Land Reform, Rural

Development and Poverty in

the Philippines:
Revisiting the Agenda
Fabrizio Bresciani (World Bank, Philippines)
Nobuhiko Fuwa (Chiba University, Japan)
Arsenio Balisacan (SEARCA, University of the Philippines)
History and salient features of land reform

PD 27 (1971): covering rice areas, setting basis

for later legislation
Operation Land Transfer (OLT)
Operation Land Leasehold (OLL)
RA 6657 (1989): launch of CARP and
extension of agrarian reform to cover all
agricultural lands
 CARPs Components
Land Adjudication and Distribution / Land Tenure
Improvement
Program Beneficiaries Development
ARC Strategy (1993): targeting support services to selected
agrarian reform communities
Agrarian Justice Delivery: adjudication and land
valuation

Emphasis between components (and within

components) shifting with political conditions,
challenges in the field, opportunism
 Modalities of land transfer and
tenurial reform:
Compulsory Acquisition (CA)
Voluntary Offer to Sell (VOS)

Voluntary Land Transfers (VLT)

Non-private Agricultural Lands (settlements,

government owned lands, landed estates)
Operation Land Leasehold (OLL)

Titling in Public A&D Lands (DENR): Forestry

Sector CBFM/ISF
 CARL: key legal provisions
Land cannot be rented and has to be worked by
the beneficiary
Cannot be sold before agrarian debt is repaid

Cannot be used as collateral

Rental rates are determined out of the market

Land valuation carried out by Land Bank and

can be challenged in regular court system
 CARP scope, by program (2006)
Private Lands (DAR)
3,1 million Ha

DENR Operation Land

3.78 million Ha 8%
Transfer
3% Government Financing
5% Institutions
Voluntary Offer to Sell
46%
Compulsory
Acquisition
Voluntary Land
18% Transfer
Settlements
4% Landed Estates
8% 1% 7%
Government Owned
Lands
DENR
Non-private lands (DAR)
1.34 million Ha.
 % of scope

100
150
200
250

0
50
D
AR

PA
L
O
LT

G
133.4%

FI

V
OS

CA
18.4%

V
LT
N
on
225.6%

-P
AL
Se
ttl
La m
en
nd ts .
ed
Es
ta
tes

G
OL
D
CARP Accomplishment (2007)

EN
R
TO
TA
L
 An Incomplete Transfer of Rights?
The Issue of Collective CLOAs

3,500

3,000 71%
2,500 83%
65%
,000 Ha

2,000
58% 86%
1,500
69%
1,000

500

ts

tes
LT

tal
OL
CA
OS
FI

en

To
G

ta
V
V

G
em

Es
ttl

ed
Se

nd
La

Collective CLOA (ha) Total CLOA

 The agricultural economy context
Agricultural Growth Rates (% )

7
6
5
4
3
2
1
0
Indonesia Philippines Thailand Vietnam China

1980-2000 2000-2007

Nominal Rates of Assistance (%)

40

30

20

10

0
1980-84 1985-89 1990-94 1995-99 2000-04
-10

-20

Agriculture NRAa All agricultural tradables

All non-agricultural tradables Agriculture relative to non-agriculture
 Poverty Trends
Poverty trends (%)

60
50

40
30
20
10
0
1985 1988 1991 1994 1997 2000 2003 2006

Philippines Urban Rural

Contribution to total poverty (%)

100
80
60
40
20
0
1985 1988 1991 1994 1997 2000 2003 2006

Urban Rural
 CARPs impact on poverty
Several impact assessment studies conducted
in the past
Mixed or non representative results
Critical lack of comprehensive data
Need to triangulate to draw conclusive
picture
Resorted to provincial data constructed from
the Family Income Expenditure Survey &
DAR information on accomplishments in land
distribution
 CARPs impact on poverty: key results

Positive impact on provincial growth (Balisacan and

Fuwa, 2007) and hence on poverty indirectly
But very small direct effect on poverty, especially
during the last decade
Redistribution of private land has strong effect on
poverty: +10% accomplishment leads to +0.3% in
rate of poverty reduction
Compulsory acquisition has strongest effect on
poverty: +10% leads to +0.8% in rate of poverty
reduction
Failure to target prime private agricultural lands and
slow implementation appear as causes of
disappointing progress
 The ARC strategy: key characteristics

Meant to empower and capacitate agrarian reform

beneficiaries
Delivery of support services: post harvest facilities, farm to
market roads, irrigation, technical extension
CDD based approach mainstreamed in local development
plans
Area-based approach focusing on maximizing scope of impact
Excellent tool for attracting ODA
Absorbed about 30% of CARPs regular budget annually
 Merits and limits of the ARC strategy
Productivity higher by 15% in farms located in ARCs
Incomplete coverage: only 50% of ARBs covered

Targeting favors areas with medium agricultural

potential and weakly correlated with poverty
Extension of support services to marginal areas
continues being a policy (and financial) challenge
Further reinforces the higher productivity of small
farms, contributing to take off of reform beneficiaries
Little differentiation across communities that differ in
terms of resource endowments and agricultural potential
 Impact on land market
Land Market Efficiency Land Market Efficiency
2000 2006

25
25

20
20

total land area, ha

15
15

10
10

5
5

0
0

0 5 10 15 20
0 5 10 15 20 25 total agricultural land owned, ha
total agricultural land owned, ha
bandwidth = .8
bandwidth = .8

Rentals & sharecropping relevant for accessing land

Land markets works more poorly in ARCs

Loss of productivity and of returns to specialization

 Impact on access to credit
70% farms rationed in formal credit market
Hypothesis: lack of individual title or collective
CLOA affects negatively access to credit
+1 ha of land with individual title leads to +6%
probability of accessing credit, even among small
farmers
Cooperative membership improves access to credit

Being an ARB has negative impact on access

Signals impact of legal restrictions on land

transferability on use of land as collateral
 Sustainability issues
Lack of systematic data to analyze sales of
reformed land
Anecdotal evidence suggests phenomenon is
widespread
In plantation sector evidence is where
phenomenon is most dramatic
Loopholes in legislation do not impede but
raise transaction costs of selling land
Implications for repayment of the agrarian debt
Key issue in the debate on CARPs extension
 Conclusions and (hopefully wise) policy
recommendations
Slow progress and typical challenges faced by centralized agrarian
reform programs
Weak land administration system
Some trade-off between efficiency and equity in plantation sector
A scaled up decentralized approach to land reform is needed to
maintain momentum
Threat of compulsory acquisition should be maintained and
focused on larger and more difficult holdings
The role of agriculture in poverty reduction is not uniform across
rural landscape. Need to identify areas where to focus resources
Land distribution and support services need to go hand in hand
Legal reforms also necessary to reactivate land markets
Break-up of mother CLOAs needs to be addressed