The recent “compromise agreement” is another fry-in-your-own-lard deal being promoted by paid hacks as a “breakthrough deal”. But who really is benefitting from the breakthrough? Definitely, not the farmers who are getting another bum deal. This is the sort of news that just enrages thinking people’s sense of decency. HLI represents the hypocrisy, the phoniness, and the corruption of the Aquino administration.
A deal is a deal. An agreement is an agreement. Don’t go into one if you have no intentions of fulfilling your part of the deal. It smacks of bad faith. It just lowered my perceptions of the “hacienderos”. The lifestyles of the Cojuangos and Aquinos represent the lifestyle of the oligarchy – LEECHES and PARASITES.
Having said that read on.
By Philip Tubeza
Philippine Daily Inquirer
First Posted 02:49:00 08/07/2010
MANILA, Philippines—It’s a world turned upside down.
This was how lawyer Christian Monsod, a member of the Constitutional Commission that drafted the 1987 Constitution, reacted to the reported compromise deal that was reached between the farm workers and management of Hacienda Luisita, the 6,500-hectare sugar plantation in Central Luzon owned by the Cojuangco family of President Aquino.
“The bottom line is that the Cojuangcos do not want to let go of the land,” said Monsod, who was himself helping to broker a deal between Hacienda Luisita Inc. and the farmers, with the backing of the Catholic Bishops’ Conference of the Philippines.
The deal runs counter to the “letter and spirit” of the 1987 Constitution which dictates that agrarian reform lands should go to the farmers while landowners get just compensation in return, according to Monsod.
“Now, it’s a world turned upside down with the landowners getting the land and farmers getting the compensation. If you have economic and political power concentrated, you can turn the world on its head,” he said.
The Supreme Court has scheduled a hearing for Aug. 18 on an HLI petition against the implementation of a Presidential Agrarian Reform Council (PARC) and Department of Agrarian Reform (DAR) directive canceling a stock distribution option (SDO) agreement and ordering HLI to redistribute 4,915 hectares of the hacienda lands to the farmers under the Comprehensive Agrarian Reform Program (CARP).
Under the SDO scheme, the farm workers in 1989 agreed to take shares of stock instead of land. They ended up owning 30 percent of HLI shares.
In 2004, however, the farmers petitioned the DAR to have the SDO canceled. After seven workers were killed in a confrontation with soldiers and policemen on Nov. 16, 2004, the PARC ordered DAR to place 4,415 hectares of Hacienda Luisita under CARP coverage.
The HLI succeeded in getting the Supreme Court to issue a restraining order in 2005.
Monsod said he could not see any way by which the DAR and the Office of the Solicitor General could change their positions. He would expect the two offices to oppose the compromise deal, he said.
“I do not see how the DAR and the Office of the SolGen can consider this as a settlement that will benefit the farmers. I suppose the SolGen and the DAR would object to the compromise,” Monsod said.
He said the Cojuangcos were trying to preempt the Supreme Court from ruling on the case with this reported compromise deal.
“This is déjà vu … They’re trying this so-called compromise to render the Supreme Court case moot and academic,” Monsod said.
He said the Cojuangcos thought up the SDO scheme partly to escape a 1985 Manila court decision, based on a Marcos-era petition, ordering them to distribute the land to the farmers.
The Court of Appeals dismissed the case in 1988 after government lawyers themselves moved to withdraw it, reasoning that the hacienda lands were supposed to be distributed under the Aquino government’s agrarian reform program.
“Now that there’s another case that did not go their way, they’re trying this compromise. Isn’t that déjà vu?” Monsod said.
He also questioned the new agreement’s provision that sets aside only 1,400 hectares, or one-third of the hacienda’s land area, for distribution.
“If you look at the agrarian reform program, it says all the land should be given. How come the farmers end up owning only one-third of it? That does not make sense. I don’t see how that can be considered a compromise,” Monsod said.
Where’s the money?
Monsod said HLI also cannot claim that the farmers are only getting one-third of the land because they owned only 33 percent of HLI shares under the SDO.
Monsod explained that the farmers were told in 1989 that they were getting only 33 percent of the shares because this was supposedly the equivalent value of the hacienda land in the whole company.
“Now the farmers are getting only one-third of that land. I don’t understand that,” he said.
Monsod also noted that HLI had argued in 1989 that the 4,900 hectares it put under the SDO could not be distributed to the then 6,000 farmer-beneficiaries because they would then be getting “less than one hectare.”
He said the management explained that each farmer getting less one hectare of land was not economically viable for “large-scale sugar production.”
“But 15 years (after 1989), it turned out that that their (large-scale sugar plantation) enterprise was not profitable. How can they lose money for 15 years?” Monsod said.
“In other words, it did not work as a justification for not distributing the land. It was unfounded,” he said.
Getting away with it
And with the new settlement, farmers would now be getting small plots of land, Monsod noted.
“So, who are they fooling? But they got away with it then,” he said.
Monsod said that because HLI was losing money, it set aside in 2004 around 500 hectares which it converted into an industrial park. They also used 184 hectares to pay debts to the Rizal Commercial Banking Corp.
“They earned P1.2 billion to pay off debts and make up for the losses but the farmers only got P37.5 million because under the (SDO) they would only get a 3-percent share of gross sales,” Monsod said.
“Where did the money go? And now they are again losing money,” he said.
Tons of books have been written about agrarian reform and how it frees up capital and transforms an agrarian economy into a market economy. And yet, the Philippine can’t still get it right. Not that it does not know what is the right thing to do – but it refuses to do so. Instead it comes up with alibis. Now there are two types of alibis – alibis for failure and alibis for success. If the Philippines were to have an alibi – let it be an alibi for success.
Seriously, I wonder what the editor of the Inquirer is thinking at this moment. In his/her heart of hearts – why is he tuning HLI out? This is not about partisanship – this is about righting a wrong. Where is our sense of right and wrong? Don’t people know what’s right and what’s wrong anymore? How can we allow this mockery continue to happen? Where have all the good people gone? Where are their voices? Why are they silent on Hacienda Luisita? Have they opted to look the other way – as HLI lays the farmers to waste – in exchange for plush offices and comfy homes? Do you people even have a conscience? You are living off on the land which DOES NOT BELONG TO YOU.
My parents raised me up not to use properties which are not mine, to honor my word, and to discern between right and wrong. And by golly, Hacienda Luisita represents the ethical opposite of everything I stand for. I am outraged. The deal is DISTRIBUTE ALL LANDS – not parts of the land, not an option to own land or to own stocks – what is so hard to understand with the word ALL?
I can imagine the farmers and peasants shouting – MGA WALANGHIYA!!! NOYNOY MGA KAMAG-ANAK MO – MGA WALANGHIYA!!! ANG KAKAPAL NG MGA MUKHA NIYO! MAHIYA NAMAN KAYO! NOYNOY, KRIS – PAGSABIHAN NYO NAMAN YONG MGA KAMAG-ANAK NYO. DI NA KAYO NAHIYA! ITIGIL NYO NA ANG PANGLOLOKO NYO!!! MGA MANGGAGANTSO!
Why the Philippines needs Agrarian Reform ASAP
John Medaille, an adjunct instructor in the University of Dallas, where he teaches “Social Justice for Business Students,” a requirement for the Business Leadership Degree provides a very lucid narrative on how land reform transformed agrarian economies into tiger economies.
The case for land redistribution can be made in pure neo-classical terms. Where there are few owners, and especially when the few combine to control the market, a monopoly in land is created which in turn creates a monopsony for the labor market; land owners become “price makers” rather than “price takers.” Further, the economic control of the labor market is often reinforced by a series of institutional controls, such as the difficulty tenants or laborers have of obtaining credit, use of police power to prevent protests or unions, lack of education in rural areas, discrimination, etc. All of these things leave sharecroppers or farm laborers at a disadvantage in wage or rent negotiations, making these contracts leonine. The effect is that the landowners can arbitrarily lower the cost of labor with the results that the marginal costs are higher than the average costs, reversing the situation in a “normal” labor market; to increase the amount of labor would require them to raise wages rather than lower them. This has four consequences from a purely neo-classical perspective. One, the cost of labor is lower than what it would be in a competitive environment resulting in exploitation of the farm worker. Indeed, the low wages make marginal costs higher than average costs. Two, total employment on the farms is lower than what it would be because the higher marginal costs make it inefficient (in terms of profit) to fully utilize the land, resulting in surplus labor. The combination of surplus labor and lowered labor costs in turn lowers the “reservation wage” in urban areas, accentuating urban poverty. The third point follows from the second: since marginal costs are higher than average costs, total output is lower than what it could be, resulting in production inefficiencies. Whenever labor costs are artificially controlled through monopoly or monopsony power, average labor cost is likely to be lower than marginal cost, meaning that optimal returns to capital are reached before full utilization of the resource. Which leads to four, although the farm is less efficient, the total profits are higher, which results in an inequality of income distribution and widespread poverty. In other words, the farm is made “efficient” not in terms of total output, but in terms of total profit.
The implications are that wider ownership of land would raise total output and average income by breaking the monopsony over the labor market. There would be a more equal distribution of income and a reduction in both urban and rural poverty. This in turn would broaden the market in the non-agricultural sectors, allowing for more secure investment opportunities and hence advance the broadening of the economy away from the purely agricultural. However, there is a question of how to break up land monopolies. Three solutions have been put forward, a market-based solution, favored by the World Bank; a re-distributive solution, in which land is simply expropriated; or by a combination of the two. All three have been tried extensively since the 1950’s, when land reform achieved a high priority on the development agenda; the first two have been shown to have extensive problems.
The third solution, a combination of market buy out and expropriation. Like expropriation, this solution actually changes power relationships within a given society; like market based solutions, it recognizes, partially, the rights of existing land owners. In such solutions, there is no magic formula as to the allocation of rights and power; it is arrived at on an arbitrary basis and is purely a matter of judgment. The primary examples of this form of land redistribution are Taiwan, Japan, and South Korea. The circumstances in which the redistributions took place are somewhat remarkable, involving three historical circumstances. The first was the explication of Chinese nationalism given by Sun Yat-sen (1866-1925), head of the Chinese Nationalist Party (the Kuomintang) which overthrew the Manchu dynasty in China and was in turn overthrown by the Chinese Communists. The second was American ascendancy over the east after World War II. And the third was the imperative to effective action given by the fear of a communist victory in all three places and the need to break the power of an oppressive land owning class whose very existence had been the biggest practical argument in favor of communism.
Taiwan was still a low labor cost state and hence there were transplant factories, what we now call “outsourcing.” Manufacturers in Hong Kong and Japan contracted out some work to Taiwan. This gave the Taiwanese valuable experience in setting up factories and managing production. In learning how to make things cheaply for others, they learned how to make the same things for themselves. But the skills learned were then used to set up their own factories.
To encourage efficient use of the land, a Georgist tax policy was followed. Georgism was a 19th century theory developed by Henry George (1839-1897). George was probably the most well-known and popular economist of his day; some measure of his popularity can be gleaned from the fact that at his death, over 100,000 people filed past his coffin, while thousands more were unable to get in. His major work, Progress and Poverty, was a best seller for many years, and his ideas had a tremendous influence up until recently. Basically, George noted that while the law of rents allocated all values above subsistence to the landlord, the landlord did not actually do anything to earn those values. George also noted that the claim to the land the landlord held was based not on any natural right, but on government power alone. Further, the rent of land was due totally to the external factors: population and off-site improvements. In other words, the landlord added no values to the land per se. Yet, land tends to be taxed lightly while the improvements on land tend to be taxed heavily. For George, this reversed the logical order. Land should be taxed to its full rental value, while improvements should not be taxed at all; land after all was pure gift, while what a man made of the land was his alone. Thus Georgism is often called the single-tax theory, since there would be only land taxes. George believed that the single tax would force down the price of land by making it unprofitable to hold parcels for speculation, while encouraging development by leaving both labor and improvements to the land untaxed. One can say that George socialized the land while privatizing its development; it is an interesting view of the questions of the social and the private values of land that we have previously examined. Sun Yat-sen was an admirer of Henry George and made his ideas a part and parcel of Chinese nationalism; hence George’s theories were spread through the East. In fact, both Singapore and Hong Kong are based on Georgist principles. In Hong Kong, all the land is owned by the government and leased to developers (which is equivalent to a 100% tax rate), while in Singapore, the government owns 65% of the land. Needless to say, both are very prosperous states. Georgism deserves a lot more space then this. But for our purposes we can note that Taiwan followed a Georgist policy to encourage development while keeping other taxes relatively low.
Taiwan, Korea, and Japan have demonstrated the great effectiveness of redistributive policies in providing development with equity. In only a single generation, Korea and Taiwan were able to transform themselves from feudal and highly unequal societies into industrial powerhouses while overcoming poverty and inequality. As such, redistribution of productive assets should provide a model for development. This is an especially important question, given the destabilizing inequality and lack of development that exists in the world today; moreover the question is made more important today by both the phenomenon of “globalization” and the precarious security situation in the world.
Agrarian reform and freeing the Philippine economy are the two programs that will bring the most dividends to Philippine society. It will take political will to bring this about. So far it has been a disgusting train wreck of gaffes and more gaffees. Absolutely dismal.
Note that despite its limited implementation and enforcement, agrarian reform has done much for the Philippine economy. As pointed out in the website Economy Watch, Agrarian Reform in the Philippines not only accelerated the productivity of the agricultural sector of the country, but promoted the agro-based industries as well.
Agrarian Reform acts and laws in Philippines: gradual evolution
* The beginning: The idea of initiating land reform programs in Philippines can be traced back to 1963. The enactment of the Republic Act (RA) 3844, Section 49, better known as the Agricultural Land Reform Code emphasized on the foundation of an organization called the Land Authority.Established on 8th August 1963, the Land Authority was endowed with the responsibility of implementing the Republic Act 3844 policies. To hasten up the other activities associated with the land reform programs in Philippines, the Republic Act 3844 offered formal recognition to all the existing agencies involved with similar activities. The functions of these agencies were re-coordinated, with the aim of fulfilling the common objectives of the land reform programs.
* The 1970s: Republic Act 6389, popularly referred to as the Code of Agrarian Reform of the Philippines proposed the foundation of an autonomous department, the Department of Agrarian Reform (DAR). This independent body was formed to replace the existing Land Authority. The Department of Agrarian Reform was further re-named as the Ministry of Agrarian Reform in 1978, under the then Parliamentary form of government in Philippines.
* 1980 onwards: The year 1988 saw the formulation of Republic Act No. 6657, popular as the Comprehensive Agrarian Reform Law or CARL. The Comprehensive Agrarian Reform Law or CARL was enacted to offer lawful basis for the implementation of the Comprehensive Agrarian Reform Program or CARP, suggesting the implementation methods as well. In fact, it was the CARL, which empowered the CARP for supporting the activities of the agro-based industries in the country.
* The post-2000 era: The Department of Agrarian Reform was further re-named as the Department of Land Reform in this era. The Executive Order 364, signed by the Philippine President Gloria Macapagal-Arroyo was enacted to widen the areas of operation of the Department of Land Reform, making it accountable for all land reform activities and programs in Philippines. Further, the Executive Order also made the Department, controller and supervisory body of the Philippine Commission on Urban Poor (PCUP). In addition, recognition of the ownership of the ancestral lands of the native Philippine population also came under the jurisdiction of the Department of Land Reform.
Very recently, Executive Order No. 456 was signed by President Arroyo on 23rd August 2005. This Order commanded the Department of Land Reform to revert back to its original name, Department of Agrarian Reform. The aim of the Executive Order 456 was to do something more other than mere reformation of the agrarian land. This specific order considered all the important factors to promote beneficial activities which can lead to overall economic upliftment of the Philippine agricultural sector and the peasant class.
Agricultural Sector of Philippines and Agrarian Reforms: effects
* In spite of Agrarian Reform, absence of symmetry in the land allocation pattern persisted as a permanent plight to the agricultural sector of Philippines.
* There was hardly any change which took place in the existing relationship between the landlords and the peasants. The relationship was not at all liberalized, but continued to be feudal in nature. Here, the ownership of agricultural land remained concentrated in the hands of few landlords. It was basically due to the narrow-mindedness of the landholders who showed more interest in controlling the uses of their plots rather than in achieving sustained increase in agricultural productivity.
* When the chunks of the agricultural land were under the control of the landowners, they put them on rent to the farmers for cultivation. Hence, the tenancy rates in the Philippines rural areas existed and varied between 50% to 70%. This made the landownership somewhat monopolistic in nature in Philippines, where wealth concentrated in the hands of the rich and powerful landlords, while the peasant classes were pushed towards poverty.
However, the situation showed substantial improvements, with the passing of the Comprehensive Agrarian Reform Law (CARL) or Republic Act No. 6657. The Law utilized the maximum portion of the 50 billion (US$1.92 billion) fund in initiating developmental land reform programs. Though the development was quite slow in terms of the allocating the lands to the tillers, yet the government was successful in allocating an aggregate of 2.56 million hectares of land among the landless peasants.
Clearly, much more needs to be done and the Philippines is not doing it.
Letting HLI, with its press releases and pats in the back by its media cronies, get away with injustice might just become the flagship legacy of the Aquino administration.
The apple does not fall far from the tree. Si P. Noy, anak – nga ng nanay nya.