End it

We invested a quarter of a century in a badly designed program that did not deliver liberation to the rural poor. All it achieved, according to one of our most prominent economists, was to convert at great public expense the landless poor into the landed poor.

As we approach decision point on the Comprehensive Agrarian Reform Program (CARP), Cory Aquino’s “centerpiece program,” it is time to take a hard-nosed look at the costs and benefits. This was, from the very beginning, a flawed program — and not only because it excluded Hacienda Luisita from its coverage.

The Foundation for Economic Freedom (FEF), an advocacy group of prominent economists and policy leaders, released a position paper calling for the termination of the agrarian reform program. It has been a political project driven by moralizing and bad economic sense. The long-term costs on our development are huge.

When the original CARP program ended some years back, Congress passed a law extending the program and further expanding its coverage. The Comprehensive Agrarian Reform Program Extension with Reforms (CARPER) ends this year.

Agrarian reform advocates, principally from left wing groups, pushed for the extension despite the program’s obvious failings. Because it was politically profitable for our legislators to endorse the extension program, the law commanding it easily passed Congress. Few voices were courageous enough to argue against a popular — albeit economically destructive — program that created a semblance of achieving social justice even as it forced our agriculture to stagnate.

The FEF position paper builds on the findings of Dr. Raul Fabella, our national scientist for economics.

In his report, Fabella notes that the land reform program skewed the rural land market, forcing up land prices without encouraging productivity. It subdivided the land into uneconomical “family-sized” parcels that could not possibly support families.

The program created what economists call “rigidities” in our agriculture. It preserved cultivation of low-value crops, prevented more efficient farmers from acquiring the land of the less efficient ones. It discouraged agribusiness and created protracted uncertainties about land rights.

In a word, the only accomplishment of this badly-conceived program was to force our agriculture to stagnate. It discouraged capitalization of our farms to improve efficiencies and raise output.

If our cost of producing agricultural goods are much higher than our neighboring economies (thereby encouraging massive smuggling of agricultural products), blame that on CARP. If our economy is notoriously unable to meet our country’s food needs, blame that on CARP too. If our food price regime is too high, aggravating poverty incidence, blame that on the inefficiency of our agricultural sector and, ultimately, on CARP.

Blame CARP for abetting rural-to-urban migration, and ultimately for labor exportation. If our agricultural communities are unable to produce enough wealth to encourage people to stay, farms cannot retain people. They would rather take their chances in cities, huddled in shanties and squatting on private land.

CARP, to be sure, did not end agrarian unrest. It simply created a larger demand for state dole-outs for farms. It enlarged the constituency for the politics of patronage instead of creating a robust middle class of independent farmers. Therefore, it not only warped our economy; it warped our politics as well.

The remedial measures — from the cash transfer program to the NFA — taken to prevent the rural poor from becoming an explosive social volcano made things worse.

The NFA, nothing more than a vehicle for delivering concealed subsidies for our agriculture, is a hotbed for corruption, the milking cow for whichever political faction of the elite is in power. The cash transfer program, fueled by borrowed money, pushes future governments into worse indebtedness without in any way making a dent on poverty.

The CARP, to be sure, enjoys great emotional appeal. From the start, is was packaged as a social justice program that would end rural poverty. Inside that appealing package was an unsustainable, and ultimately destructive, economic model: subsistence farms that were actually expected to produce wealth.

The wild-eyed, soft-hearted advocates of CARP might have been motivated by good intentions. As that old Persian saying goes: the road to Hell is paved with good intentions.

The only way we can save our agriculture is by adopting good economics instead of good slogans. Only by making market forces work by increasing flexibility in our agriculture can we finally bring down the food price regime and actually decrease poverty.

This is the time to shift our rural development paradigm from one based on state patronage to one driven by market efficiencies.

The FEF notes in its position paper that nearly the entire amount of land originally intended as the program’s coverage has been transferred — to no avail as far as poverty alleviation is concerned. In terms of breadth, the CARP and unholy offspring, the CARPER, distributed over 5 million hectares, covering 16% of our entire land area. It has a much larger scope, and longest tenure, than any such program in other countries.

What social benefits have been achieved. Inequality worsened. Poverty deepened. We are now a nation unable to feed itself.

The FEF calls on Congress to allow this unhappy program to expire, on the DAR to desist from further issuing notices of coverage because this adds uncertainty over property rights, and for government to instead to invest its energies on improving agricultural efficiency and encouraging rural investments.

The question, of course, is: Can our politicians, and this petty administration particularly, take a grander view of our nation’s future?