World Bank's interest in land reform

The World Bank views land reform as a way to quell social unrest. The mere semblance of land reform is useful in dampening people's protest, particularly the strengthening of a peasant movement. The Bank is also preoccupied with productivity, which motivated its interest in tenure arrangements. Conventional economists admit that feudal relations of production hamper productivity. Meanwhile, the Bank also gives credit to feudal advantages, especially cheap and unorganized labor. Thus, it welcomes more "modern" relations of production because rural monopolies on land, credit, trading and marketing are inefficient. Feudal exploitation is complemented with semi-feudal arrangements for the benefit of transnational corporations.

International organizations have been opposed to radically redistributive land reforms such as in China and Vietnam wherein little or no compensation was given to expropriated lands. They had been ambivalent about supporting land reform though there were several declarations, researches and policy statements on land reform, which was in any case constrained by the "Washington Consensus" of liberalization, privatization and deregulation.

The World Bank's structural adjustment programs that curbed public spending and imposed neo-liberal policies that are inherently anti-people diminished land reform across the globe.

It is quite ironic that in the mid-1990s, the World Bank put agrarian reform back on the international agenda. The Bank took advantage of the clamor for land reform to push for its policy "innovation" "" market-oriented land reform, which is devoid of social justice - to replace state-led land distribution.

Situation of the Third World

Economic crisis, worsened by mismanagement, debt and corruption; unfair multilateral trade policies; and burgeoning trade deficits resulted in mounting debts for Third World countries in the 1980s and 1990s. Many countries turned to the World Bank and the International Monetary Fund for help and agreed to take a package of severe trade, fiscal and monetary actions called structural adjustment and stabilization programs.

Land reforms were failing because these involved compensation and there were never enough funds to compensate landlords. And because there was compensation and negotiation for prices, land reform programs dragged on. The impact of the IMF-WB policies was the last straw for the land reform programs.

These negative impacts can be seen in public expenditure cuts (especially for social services like health and education, and infrastructure such as irrigation, roads), devaluation of currency that hiked inflation, and decreased subsidies to agricultural production inputs and rural welfare. The implications to real wage, income distribution and poverty have been tremendous.

Previous World Bank policy on land reform

The World Bank issued a stand on land reform only in 1975 through its "Land Reform Policy Paper." The paper's professed advocacy of agrarian reform, however, was not translated into actual support for land redistribution as the Bank was busy with a project that aimed to restructure Third World agriculture - the Green Revolution. R&D to increase farm productivity and the introduction of new technologies were pursued with a view of providing new markets and investment opportunities for developed countries' TNCs. The program was also deemed to be effective in pacifying peasant unrest.

The 1975 Policy Paper's major recommendations were: (1) formal land titling as a precondition of "modern development"; (2) abandonment of communal tenure systems in favor of freehold title and sub-division of the commons; (3) widespread promotion of land sales markets to bring about efficiency-enhancing land transfers; and (4) support for land redistribution on both efficiency and equity grounds.

The Bank's policy advice endeavored to do away with customary communal tenure systems that are considered backward. These common lands are also traditionally utilized for food production and are thus incompatible with the World Bank's imposition of export-oriented agriculture. Privatization of land ownership would provide a more favorable environment for cash crop production. In addition, this contributes to debt servicing since the proceeds of public land sales are used to generate government revenues, the bulk of which are paid to the international creditors.

The break up and privatization of communal lands and the promotion of land markets merely benefit big landowners and a few rich farmers able to venture into capital-intensive farming. Indigenous peoples and poor farmers, on the other hand, continue to be displaced since there is no place for them in the highly competitive climate of agribusiness. The Bank's recommendations therefore are far from considering land reform as a means to halt feudal exploitation in rural areas.

In the 1990s, the World Bank reviewed its Land Reform Policy Paper and started promoting market-assisted land reform as an alternative to redistributive land reform. This only underscores the fact that the World Bank uses land reform as a tool to tailor Third World agriculture to the demands of monopoly capital. It serves the interest of landlords and TNCs in maintaining monopoly on agricultural lands. Thus, government programs that are 'market distorting' are vigorously discouraged.

Market-oriented land reform

The main elements of market-oriented land reform are:

1. direct land transactions between willing buyers and sellers, supported by borrowed foreign funds and financed by subsidized credit to enable potential buyers to pay the prevailing market prices;
2. no expropriation of private land but instead a voluntary land transaction, using property as collateral in the credit market; and
3. participation of non-government groups in implementation.

This market-oriented land policy is associated with privatization of the indigenous customary land tenure. This process includes individual titling of property rights in land and lifting the restrictions on its sale to outsiders. Also, the redistributive reforms are dismantled, such as the decollectivization of production cooperatives; break up of state farms and their sale in the open market; abolition of protective measures against the eviction of tenants and extraction of market-determined rent.

The argument for the market approach to land reform rests on the following premises: the beneficiary's immense production efficiency and investment incentives (since there is access to credit to pay for the land).

A World Bank's economist describes this land policy as "a mechanism to provide an efficiency and equity-enhancing redistribution of assets that would increase overall investment at a cost that is comparable to other types of government intervention."

The FAO advocated this market-oriented land reform and declared, at the initial stage of the approach and without proof, that it is the most effective way to distribute land and reduce the unequal distribution pattern.

Application of World Bank policies on land reform

For many Third World countries, the implementation of the structural adjustment program and market liberalization policies meant the privatization of State farms and communal lands of indigenous peoples, and the deregulation of farm tenancy arrangements that were part of previous redistributive land reforms.

The market approach assumes the ability of the landless to gain access to private landownership through financial aid. The experience of Brazil, Colombia, the Philippines and South Africa do not live up to expectation basically because of the power wielded by the ruling elite who manage to maneuver domestic and foreign resources away from the poor in favor of rich farmers/landlords and speculators. It is absurd to expect poor peasants to be in an equal bargaining position with landowners in negotiating prices of land.

With the economic reforms, the poor farmers were projected to achieve higher productivity and income because of higher agricultural investment and higher growth rates, which will be sustained enough to increase purchasing power and decrease poverty.

The experience of countries that implemented SAPs showed otherwise. Employment opportunities for the growing number of agricultural workers have narrowed. Bankruptcy of small farms due to foreign competition brought by trade liberalization, rising unemployment, escalating prices of goods and services have intensified poverty, especially in the countryside.

In Brazil, Colombia, Kenya, the Philippines and South Africa, which share some structural characteristics "" such as implementation of a series of economic reforms and huge external debts, including those involving market-based land reform - rural poverty incidence remains high, the degree of land concentration is also high while landlessness among farm households remains widespread. Still, the market approach to land reform continues to be promoted and imposed on other countries.

Market-oriented Land Reform in the Philippines

Land reform was the centerpiece program of the Aquino government. The Comprehensive Agrarian Reform Program (CARP) is the third attempt at agrarian reform since 1962. It covers the distribution of rice and corn lands (which is basically a continuation of the Marcos land reform program), idle and abandoned lands, lands under the voluntary offers to sell (VOS) scheme, sequestered lands of Marcos and his cronies, and government-owned agricultural lands.

The CARP was supposed to run on a ten-year period such that by 1998, the target of 10.3 million hectares will have been distributed, benefiting around 3.9 million farmers. But implementation of the CARP continues to lag. Department of Agrarian Reform figures show that as of June 2002, CARP distributed only 5.7 million hectares or 71% of its already reduced scope of eight million hectares. From 1972 to June 2005, lands distributed total only 6.46 million hectares.

The CARP is flawed from the beginning. It allows retention limits that defeat the principle of "land to the tiller". CARP inherently favors landlord interests, through such provisions as the land retention right of landlords and their children, compensation for land acquired by government for agrarian reform, amortization by beneficiaries of lands granted under the program, and CARP's acceptance of "arrangements alternative to the physical distribution of lands such as production or profit sharing, labor administration, and the distribution of shares of stock."

Through the voluntary offer to sell or the voluntary land transfer scheme, landowners can negotiate the price directly with farmers. CARP also defers coverage of commercial farms. Because of CARP's many loopholes, landlords have engaged in massive land use conversions and cancellation or confiscation of land certificates already issued to beneficiaries.

The recommendations of the World Bank's 1975 Land Reform Policy Paper are clearly enshrined in the CARP. It relies on sales operations to "distribute" private land to the farmers. It prioritized the titling of public lands and settlements already occupied by farmers or the privatization of communal lands instead of breaking up and distributing big private landholdings.

The World Bank did not directly support land acquisition but channeled its funds to CARP's extension programs that only benefited the landed elite and agribusiness corporations. During the Aquino administration, the Bank funded the nucleus estate management system, a plantation set-up centered on a corporation with small farmholdings dependent on the center for financing, inputs, management, marketing, processing facilities and other technological support.

Meanwhile, government analysts observed that the 'downside' of agrarian reform is that it constrained the rural land markets and restricted the trading of agricultural lands. This is because the law prohibits lands acquired by beneficiaries from being "sold, transferred or conveyed except to through hereditary succession or to the government for a period of ten years". It also prohibits banks from foreclosing and owning properties secured by emancipation patent or certificate of land ownership award. If an agrarian reform beneficiary is unable to pay the bank loan, the bank has to turn over the emancipation patent or certificate of land award to the government that will give the land to another agrarian beneficiary.

A decade of the CARP did not even make a dent in the monopoly control of landlords. According to the 1998 Annual Poverty Indicator Survey, 68% of the households who had at least one member working in agriculture did not own land other than their residence, and only about 3% acquired land through CARP. In the 2002 APIS, the number of families that acquired lands other than residence through CARP is 376,000 or 11% of families with lands other than residence.

Since almost all public and other less controversial lands were already covered, CARP was supposed to start distributing the more contentious estates of landlords and corporations. But the World Bank advised the government to stop compulsory acquisition schemes and focus on the market-oriented provisions of CARP.

In its 1996 Philippines country report "A Strategy to Fight Poverty," the Bank observed, "comprehensive rural land reform, as currently structured, is bound to remain contentious, expensive, and administratively complex" and concluded, "the administrative complexity of land reform probably cannot be resolved in the context of a government-administered program executed in a democratic society."

The Bank's 1997 report "Philippines: Promoting Equitable Rural Growth" made more concrete recommendations, including the completion of CARP through a "process of market-assisted land reform" for holdings below 24 hectares. The CARP was already market-friendly by design, thus it required just a little fine-tuning to align it with the World Bank model. As market-oriented land reform was compatible with the framework of the existing program, the World Bank did not even have to create pilot programs like in Brazil and Colombia.

Since 1998, land distribution through compulsory acquisition was almost nil. Instead the Department of Agrarian Reform advocates negotiated settlements in the context of a "demand-driven" approach.

ARCs

In the mid-1990s, the World Bank supported President Ramos' brainchild, the Agrarian Reform Communities (ARCs). The ARC concept encourages partnership with agribusiness. ARC is defined as a cluster of contiguous barangays where there is a critical mass of farmers and farm workers awaiting the full implementation of agrarian reform. As of June 2005, there are 1,697 ARCs in 6,307 barangays.

ARCs are geared towards production of HVCs such as tropical fruits, vegetables and rubber, rather than staple crops such as rice and corn for domestic consumption. DAR encourages ARCs to enter into partnerships with agribusiness companies through such arrangements as contract growing and lease-cum-profit sharing. These arrangements intensify the control of TNCs and big local agribusiness firms over CARP land while allowing them access to cheap farm labor force.

Intensifying market orientation

After the Comprehensive Agrarian Reform Program's extension in 1998, Administrative Orders issued by the Department of Agrarian Reform (DAR) have watered it down even further by diluting the land reform concept and strengthening the rights of landlords. For example, AO 9, issued December 1998 provided guidelines for Agribusiness Venture Arrangements including contract growing, lease arrangements, management contracts, build-operate-transfer schemes and joint venture arrangements. This arrangement, also known as a corporative scheme, was further outlined in AO 2 of 1999.

More recently, President Arroyo's former socioeconomic planning secretary proposed "Plan 747," a draft framework of strategies supposed to address the perennial problem of poverty in the Philippines. The plan introduced the concept of "land stewardship" that upholds the landlord's right to own and control vast tracts of agricultural land, provided he is a "responsible" steward of it. The plan also admits that government's land reform program has failed to solve poverty in the countryside and says that encouraging private investments in the agricultural sector will make it more productive and reduce rural unemployment and poverty.
It proposes consolidating agricultural production of specific crops, such as rubber and cacao, into nucleus farms. It calls for more private investments particularly among agrarian reform lands. Clearly, the concept of "land stewardship" encourages the continuing land monopoly of landlords, landowners' evasion of land reform and wholesale land use conversion.

Farmland as Collateral Bill

According to Arroyo, "To put social justice character to job creation, we have to make sure that we promote micro-finance and agribusiness." In her inaugural address, the President unveiled her vision of creating three million entrepreneurs through micro-financing and the conversion of two million hectares of land into agribusiness hub. She said "asset reform" involves three areas of land reform "" agrarian, urban and ancestral "" thus, there is a need to "move to the new land reform, which is to make farms qualified as collateral."

The Farmland as Collateral bill seeks to provide farmers access to credit facilities through the use of Certificate of Land Ownership Award (CLOA) given under the land reform program as collateral for loans from government financing institutions (GFIs). The basic principle behind the bill "" a 'liberalized' agrarian reform "" is essentially anti-farmer as it would lead to the re-consolidation of agricultural land in the hands of a few.

The bill seeks to remove the ten-year prohibition on the sale, transfer or conveyance of distributed lands (whether unpaid, partially paid or fully paid). The World Bank, Asian Development Bank and a number of landlord-legislators have long been lobbying for the removal of this provision on the pretext that they would want to see small farmers gain access to formal credit. If passed, the proposed law will also strip away the basic protection supposedly accorded to ARBs, thereby opening them to abuse.

It will not only force small landowning farmers and many cash-strapped ARBs to sell or give up their lands, it will also legitimize the illegal and extra-legal deals that have been taking place with disadvantageous terms to farmers. These include the widespread practice of 'pawning' of lands, EPs, CLOAs, CLTs, homestead patents, usufruct or farming rights, etc. in exchange for farm capital.

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