Free land no cure for PH rural poverty – economists

Foundation for Economic Freedom

A group of prominent economists warned against a “populist” move to distribute free land to farmers, arguing that this will neither boost agricultural productivity nor end rural poverty.

The Foundation for Economic Freedom (FEF) – an advocacy group for good economic governance and market-friendly reforms – issued on Friday a statement reacting to reports that the government had agreed to the demand of left-wing group National Democratic Front of the Philippines to offer free land as part of the ongoing peace talks.

FEF explained that restrictions on rural land imposed by the Comprehensive Agrarian Reform Law were what had been keeping farmers poor and preventing them from raising their agricultural productivity. These restrictions include the prohibition to sell or mortgage the property within 10 years from grant, prohibition to lease, and the prohibition to own more than five hectares of land, the FEF said.

These restrictions prevent agrarian reform beneficiaries from accessing cheap loans from the formal financial markets and also prevent efficient farmers from working on larger tracts of land and buying out inefficient ones, the group said.

“Giving out free land will not affect the situation on the ground because only 17 percent of agrarian reform beneficiaries are paying their loan amortizations. Therefore, farmers are effectively given their lands for free. Yet, agricultural productivity has remained stagnant and our farmers have remained poor,” FEF said.

“Giving out free land will just be a populist measure similar to free irrigation and free cavan of rice without really solving the fundamental problem of Philippine agriculture: restrictions in the rural land market,” it added.

According to the FEF, what Philippine agriculture needs is to provide the conditions for efficient farmers to introduce management, technology, and capital to farmlands by removing the restrictions on the rural land market.

“Instead, we propose that agrarian reform beneficiaries be given unrestricted titles to their lands, instead of the collective Certificate of Land Ownership Awards (CLOAs), that rob farmers of economic freedom and private initiative,” FEF said.