Quezon
Cordillera Autonomous Region
Comprehensive Agrarian Reform Law
Comprehensive Agrarian Reform Program
CARP Extension with Reforms
Cropping Intensity
Department of Agriculture
Department of Agrarian Reform
Department of Environment and Natural Resources
Department of Interior and Local Government
Department of Energy
Department of Justice
Department of Science and Technology
Department of Transportation and Communication
Department of Public Works and Highways
Food and Agriculture Organisation of the United Nations
Housing and Land Use Regulatory Board
Housing and Urban Development Coordination Council
Land Use Conversion
Land Use Conversion Division
Mindoro Occidental, Mindoro Oriental, Masbate, Romblon, Palawan
NEDA Board - National Land Use Committee
National Council of Indigenous Peoples
National Capital Region
National Economic Development Authority
National Food Authority
National of Integrated Protected Areas System
Philippine Development Plan
Philippine Statistical Authority
Quantitative Restriction
Regional Land Use Committee
Subdivision and Housing Development Association

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List of Tables and Figures
Table 1: Area harvested by crop, Philippines, 1990 2015 (000 ha) ....................................... 7
Table 2: Self-sufficiency ratios of main crops, Philippines, 1990 2015 (%) .......................... 8
Table 3: Summary of multiple regression results for regional variables ................................. 11
Table 4: Summary of multiple regression results for ............................................................... 12
Table 5: Results of a simulation analysis on the impact of 30,000 ha land use conversion,
2012 2014.............................................................................................................................. 14
Table 6: Discounted benefits and costs, different uses of one ha land, 2015, in pesos (discount
rate = 6%)................................................................................................................................. 17

Figure 1: Estimated cumulative housing need by 2016, by region (in 000 units) .................... 5
Figure 2: Cumulative area of approved land use conversion, 1988 2015 (ha) ....................... 6
Figure 3: Cumulative area of land use conversion in ha, approved by Central Office, by
region, 1988 - 2015 .................................................................................................................... 6
Figure 4: Area of arable land and permanent crops, Philippines, 1987 - 2012 .......................... 7
Figure 5: Cumulative approved conversion area, and area harvested for rice, Regions III and
IV-a (ha) ................................................................................................................................... 10
Figure 6: Land area (ha) and palay production (tons), irrigated rice, 1990 2015 ................. 12

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1. Introduction
The Philippines is now grappling with an estimated housing backlog of 5.7 million units.
Scarcity of land contributes to the high cost of housing and dampens investments in
expanding socialized and low-cost housing. However land has other uses, most prominently,
as input to food production. The Secretary of the Department of Agrarian Reform (DAR)
provided a draft Executive Order (EO) declaring a moratorium on land use conversion
(LUC), to assure food security. The President has yet to sign the draft EO. Such a policy, if
enforced, will further restrict availability of land for housing.
Protecting agricultural land, including land in and near urban areas, does have food security
benefits; however such benefits should be weighed against the foregone benefits from
meeting the countrys need for shelter. The alternative is to permit responsible LUC in urban
and peri-urban areas, thereby realizing benefits from increased availability of land for
housing.
This study assesses the potential impact of a moratorium on land use conversion. Specifically
it undertakes the following:
1. Compile official data on land conversion (most recent available);
2. Examine the impact of land conversion on the following:
a) Annual area harvested of rice, using statistical analysis;
b) Physical rice farm area, using statistical analysis;
c) Food security variables such as consumption and production of food, especially
rice, using scenario modeling;
3. Comparison of benefits from food (rice) production and housing;
4. Evaluation of policies for the protection of agricultural land and the consistency of
land conversion moratorium with these policies.
2. Context
Previous studies
Previous studies highlight the debate on the pros and cons of agricultural land conversion,
with economic studies typically on the positive side.
The Philippines began to define policy and data and LUC from the commencement of its
Comprehensive Agrarian Reform Program (CARP) in 1998. From the start, land conversion
was viewed negatively from the perspective of political science and related fields. A
prominent example is Kelly (1998), which strongly highlights the negative aspects of
conversion. Based on case studies for a town in Cavite, a province in Southern Tagalog
region near Metro Manila, he concludes the following:

National data for an urbanizing town underestimate based on legal conversion

underestimate actual conversion by nearly half; irrigated rice land accounts for almost all
the total conversion;

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Food security is compromised as conversion to land leads to greater dependence on

Local politicians exert considerable control over land conversion;

Landowners are able to persuade tenants to relinquish their tenancy rights mainly through
disturbance compensation.

Contrasting with this political science analysis is economic assessment. One of the first
studies in this vein is Cardenas (1998), which also focuses on Cavite, over the period 1986
1994. He finds the following:

Legal conversion accounted for about 10 percent of the total stock of agricultural lands in
the province;

Most of the conversion (95 percent) occurred in rainfed areas (in in sharp contrast to the
finding of Kelly);

Benefit-cost analysis implies that agricultural land conversion was financially and
economically justified. The finding is robust to changes in the discount rate, time horizon,
and varying combinations of agricultural land use in converted areas.

The last time a moratorium was seriously pursued by DAR was in 2008 during a rice crisis. A
previous study by Briones (2008) showed however that a moratorium will have negligible
benefits for rice farming and food security. On the contrary, it will have a much larger
adverse impacts in terms of foregone benefits from expansion of socialized housing. His
statistical analysis shows that annual area harvested (1987 2007) is apparently unaffected
by land conversion trends. Likewise, benefit effectiveness analysis suggests that the same
hectare can meet the shelter needs of a much larger number of poor households compared to
the number of households that can be fed from the same ha of rice.
This study extends Briones (2008) by using more updated data (to 2015), and including
analysis of farmed area in addition to area harvested. 1 Moreover, impact of agricultural land
conversion is analyzed by developing scenarios for area harvested, production and
consumption, with focus on rice. New analysis based on the economic criterion is
implemented using benefit-cost analysis. Finally, the study will also focus on assessment on
LUC policies based on existing laws and policies, and the consistency of the land conversion
moratorium with these laws.
Trends in housing development
The country faces a massive and worsening housing backlog especially among low income
households.
Magtulis and Ramos (2013) estimated housing backlog of 1.225 million as of the beginning
of 2011, which is close to the estimate from the Philippine Development Plan (PDP) of the
National Economic Development Authority (NEDA). The PDP estimates the housing backlog
by 2016 to reach 5.7 million units. The largest magnitude of need of course is in the National
Capital Region (NCR), followed by Central Luzon and Western Visayas.
The Philippine Housing Industry Plan 2012 2030 (SHDA, 2011) estimates an additional

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346,000 housing units are needed (beyond available supply) every year from 2012 to 2030, or
a cumulative backlog of 6.23 million housing units by 2030. Of this backlog, over two-fifth
(41.2 percent) are for low cost housing (between 0.4 to 1.25 million pesos cost), while nearly
half (48.8 percent) are for socialized and subsidized housing (0.4 million pesos and below).
Figure 1: Estimated cumulative housing need by 2016, by region (in 000 units)

Source: NEDA (2011).

Trends in land use conversion
Area of approved land conversion has reached a total of 152 thousand ha by 2015; growth of
LUC approvals was fastest in the 1990s, slowing down in the 2000s, with only gradual
increase since 2010.
Official data on approved LUC was requested from the Central DAR; admittedly this figure
deviates somewhat from actual LUC for several reasons:
a) Central DAR has no data on LUC approved at the regional level (i.e. applications
under 5 ha).
b) There is a lag between approval of LUC and actual implementation of a project; in rare
cases the project ends up not being implemented at all.
c) It covers only legal LUC, and omits illegal LUC.
Regarding a), the area of development projects covering under 5 ha is only a small part of
overall land development. Regarding b), there may be deviations in any one year between
actual and approved LUC, but cumulative totals must converge over time. Regarding c), no
data is available for illegal LUC, hence any estimate involving illegal LUC must be purely
speculative. For these reasons, data on approved LUC is used to proxy for actual LUC.
Figure 2 shows the cumulative area of LUCs approved by the DAR Central Office since the
commencement of CARP in 1988. 2 After an initial surge in 1990 with nearly 100 thousand ha
of approved areas for conversion, cumulative area grew gradually at a rate of 1.8% per year,
reaching just under 152 thousand ha by 2015. Growth was fastest in 1991 2000 at 2.7

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percent per year, slowing down to 1.7 percent per year in 2001 2010, and dipping to just 0.2
percent per year in 2011-2015.
Figure 2: Cumulative area of approved land use conversion, 1988 2015 (ha)

Source: DAR LUCD.

LUC has been driven by demand for land in non-agricultural use, i.e. housing, industrial
zones, commercial space, and other built-up areas such as infrastructure. The great bulk of
LUC has occurred in CALABARZON (Figure 3), equivalent to nearly 119 thousand ha of
total approved conversions. This expected given the spread of urbanization in provinces near
NCR, namely Cavite, Rizal, Laguna, and Batangas.
Figure 3: Cumulative area of land use conversion in ha, approved by Central Office, by
region, 1988 - 2015

Source: DAR LUCD.

The next largest approved land conversion area is in Central Luzon, though at only one-tenth
the total approved area for CALABARZON. The next two regions are Mindanao at 3% each,
namely Davao Region and Zamboanga Peninsula. The remaining regions of the country
account for less than one-tenth of all approved areas; in fact eight of the regions have under a

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thousand ha of approved area.
Trends in food production and consumption
The countrys food production and production area has been increasing since the late 1980s.
Data on area harvested are shown in Table 1. Area harvested has been increasing, from 12
million ha in 1990 to 13 million ha in 2015. The bulk of the countrys area harvested (82%)
are taken up by just three crops, namely palay, corn, and coconut. Area harvested can be
increasing even as total farmed area is decreasing, simply by increased cropping intensity
(CI).
Table 1: Area harvested by crop, Philippines, 1990 2015 (000 ha)
1990

1995

2000

2005

2010

2015

Palay

3,319

3,759

4,038

4,070

4,354

4,656

Coconut

3,112

3,095

3,144

3,243

3,576

3,518

Corn

3,820

2,692

2,510

2,442

2,499

2,562

Others

1,749

1,896

1,981

2,102

2,235

2,362

Total

11,999

11,441

11,674

11,858

12,665

13,098

Source: PSA (2016).

A better gauge of farmed area is the area of arable land and permanent crops (Figure 4).
Likewise the area been increasing since 1987 when LUC began to be monitored. Over a
million ha were added between 1987 and 2012, an 11 percent increase.
Figure 4: Area of arable land and permanent crops, Philippines, 1987 - 2012 3

Source: FAO (2016).

In terms of food needs, the main food groups consumed by Filipinos (based on share in
average household food expenditure) are cereals (28%), fruits and vegetables (8.6%), meat
and meat preparations (13.8%), dairy products and eggs (6.8%), and fish (12.6%). Most of
the countrys food needs are met by domestic production (Table 2).

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For most crops (and in particular for cereals, fruits, and vegetables), self-sufficiency ratios
(SSRs) are 100% or more. SSR is significantly below 100% for rice, corn, coffee, garlic,
peanut, mongo. Nonetheless the SSRs are actually higher than 90 percent except for garlic,
peanut, and mongo; and only rice and corn are major crops. Furthermore, much of the
countrys corn supply is not directly for food, but for animal feed (i.e. planting of yellow
corn). This leaves rice as the major food crop on which the country is dependent on foreign
suppliers for some of its consumption needs.
Table 2: Self-sufficiency ratios of main crops, Philippines, 1990 2015 (%)
Rice
Corn
Coconut
Sugarcane
Coffee
Calamansi
Papaya
Pomelo
Tomato
Garlic
Onion
Cabbage
Eggplant
Peanut
Mongo
Cassava
Sweet Potato
Potato

1990
91
93
100
100
108
100
101
100
100
99
114
100
100
50
61
100
100
100

2000
93
91
100
100
90
100
102
100
100
73
93
100
100
35
43
100
100
99

2010
81
99
100
100
55
100
101
100
100
28
98
100
100
30
47
99
100
95

2011
94
99
100
100
55
100
102
100
100
29
108
100
100
46
58
100
100
94

2012
92
98
100
100
45
100
102
100
100
47
91
100
100
43
50
100
100
98

2013
97
96
100
100
47
100
103
100
100
72
95
100
100
56
49
99
100
96

2014
92
93
100
100
58
100
102
100
100
23
96
100
100
31
53
100
100
99

Source: PSA (2016).

Why does the Philippines import rice?
The preference of the market for at least some foreign rice is due entirely to economics.
Moya et al (2015) show that cost of production of palay, on a per kg basis, is 90% higher in
the Philippines compared to Vietnam. Hence there is a large incentive for traders to bring in
milled rice from abroad to Philippine ports, and thence to retailers, thus profiting from a
significant price gap.
Such arbitraging of difference in price is a natural consequence of a free market. However,
government policy in the Philippines prevents the free operation of the rice market. Currently
rice importation falls under a government monopoly administered by the National Food
Authority (NFA). With this monopoly the government maintains a regime of quantitative
restrictions (QRs), i.e. it sets limits on the quantity of rice that can be imported every year.
Hence, consumers are forced to purchase rice from a less affordable source, i.e. domestic

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producers.
In fact as government tightens up on importation, consumers are increasingly forced to buy
expensive domestic rice, forcing up the price of the latter further. Ultimately this becomes
politically untenable and the government is forced to adjust the QR and allow more rice
importation. This was the story in 1995 when the price of rice rose by nearly 50 percent in
just 6 months. At the start of that year, government had over-estimated the rice harvest and
underestimated the import requirement. Similarly in 2013, the price of rice increased by 12
percent over a six month period. Government had reduced its importation in 2013 by over
630 thousand tons, relative to 2012 levels, behind a forecast of 20 million tons of palay in
2013. However palay harvest was in fact just 18.44 million tons, well below the target.
Meanwhile stocks of rice declined owing to disposal of excess stocks, and provision of
disaster relief (Briones and Galang, 2013).
Failure of self-sufficiency is ultimately due to high production cost. Moya et al (2015) find no
significant subsidies on inputs in Vietnam that accounts for differences in production cost.
Rather, the root cause of the production cost difference is geography (Dawe, 2014): exporting
countries such as India, Thailand, and Vietnam happen to be endowed with wide flat plains
watered by large river systems (e.g. Ganges, Chao Phraya, Mekong, Red River), which are
big enough, relative to their population, to produce large surpluses of rice at constant
production cost. However relative to population, lands suitable for rice cultivation are in very
limited supply in the Philippines, hence production cost goes up before enough rice is
produced to meet domestic demand.
Maintaining agricultural land in peri-urban areas does not reduce production cost per kg; in
fact, rice grown in such land is probably more costly owing to high rental cost of land, and
possibly higher labor cost. What will reduce production cost is adoption of better
technologies, such as hybrid rice. However it is unlikely that production cost can be brought
all the way down to level of Vietnam. Hence zero imports may continue to be an unrealistic
(and unnecessary) policy objective.
3. Impact of Land Use Conversion
Understanding the impact of land use conversion: two models
Two contrasting models of the impact of land conversion are the displacement model and the
re-allocation model.
A simple and straightforward model of the impact of land conversion is the displacement
model: that is, every unit of food production area converted to urban use equals one unit
reduction in physical area for production of food. Moreover this implies the equivalent loss in
food production equal to the yield expected from one ha of physical farmed land. This seems
to be the model adopted by advocates of LUC moratorium.
In contrast is a more nuanced view of the agricultural system, called the re-allocation model:
conversion of food production area is part of a larger dynamic of resource allocation. The
economic forces that lead to LUC may have second-order effects that lead to offsetting

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expansion elsewhere, say in hinterlands, or changes in production behavior, such as more
intensive cultivation of existing land.
Under the displacement model, one will expect that LUC:

will be negatively related to food production physical area, on a ha-for-ha basis;

will be negatively to food production area harvested, equal to physical area lost,
adjusted for CI;

will cause food production to decline, equivalent to the loss in area harvested
multiplied by average yield.

These hypotheses will be used as a guide for framing the statistical analysis that follows.
Impact at the regional level
At the regional level, statistical analysis fails to confirm the displacement model; results
appear more consistent with the re-allocation model.
First we graphically inspect the time series of LUC and agricultural area harvested for rice in
the regions with the most land converted, i.e. Region IV-A (CALABARZON) and III (Figure
5). The latter happens to be the countrys top rice producing region. Note that while the
preferred comparison is between converted area and physical farmed area, only data for area
harvested is available at the regional level.
Figure 5: Cumulative approved conversion area, and area harvested for rice, Regions
III and IV-a (ha)

Source of basic data: DAR-LUCD (2016) and PSA (2016).

In the case of CALABARZON, the displacement model appears to be confirmed. The
cumulative area of approved conversion approached 100,000 in 1990, just 60,000 ha less than
total rice producing area. The cumulative area has continued to rise, approaching 120,000 by
2015. Rice growing area has however continued to fall, dipping below cumulative converted
area by 2003, now at only 113,000 ha.
Inspection of parallel time series for Central Luzon tells a far different story. Cumulative area

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approved for conversion has also increased over time; however at the same time total area
harvested for rice has also been on an upward trend, with some dips in specific years such as
1990 94, 1998, 2010, and 2015; the last three episodes represent harsh El Nino drought
periods. By 2015 total area harvested was about 700,000 ha, orders of magnitude above
cumulative approved area of under 11,000 ha.
There is a limit to what can be discerned by inspection of graphical data, as it fails to account
for other intervening variables. Table 3 summarizes statistical analysis in the form of multiple
regression on cross-section (region) and time-series (annual) data. Dependent variables area
harvested in levels; the main explanatory variable of interest is cumulative approved area.
Alternatively the dependent variable can be stated in change form, together with the main
explanatory variable, which is transformed into approved area for a given year. For each
regression other explanatory variables are: real palay price; year; and dummy variables for
1998, 2010, and 2015 (El Nino years).
The result is shown in Table , which displays only findings for changes in levels (regression
in levels is plagued by low adjusted R2). In two of three regressions, the t-value is below the
cut-off of around 2, i.e. the probability of incorrectly rejecting zero effect of conversion area
does not meet the threshold. The one time the coefficient of land conversion area is
significant (t-value = 1.93), the impact on the dependent variable (change in irrigated area) is
positive, contrary to the displacement model. However the regional model exhibits poor fit, at
only 0.11 adjusted-R2.
Table 3: Summary of multiple regression results for regional variables
Dependent variable
Change in area harvested, ha

Coefficient

t-value

Goodness-of-fit

6.354

1.59

0.16
**

Change in irrigated area, ha

4.895

1.93

0.11

Change in production, tons

-0.318

-0.27

0.14

Note:
1. Significance level denotes that probability of incorrectly rejecting a zero value for a
coefficient is low, i.e. below the significance level.
2.

denotes significance at the 10% level; ** denotes significance at the 5% level; ***denotes
significance at the 1% level.

3. Calculations obtained from a fixed effects regression using STATA.

Source: Authors calculation.
Impact on irrigated area at the national level
Contrary to the displacement model, land use conversion is associated with increases in both
area and output from irrigated rice land.
At the national level, physical area estimates are available for irrigated lands. Figure 7
presents cumulative approved area, juxtaposed with irrigated land area. The latter is on an

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upward trend save for a sharp decline in 1994 (owing to data issues). Likewise national
output of irrigated rice has been increasing over time with some interruptions owing to El
Nino in 1998 and 2009-10.
These trends coincide with the increasing cumulative approved area for LUC. This is already
inconsistent with the displacement model. However as with the regional data, we conduct
multiple regression analysis to control for other influential variables.
Figure 6: Land area (ha) and palay production (tons), irrigated rice, 1990 2015

Sources: PSA (2016) and DAR-LUCD (2016).

Results for both levels and changes in levels are shown in Table 4. In only one case does the
conversion variable have a negative effect, namely in Regression 1); estimates of significance
are unreliable in this case. In the other regressions, conversion has a positive effect.
Table 4: Summary of multiple regression results for
Dependent variable
1) Irrigated area, ha

Conversion
variable
Cumulative

Coefficient

t-value

-19.844

---

Goodnessof-fit
0.461

2) Change in irrigated area, ha

Annual

4.686

1.65

0.890

3) Production, tons

Cumulative

30.81

1.41

0.990

4) Change in production, tons

Annual

114.55

1.42

0.36

Note:
1. Regressions are based on ordinary least squares using STATA.
2. Breusch-Godfrey test fails to rejects absence of serial correlation in all regressions
except Regression 1). Hence the t-value is not presented
Source: Authors calculation.
The best-fitting estimate is Regression 3) where 99% of variation in irrigated output is
explained by the regression. In Regression 3), cumulative LUC has a positive effect on rice

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production (though strictly speaking it fails to meet the test of statistical significance even at
10% level). One safely may conclude though that the data fail to support the displacement
model while providing moderate support for the re-allocation model.
National-level impact of land use conversion using simulation
Overview
In the preceding analysis, a variety of statistical methods were applied to isolate the
relationship between LUC and food production or production area. Unfortunately owing to
noise in the data, neither the displacement model nor the re-allocation model can be
decisively confirmed, though the evidence tends to weigh towards the latter. The following
analysis uses a different approach based on computer simulation of Philippine agriculture.
The simulation model is the Agricultural Model for Policy Evaluation or AMPLE (Box 1).

Box 1: The AMPLE

The analytical tool for scenario modeling is the Agricultural Model for PoLicy Evaluation
(AMPLE). The AMPLE is a numerical supply and demand model for evaluating
alternative agricultural scenarios. It had been earlier applied for assessing productivity
growth from 2010 to 2020 (Briones, 2013a), food security from 2010 to 2040 (Briones,
2013b), and trade liberalization scenarios from 2010 to 2020 (Briones, 2013c).
The AMPLE is a multi-market partial equilibrium model which encompasses eighteen
agricultural sectors, representing the major products of Philippine agriculture. AMPLE is
comprehensive in its representation of Philippine agriculture; it is able to represent impact
of the various challenges in the form of rapid population growth, and land use change.

The AMPLE simulates the impact of a sudden decline in agricultural land, commensurate to
the size needed for socialized housing in 2016. The estimated land area is 57,000 ha,
computed with the following assumptions:

Total backlog:

5,700,000 units

Housing density:

100/ha

Hectares of land needed:

57,000 ha

Area harvested decline:

114,000 ha (57,000 ha x 2 CI)

Note that these assumptions are biased in favor of showing a larger negative impact of
housing on food production; some LUC areas have a cropping intensity of less than 2.
Nonetheless, biasing the results in favor of a bigger food production impact ensures that the
analysis provides a measure of bias against LUC.

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Hypotheses
Baseline data of AMPLE is compiled for 2012-2014, notionally centered on base year 2013.
In the base year, rice yield is 3.91 tons, and milling recovery is 65.4%. The computer
experiment simulates the impact of losing 60,000 ha area harvested to LUC in the base year.
The displacement model makes the following predictions:

Area harvested for rice declines by 114,000 ha ;

Output of palay declines by 445,740 tons (= 114,000 ha x 3.91 tons/ha; )

Consumption of milled rice declines by 291,514 tons ( = 445,740 tons x 65.4%).

Note that the assumed decline in area harvested involves 100% LUC of agricultural land, all
of which is cropped twice a year estimates that are heavily biased in favor of the
displacement model. We compare these predictions against results of simulation analysis.
Results
Simulation analysis shows a negative impact of land use conversion on food production, but
the impact is minimal.
Results from AMPLE simulations are summarized in Table 5; only the top four crops affected
by area are included, namely: rice, corn, sugarcane, and coconut. In contrast to the statistical
analysis, the simulation analysis shows a clear negative impact, as AMPLE isolates the
underlying fundamentals of supply and demand, eliminating noise by design.
Table 5: Results of a simulation analysis on the impact of 57,000 ha land use conversion,
2012 2014
Base year value
Area (ha)
Rice
Corn
Sugarcane
Coconut
Output (tons)
Rice
Corn
Sugarcane
Coconut
Food consumption (tons)
Rice
Corn (white)
Sugarcane

With shock

Change

Change (%)

4,725,238
2,589,631
434,132
3,542,103

4,672,810
2,566,239
428,995
3,521,553

-52,428
-23,392
-5,137
-20,550

-1.1
-0.9
-1.2
-0.6

18,479,885
7,518,169
25,336,864
15,303,961

18,404,201
7,509,454
25,188,886
15,342,189

-75,684
-8,715
-147,978
38,228

-0.4
-0.1
-0.6
0.2

11,411,667
2,118,305
2,139,275

11,368,461
2,113,529
2,125,902

-43,206
-4,776
-13,373

-0.4
-0.2
-0.6

Source: Authors calculation.

15 | P a g e
The simulation points to the largest impact falling on area harvested for rice. However LUC
conversion of 114,000 ha causes a decline of about 52,000 in area harvested of rice; this is 54
percent lower than that predicted by the displacement model. The reason is that changes are
distributed across crops, some not as critical as rice to food security, such as corn (-23,392
ha), sugarcane (-5,177 ha), and coconut (-20,550 ha); equivalent to declines between 0.6 to
1.2 percent.
Similarly the simulation model projects a decline in output, but again far from the amounts
predicted by the displacement model: for palay, rather than 446,000 tons, the projected
decline is 88 percent lower, at only 52,248 tons. The reason is that the decline in area
harvested is much lower than under the displacement model as shown above; moreover the
remaining agricultural area will be cultivated more intensively with a resulting slight
improvement in yield (of about 30 kg/ha). However more crops will be affected aside from
rice, namely corn, sugarcane, and coconut, all of which suffer slight declines in output
(maximum fall of 0.6 percent for sugarcane).
With the small negative impact on food production, one may expect a small negative impact
on food consumption. In contrast to the loss of 291 thousand tons based on the displacement
model, the actual decline in rice consumption is 85 percent lower at only 43,206 tons. There
also declines in food production of white corn and sugar, respectively about 1,300 to 7,000
tons. There is also a small increase in imports, at only 171 tons.
We conclude that the impact on food security is minimal, not only relative to the overblown
estimates based on the displacement model, but also relative to the magnitudes of human
welfare involved. The projected increase in socialized housing (necessitating the 57,000 ha
land conversion) is big enough to clear 100 percent of the backlog, but will require only a 0.4
loss in consumption of rice, 0.2 percent loss for corn, and 0.6 percent for sugar.
4. Benefits and Costs of Land for Food and for Shelter
Methodology for comparison
This section evaluates alternative uses of land under the following set-up: the comparison is
between one ha additional land area for socialized housing, versus maintaining the same ha
for food production (i.e. comparison at the margin). To make the strongest case to favor a
moratorium, we adopt the displacement model for framing the foregone food production from
land use conversion, that is:

The land being evaluated is in urban and peri-urban areas and is suitable for socialized
housing development.

Currently the area is being used for production of palay yielding the national average
of 3.91 tons/ha per cropping. The area is irrigated with CI = 2.

We propose two methodologies for making the comparison, namely equivalence and
economic valuation. The key assumption of the equivalence method is to posit equivalent
value to society of meeting a familys need for food, and meeting a familys need for shelter
over a given period (say one year). Under the equivalence method therefore, one need only to

16 | P a g e
count the number of families under alternative uses of 1 ha of land; the preferred land use is
one that benefits the most number of families. This is a very straightforward allocation
rule.
Economic valuation though is much more involved, though much more comprehensive. This
approach translates costs and benefits of alternative uses of a hectare of land. Future streams
of benefits and costs are translated into present value by discounting. In the following, we
adopt the more conservative assumptions in terms of setting the net benefit of housing,
effectively biasing the analysis in favor of rice production. This is to ensure a margin of
safety to ensure that the analysis is biased against LUC. The assumptions are as follows:
Benefits and costs of housing

The discount rate is approximated from the bank average lending rate (High) obtained
from BSP data (http://www.bsp.gov.ph/statistics/statistics_online.asp). The time horizon is
sixty years, the assumed lifetime of a house under proper maintenance.

A total of 100 families are provided socialized housing in one ha. Benefit of housing is
estimated from the equivalent rental of low-cost housing, priced at P750,000 per unit. In
turn equivalent rental is approximated from the 30-year amortization under government
(Pag-Ibig) housing program. From the imputed rental of P4,700 per month, we net out an
estimated P200 per month maintenance cost, for a monthly benefit of P4,500 per month
per unit.

Societys cost of housing is the cost of construction (assumed to be incurred within one
year). The assumed lifetime of a house is 60 years. Construction cost assumes that the
P750,000 unit price incorporates a 6% mark-up for the developer. The imputed
construction cost is P707,550 per unit.

Benefits and costs of palay production

Societys gross benefit from palay production is valued at the price of palay. Two
alternatives are available for imputing the price:

The obvious imputation is the market price, averaged for the whole country.

Given the import policy of government, the more appropriate imputation (from the
economic standpoint) is the shadow farmgate price, approximated from the
farmgate prices in rice exporting countries derived from Moya et al (2016).

Societys cost of production is assumed to be the same production cost incurred by

farmers. On per ton basis, PSA (2016) data imply average palay production cost of
P11,040 per ton (1,000 pesos rental cost of land omitted).

Result of family count analysis

Under the equivalence method, one hectare of urban or peri-urban land should be converted
to housing as it meets the needs of 100 families a year whereas keeping the land for food
production meets the needs of only 9 families.
A family consists of five members, consuming a total of 561.3 kg rice per year (= 112.26 kg

17 | P a g e
rice per head per year x 5 heads). This is obtained from 858.26 kg of palay per year (=561.3
kg rice per year x 1 kg palay/0.654 kg milled rice). Dividing 7,820 kg by this figure and
rounding off obtains the 9 families estimate.
Result of benefit-cost analysis
Under the economic value criterion, the net benefit to society from converting a ha of land for
socialized housing far larger than for maintaining the land for rice production.
Benefit-cost analysis using economic value is shown in Table 6. For food, production cost is
only P1.5 million; whereas for housing, production cost is much higher, at 70.7 million pesos.
However the benefit from housing production is also much higher, at P87.3 million,
compared to just P2.0 million for food production. Hence, net discounted benefit of housing
is P16.6 million, compared to that of food production at just P0.5 million. Preventing LUC
involves a loss to society of about P16 million.
Table 6: Discounted benefits and costs, different uses of one ha land, 2015, in pesos
(discount rate = 6%)
Housing
(a)

Food, market price

(b)

Food, shadow price

(c)

Benefits

87,271,710

1,977,343

1,543,857

Costs

70,754,717

1,481,594

1,481,594

Net

16,516,993

495,749

62,263

Subtract (a)

-16,021,243

-16,454,729

Source: Authors calculation.

The comparison is even less favorable for food production when using the proper economic
value of rice (i.e. at farmgate parity). The net discounted benefit declines to just P62
thousand, i.e. the use of market price already overstates by eight-fold the net social benefit
from food production. Preventing LUC now inflicts a higher loss to society, at about P16.5
million.
5. Land Use Conversion Policies: Review and Implications of the Analysis
Laws and policies on land use conversion
Comprehensive Agrarian Reform Law (RA 6657)
The law originally conferring DAR authority over land use conversion is the Comprehensive
Agrarian Reform Law or CARL, enacted in 1987, and authorizes the conduct of a
Comprehensive Agrarian Reform Program (CARP). Chapter XV, Section 65 states:
After the lapse of five (5) years from its award, when the land ceases to be economically
feasible and sound for agricultural purposes, or the locality has become urbanized and the
land will have greater economic value for residential, commercial or industrial purposes, the
DAR, upon application of the beneficiary or the landowner, with due notice to the affected
parties, and subject to existing laws, may authorize the reclassification or conversion of the

18 | P a g e
land and its disposition: Provided, That the beneficiary shall have fully paid his obligation.

The law unambiguously elevates the economic criterion as the primary basis for approving
applications for land use conversion. What the law deems illegal is conversion with no
economic basis, but only for the purpose of evading redistribution of land or dispossess
tenants (Chapter XV, Section 72).
Local Government Code (RA 7160)
The 1991 Local Government Code authorizes local legislative councils (Sanggunian) to reclassify agricultural lands to non-agricultural uses. As with CARL, the criterion for allowing
re-classification is economic, that is:

When the land ceases to be economically feasible and sound for agricultural purposes as
determined by the Department of Agriculture; or

Where the land shall have substantially greater economic value for residential,
commercial, or industrial purposes, as determined by the Sanggunian concerned.

Such re-classification is subject to limits determined as a share in the land area under the
jurisdiction of the local government concerned, as follows:

For highly urbanized and independent cities:

15 percent

For component cities, as well as 1st 3rd class municipalities:

10 percent

For 4th 6th class municipalities:

5 percent

National Integrated Protected Areas System (RA 7856)

The National Integrated Protected Areas System (NIPAS) Act of 1992 integrates the various
forms of protected area in the country, nature reserves, natural parks, natural monuments,
wildlife sanctuaries, protected landscapes and seascapes, resource reserves, natural biotic
areas, and so forth. Generally in protected areas, no disturbance of flora and fauna is
permitted, hence land cultivation and farming are obviously not allowed, let alone use of land
for industrial or residential use. Currently about 357,000 ha of the country are classified as
protected areas as of 2012.
Agriculture and Fisheries Modernization Act (RA 8453)
A fairly elaborate system of agricultural land use planning is provided in the 1997 Agriculture
and Fisheries Modernization Act. AFMA mandates delineation of a Network of Protected
Areas for Agricultural and Agro-Industrial Development (NPAAAD), referring to agricultural
areas to ensure efficient utilization of land for agriculture and agro-industrial development
and promote sustainable growth. The NPAAAD shall be identified by the Department of
Agriculture (DA), with inputs from the DA- Bureau of Soils and Water Management, as well
as the National Mapping and Resource Information Authority of Department of Environment
and Natural Resources. By law the NPAAAD includes:

All irrigated areas, all irrigable lands already covered by irrigation projects with firm
funding commitments;

19 | P a g e

All alluvial plain land highly suitable for agriculture whether irrigated or not;

Agro-industrial croplands or lands presently planted to industrial crops that support the
viability of existing agricultural infrastructure and agro-based enterprises, highlands, or
areas located at an elevation of five hundred (500) meters or above and have the potential
for growing semi-temperate and high-value crops; all agricultural lands that are
ecologically fragile, the conversion of which result in serious environmental degradation,
and mangrove areas and fish sanctuaries.

Within the NPAAAD, the DA is mandated to define Strategic Agriculture and Fisheries
Development Zones (SAFDZs). The SAFDZ denotes areas identified for identified for
production, agro-processing and marketing activities to help develop and modernize, with the
support of government, the agriculture and fisheries sectors.
With respect to LUC, the AFMA imposes the following restrictions:

Up to 2003:

all irrigated lands, irrigable lands already covered by irrigation projects with firm
funding, lands with existing or having the potential for growing high-value crops;

not more than five percent of SAFDZ area may be converted.

Beyond 2003: conversion may be allowed on case-to-case basis, subject to existing laws,
rules, regulations, executive orders, and issuances, and administrative orders. In case of
conversion, the land owner will compensate DA for the amount of the governments
investment cost (say in irrigation), adjusted for inflation.

DAR Administrative Order No. 1 Series of 2002

DAR AO 1(2002) lays down the comprehensive rules for land use conversion. It promulgated
the principle of protection of prime agricultural lands to ensure food security (Article I,
Section 1.1). Prime agricultural lands are those that can be used for agriculture, and can
provide optimum and sustainable yield with minimum inputs and development costs, as
determined by DA.

The AO introduces permanent prohibitions for LUC for the following lands:

Protected areas under NIPAS;

All irrigated areas, even those without water but programmed for rehabilitation; all lands
with irrigation facilities, and all irrigable lands already covered by irrigation projects with
firm funding commitments.

In addition it introduces a category of lands that are highly restricted from conversion, such
as irrigable lands (with no firm funding commitments). Such highly restricted lands (above 5
ha) must obtain approval from the Presidential Agrarian Reform Council (PARC), except for
housing projects under E.O. 45(2001).
The AO also formalizes the technical requirements to evaluate the economic justification for
LUC, namely:

20 | P a g e

Project feasibility study an investigation of the market, technical, financial, economic,

and operational viability of the project. It looks into the alternative technical schemes to
achieve the projects objectives, including size, location, production process, and physical
and financial resource requirements. The study determines whether the project would
generate sufficient benefits to offset estimated investment and operating costs.

Socio-economic benefit-cost study the assessment of the projects net contribution to the
national economic and social welfare, done through a comparison of the economic and
social benefits expected to be generated from the project with the social and economic
costs of its implementation and operation.

EO 770 (2008): Providing the Institutional Framework for National Land Use Planning
Following the controversy over the planned LUC moratorium in 2008, then President Arroyo
issued EO 770 (2008), amending Letter of Instruction 1350 of 1983. The EO establishes
under the NEDA Board the National Land Use Committee (NB-NLUC) as countrys highest
policy-making body on land use. The NLUC is chaired by the Socio-Economic Planning
Secretary with Secretaries of DENR, DA, DAR, DTI, DPWH, DOTC, DOT, DILG, DOJ,
DOST, and DOE as members, together with two private sector representatives; the
chairpersons of the HUDCC, HLURB, and NCIP; and the Presidents of the Leagues of
Municipalities, Cities, and Provinces. The tasks of the NB-NLUC are as follows:

Advise the President on matters concerning land use and physical planning;

Formulate a national physical framework plan and other inter-sectoral policies and
programs that guide the rational utilization and management of the countrys land and
other physical resources, and the preparation of sub-national physical framework
plans.

Promote the integration of land use and physical planning policies, plans and
programs, including disaster risk management, into national socio-economic plans and
programs;

Decide and resolve land use policy conflicts among agencies of the national
government;

Establish and maintain, in conjunction with the various appropriate government

agencies, a database system which would identify and classify the present and possible
uses of specific land areas, public and private, comprising the total land resources of
the nation; and

Provide policy directions to the Regional Land Use Committees in the performance of
their physical planning functions.

The NLUC is further guided by a Technical Board chaired by the NEDA DDG for Regional
Development, with members composed of Director-level designates from the member
agencies of the NB-NLUC. Finally the EO institutionalizes the establishment of the Regional
Land Use Committee (RLUC) with similar mandate and composition as the NLUC but at a
regional level. The RLUC and NLUC obviously do not rule on specific LUC applications, but

21 | P a g e
they are certainly supposed to vet and approve land use policies of the national government
and set forth the physical framework plans incorporating the approved land use policies.
Strengthening Comprehensive Agrarian Reform (RA 9700)
RA 9700 of 2009, better known as CARPER (Comprehensive Agrarian Reform Extension
with Reforms), mostly reiterates the LUC provisions of CARL. One key difference though is
irrigated and irrigable lands shall not be subject to conversion (Sect. 22), i.e. strengthening
the restriction stated in DAR AO 1(2002), this time with direct force of law.
The definition of irrigable lands however is left unclear. According to AFMA. irrigable
Lands refers to lands which display marked characteristics justifying the operation of an
irrigation system. The National Irrigation Authority (NIA) has identified about 3 million ha
of irrigable lands in the Philippines, with only 1.7 million ha (56.7 percent) actually irrigated.
The basis of the identification are contiguous areas of at least 100 ha with slopes not more
than 3 percent (David, 1990).
Consistency of a total moratorium with existing laws
On their own, market forces and policy distortions can induce excessive land use conversion.
As seen above, applicable laws certainly accept economics as the overriding criterion for
permitting LUC. Our benefit-cost analysis does suggest that under certain conditions LUC
makes economic sense. In practice though not every application for LUC meets the
assumptions in the benefit-cost analysis. For instance, LUC can manifestly be pursued simply
to evade redistribution under CARP; presumably this is the reason for assigning DAR the
authority to review on LUC applications covering agricultural lands. As economic expansion
in and around Metro Manila continued after decentralization, several incidences of haphazard
land development and spot zoning were noted (Ballesteros, 2000).
The existing legal and regulatory framework, combined with a functional and competent
regulation, offers adequate safeguards against excessive land use conversion.
Several laws, and numerous executive issuance and administrative orders already govern the
policy regime for LUC in the Philippines. These were instituted precisely to ensure that
market forces and other distortionary measures can be checked such that land is allocated to
its optimum use both now and for future generations. Hence to counterbalance purely market
considerations, DAR AO 1(2002) formally recognizes the need for the state to protect prime
agricultural lands to ensure food security, while acceding to the economic rationale for LUC.
The technical framework for LUC assessment institute important safeguards, such as
insistence on a project feasibility study and socioeconomic benefit-cost analysis. The
regulator can then evaluate the claims made in these studies to ensure that land use is
optimized; for instance, it may require the project feasibility study to demonstrate that the
development plan require the least space to fulfill its objectives. Nor is assessment of
applications for LUC to be done in a vacuum. Ideally the DAR shall evaluate such
applications based on the national and regional physical framework plans, and other relevant
land use policies, prepared by the RLUC and NLUC.

22 | P a g e
A moratorium appears to be within the legal ambit of the Executive branch; however such a
policy renders problematic the attainment of other, equally pressing legal obligations.
The draft EO applies to: 1) awarded lands under agrarian reform; 2) lands under Notice of
Coverage issued by DAR; 3) Irrigated and irrigable lands; 4) Prime agricultural lands; 5)
Retention area of landowners which are tenanted; 6) Agricultural lands with the presence of
agricultural activities or being cultivated by the farmers individually or collectively.
Note that idle lands not falling under conditions 1) to 5), are allowed for LUC even under the
proposed moratorium. Nonetheless, in its current wording, the draft EO is far-reaching and
comprehensive. Lands with the presence of agricultural activities are prohibited from LUC,
with no exception provided for alternative use, such as for low cost or socialized housing;
industrial estates; right of way for infrastructure; and the like.
Admittedly, rules imposed by the executive branch on land use seem to be have been
conferred legal sanction by virtue of AFMA. Hence policy decisions such as a moratorium on
LUC appear to be well within the ambit of the Executive, especially if the purpose is
administrative in nature, i.e. to give DAR a temporary reprieve for the purpose of conducting
a nationwide inventory of past LUC, whether authorized or not; and to improve its system of
LUC approval.
However, just because the legal mandate exists, does not mean it may be exercised in any
which way. The state has other statements of policy that are of equal legal weight. Given the
blanket nature of the proposed LUC moratorium, a sharp contradiction arises given these
other policy declarations of government, such as:

Balanced agro-industrial development (Philippine Constitution);

Various declarations 1992 Urban Development and Housing Act (RA 7279):

Optimization of the use and productivity of land and urban resources;

Development of urban areas conducive to commercial and industrial activities which

can generate more economic opportunities for the people;

Access to land and housing by the underprivileged and homeless citizens;

A temporary moratorium will of course be far less problematic than a permanent one.
However even a temporary moratorium is not without consequence. At the very least this will
delay some socially worthwhile projects; the greater impact though is that it creates policy
uncertainty in an already troubled investment climate in public and private construction.
Discussions on LUC moratorium should be studied and discussed in length within existing
institutional frameworks where multiple stakeholders are able to provide their inputs.
Rather than moving hastily on a moratorium decision, temporary or otherwise, government
should deploy its existing institutional frameworks to reconcile the need for meeting housing
needs of the population, while addressing unjustified LUC. That mechanism precisely is the
NB-NLUC. The NB-NLUC involves multiple stakeholders, including the private sector as
well as housing and urban development. The NB NLUC can be informed by technical study

23 | P a g e
of the NLUC Technical Board. The NB-NLUC can then issue a recommendation to the
President, as basis on issuing an Executive Order on an LUC moratorium as needed.
6. Concluding Remarks
This paper reiterates, updates, and reinforces the recommendation of Briones (2008) against a
moratorium on land use conversion. This study finds that a simple displacement view that
LUC will reduce agricultural land and remove from agricultural output the yield of the
converted land is simply not borne out by the data. Instead the agricultural system of the
country adapts to land use conversion at the urban fringe. Allowing enough LUC to ease the
low cost and socialized housing backlog will not seriously undermine the countrys food
security. On the other hand, society incurs net loss from a blanket disapproval of all LUC.
The alternative to a blanket disapproval of all LUC is individual, case-by-case evaluation,
which is the system already in place. This system though is in need of strengthening in terms
of its ability to evaluate the technical merits of any proposed project requiring LUC.
Government should activate and capacitate its existing institutions for reconciling the tradeoff between food and non-food uses of land in its pursuit of inclusive and sustainable
development.
References
Ballesteros, M. 2000. Land Use Planning in Metro Manila and the Urban Fringe: Implications
on the Land and Real Estate Market. Discussion Paper Series No. 2000-20. Philippine
Institute for Development Studies, Quezon City.
Briones, R., 2008. Should Rice Areas be Protected by Banning Land Conversion? Report
funded by and submitted to the Subdivision Housing Development Authority (SHDA).
Briones, R. 2013a. Long-term Vision and Strategic Choices for Agriculture and Food Security
in the Philippines in 2040. In: Agricultural Transformation and Food Security 2040 ASEAN
Region with a Focus on Vietnam, Indonesia, and Philippines: Philippines Country Study.
Tokyo: Japan International Cooperation Agency, 99 106.
Briones, R. 2013b. Scenarios and options for productivity growth in Philippine agriculture:
An application of the Agricultural Multi-market Model for Policy Evaluation (AMPLE).
SEARCA Monograph Series on Productivity Growth in Philippine Agriculture. SEARCA,
DA BAR, and PhilRice: Los Baos, Laguna, Philippines.
Briones, R. 2013c. Philippine agriculture to 2020: Threats and opportunities from global
trade. Discussion Paper Series No. 2013-14. PIDS, Quezon City.
Briones, R., and I. Galang. 2014. Bakit nagmahal ang bigas noong 2013? At bakit mahal pa
rin? The continuing saga of rice self-sufficiency in the Philippines. Policy Notes No. 201408. PIDS, Quezon City.
Cardenas, D. 1998. Assessment of the socio-economic impact of agricultural conversion on
Cavite's rural communities. Ph.D. thesus (unpublished). University of the Philippines Los
Banos, Philippines.

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David, W. 1990. Irrigation Development in the PhilippinesPresent Status, Issues, Problems and
Policy Recommendations. Philippine Journal of Crop Scienc 15(1):17-26.

Dawe, D. 2014. Rice self sufficiency: nature vs. nurture. In: Dawe, D., S. Jaffee, and N.
Santos, eds. Rice in the Shadow of Skyscrapers: Policy Choices in a Dynamic East and
Southeast Asian Setting.
DAR, 2016. Executive Order No. ____ (Draft). Declaring a Moratorium on the Processing
and Approval of All Applications for Land Use Conversion of Agricultural Lands to Nonagricultural Purposes.
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Environment and Urbanization 10(1): 35-54.
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Population and Housing. Paper presented at the 12th National Convention on Statistics, EDSA
Shangri-La Hotel, Mandaluyong City, 1 2 October.
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Ecija, Philippines and Los Banos, Laguna, Philippines.
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Endnotes

Cropping intensity (CI) is the frequency at which a physical farmed area is harvested in a year. Annual area
harvested is physical farmed area multiplied by CI.

Regional DAR offices may decide on LUC applications of up to five ha; these account for only a small
proportion of approvals.

Arable land is the land under temporary agricultural crops (multiple-cropped areas are counted only once),
temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow
(less than five years). The abandoned land resulting from shifting cultivation is not included in this category.
Data for Arable land are not meant to indicate the amount of land that is potentially cultivable. Data are
expressed in 1000 hectares. Permanent crops are sown or planted once, and then occupy the land for some years
and need not be replanted after each annual harvest, such as cocoa, coffee and rubber. This category includes
flowering shrubs, fruit trees, nut trees and vines, but excludes trees grown for wood or timber.