Supreme Court Decision on Hacienda Luisita

WHEREFORE, the Motion for Partial Reconsideration dated July 20, 2011 filed by public respondents Presidential Agrarian Reform Council and Department of Agrarian Reform, the Motion for Reconsideration dated July 19, 2011 filed by private respondent Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita, the Motion for Reconsideration dated July 21, 2011 filed by respondent-intervenor Farmworkers Agrarian Reform Movement, Inc., and the Motion for Reconsideration dated July 22, 2011 filed by private respondents Rene Galang and AMBALA are PARTIALLY GRANTED with respect to the option granted to the original farmworker-beneficiaries of Hacienda Luisita to remain with Hacienda Luisita, Inc., which is hereby RECALLED and SET ASIDE. The Motion for Clarification and Partial Reconsideration dated July 21, 2011 filed by petitioner HLI and the Motion for Reconsideration dated July 21, 2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya are DENIED.

The fallo of the Court’s July 5, 2011 Decision is hereby amended and shall read:

PARC Resolution No. 2005-32-01 dated December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006, placing the lands subject of HLI’s SDP under compulsory coverage on mandated land acquisition scheme of the CARP, are hereby AFFIRMED with the following modifications:

         All salaries, benefits, the 3% of the gross sales of the production of the agricultural lands, the 3% share in the proceeds of the sale of the 500-hectare converted land and the 80.51-hectare SCTEX lot and the homelots already received by the 10,502 FWBs composed of 6,296 original FWBs and the 4,206 non-qualified FWBs shall be respected with no obligation to refund or return them.  The 6,296 original FWBs shall forfeit and relinquish their rights over the HLI shares of stock issued to them in favor of HLI.  The HLI Corporate Secretary shall cancel the shares issued to the said FWBs and transfer them to HLI in the stocks and transfer book, which transfers shall be exempt from taxes, fees and charges. The 4,206 non-qualified FWBs shall remain as stockholders of HLI.

DAR shall segregate from the HLI agricultural land with an area of 4,915.75 hectares subject of PARC’s SDP-approving Resolution No. 89-12-2 the 500-hectare lot subject of the August 14, l996 Conversion Order and the 80.51-hectare lot sold to, or acquired by, the government as part of the SCTEX complex. After the segregation process, as indicated, is done, the remaining area shall be turned over to DAR for immediate land distribution to the original 6,296 FWBs or their successors-in-interest which will be identified by the DAR.  The 4,206 non-qualified FWBs are not entitled to any share in the land to be distributed by DAR.

HLI is directed to pay the original 6,296 FWBs the consideration of PhP 500,000,000 received by it from Luisita Realty, Inc. for the sale to the latter of 200 hectares out of the 500 hectares covered by the August 14, 1996 Conversion Order, the consideration of PhP 750,000,000 received by its owned subsidiary, Centennary Holdings, Inc., for the sale of the remaining 300 hectares of the aforementioned 500-hectare lot to Luisita Industrial Park Corporation, and the price of PhP 80,511,500 paid by the government through the Bases Conversion Development Authority for the sale of the 80.51-hectare lot used for the construction of the SCTEX road network.  From the total amount of PhP 1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP 1,330,511,500) shall be deducted the 3% of the proceeds of said transfers that were paid to the FWBs, the taxes and expenses relating to the transfer of titles to the transferees, and the expenditures incurred by HLI and Centennary Holdings, Inc. for legitimate corporate purposes.  For this purpose, DAR is ordered to engage the services of a reputable accounting firm approved by the parties to audit the books of HLI and Centennary Holdings, Inc. to determine if the PhP 1,330,511,500 proceeds of the sale of the three (3) aforementioned lots were actually used or spent for legitimate corporate purposes.  Any unspent or unused balance and any disallowed expenditures as determined by the audit shall be distributed to the 6,296 original FWBs.

          HLI is entitled to just compensation for the agricultural land that will be transferred to DAR to be reckoned from November 21, 1989 which is the date of issuance of PARC Resolution No. 89-12-2.  DAR and LBP are ordered to determine the compensation due to HLI.

          DAR shall submit a compliance report after six (6) months from finality of this judgment. It shall also submit, after submission of the compliance report, quarterly reports on the execution of this judgment within the first 15 days after the end of each quarter, until fully implemented.

The temporary restraining order is lifted.

SO ORDERED.

Source:http://sc.judiciary.gov.ph/jurisprudence/2011/november2011/171101.htm

SPECIAL REPORT: Phl now a heavy importer of logs

By Rudy A. Fernandez (The Philippine Star) Updated March 02, 2011

MANILA, Philippines - Once a lavish exporter of logs. Now a heavy importer of this wood product.

Also, a big chunk of the country’s lumber and other forest products, on top of the imported logs, is now sourced from Asian and Pacific countries (Indonesia, Malaysia, Thailand, Vietnam, China, Australia, New Zealand, Papua New Guinea) and as far as Canada in North America, Brazil in South America, South Africa, and Germany in Europe.

This is how pathetic the Philippines has become.

Centuries back, when billions of trees lushly mantled the country’s mountains, who would think that Filipinos would one day become log importers?

That fateful day came in the 1980s.

During the 1989-2003 period, the Philippines imported 7.7 million cubic meters of logs valued at $925.6 million (about P508 billion at the then peso-dollar exchange rate), National Statistics Office (NSO) records showed.

The country began heavily importing logs in 1989, buying 397,926 cu m valued then at $29.82 milllion.

Log importation peaked in 1996 when 877,585 cu m woth $127.4 million were shipped in. It decreased to 768,474 cu m in 1997 and down to 584,759 cu m in 2000.

It slid further to 164,960 cu m in 2005 and to 77,557 cu m in 2008, statistics obtained by The STAR from the Philippine Council for Agriculture, Forestry and Natural Resources Research and Development PCARRD) indicated.

NSO records also showed that the country imported 4.26 million cu m of lumber valued at $1.03 billion during the 1993-2003 period.

Lumber importation peaked in 1996 when the Philippines sourced from other countries 567,426 cu m valued at $162 million. It went down and up and down in the succeeding years, settling at 164,595 cu m in 2005.

Today, a former Department of Environment and Natural Resources (DENR) undersecretary reported recently, the country needs about 2.5 million cu m of wood, most of it imported, to feed its wood-based industry that sells in the international markets.

The 20th century Filipino, records now attest, has been the most wanton and destructive exploiter of the country’s natural resources.

Consider the following mind-boggling data gathered from various sources, among them the DENR-Forest Management Bureau (FMB) and United Nations Food and Agriculture Organization (UN-FAO):

• At the height of the logging industry in the 1960s and 1970s, a high 300,000 hectares of forests were cleared yearly. This is one-thirtieth of the country’s total land area of 30 million ha.

• During 1990-2000, deforestation was still high at 260,000 ha/yr. The deforestation rate decreased to 157,000 ha/yr during the 2000-2005 period.

The question new is: Will the 21st century Filipino (particularly the greedy and rapacious legal and illegal loggers and survivalist mountain dwellers) be left unbridled to wipe out what is left of the country’s forest resources?

With the unabated degradation of the environment set against the grim backdrop of a burgeoning population (fast racing to the 100 million mark), one wonders how well the Philippines will fare in its “race against time”.

Over the past two decades, catastrophes triggered by natural phenomena, notably typhoons and floods, swept communities in various parts of the country.

A glaring example was the deluge that sent thousands of residents of Ormoc City (Southern Leyte) to their watery graves in 1991.

In succeeding years, nature again angrily fought back with vengeance.

Mudslides buried villages in Guinsaugon (also in Southern Leyte) and Albay. Floods and landslides also subsequently swept Eastern Samar, resulting in the death of many old and young people alike.

Even legendary Mt. Makiling in Laguna was not spared. When typhoon “Milenyo” unleashed its fury on the mountain in 2006, 15 residents of Barangay Bagong Silang in the heart of the storied mountain perished in a landslide of boulders, uprooted trees and mud triggered by floodwaters cascading from the mountain.

Moreover, who can forget the deaths and properly destruction wrought by typhoons Ondoy, Pepeng, Frank, Basyang, and other deadly howlers that battered the country in recent years.

 The grim projection is out: At the rate the Philippines is ravaging its natural resources, it world be the first Southeast Asian country to lose its forests within the first half of the present century.

Centuries back, the country’s primeval forests were a paradise to behold.

During the last quarter of the 16^th century, at the early period of the Spanish colonization of the country, forests covered about 27 million hectares (more than 90 percent) of the total land area of 30 million ha.

The mountain ecosystem then natured about 3,500 species of indigenous trees, 8,120 species of flowering plants, 950 species and subspecies of birds, 240 to 260 species and subspecies of reptiles, and 640 species of mosses.

Many years back, too, about 3,800 species of plants endemic to the Philippine archipelago and not found anywhere in the world had been recorded.

By 1920 when there were only a little more than 12 million Filipinos, there were still about 18 million ha. of natural forests. This shrank to 17 million ha. in the mid-1930s, when the population was about 15 million.

By the 1990s, when there were already more than 70 million Filipinos, only 5.4 million ha. of forests were left, much of which were nonproductive and less than a million hectares of virgin forests.

In 2005, with the country’s burgeoning population having reached 86 million, only 16 provinces – 14 in Luzon and one each in the Visayas and Mindanao – had forests cover of only more than 50 percent, based on Department of Environment and Natural Resources (DENR) figures.

That was five years ago and, for sure, a big chunk of those forests has also been scraped.

With the sordid state of the country’s mountain ecosystem, the coming generations of Filipinos can only read in books and historical accounts the paradise that once was Philippine forests.

Many of the country’s prized floral (plant) and faunal (animal) species have vanished or are headed for extinction because of the unabated destruction of mountains attributed to logging, swidden or kaingin (slash-and-burn) farming, forest fires, posts and diseases, and irresponsible mining operations.

Yet the worst has yet to come.

What are left of the country’s remaining forest do not stand a chance against the millions of Filipinos now occupying the uplands in view of the lack of life-sustaining opportunities in the lowlands.

No less than the DENR had reported that as of 1999, there were already 18.3 million people, mostly among the country’s “poorest of the poor”, in the uplands.

It has further been projected that the number of forest dwellers will soar to 37 million by 2015, which is only less than half a decade away.

If these trends continue, warned environment expert Dr. Ma. Concepcion Cruz years back, two major adverse consequences would occur.

One, to meet the food needs of people living in mountains, more forestlands will be cleared for agriculture.

Two, as upland agriculture intensifies, soil erosion, flooding, siltation and sedimentation will take place, affecting the lowlands. Upland migrants, possessing little cultural adaptation to mountain environments, will reduce the forests into degraded croplands, as vast tracts of mountain areashave already been converted into veritable dustbowls.

Over the decades, as again today, the issue of “total log ban” cropped up whenever natural calamities bludgeoned the Philippines.

But a fact remain: Who will implement the total log ban?

The perturbing thing is that both pro and con are correct. What will the “Solomonic” solution then be?

This writer still remembers well the results of studies done by the University of the Philippines Los Baños (UPLB) on the suspension or cancellation of licenses of some timber logging concessions found violating forestry laws.

After the concessions had left, hordes of upland dwellers descended upon the logging sites and, mostly applying the “carabao logging” practice, wiped out what was left from the logging operations.

We recall, too, the candid admission of a former DENR official in a public forum that because of the miserable lives of the upland settlers, the government could not muster the necessary “political will” to implement forestry laws.

In recapitulation, a forest scientists and professor once reworded a song titled “Where have all the flowers gone.”

Here’s Dr. Edwino Fernando’s version: “Where have all the trees gone?/ Men have cut them every one/When will they ever learn?/ When will they ever learn?”

When will Filipinos ever learn from the death-dealing catastrophics that now happen with regularity during typhoon and rainy seasons owing to the destruction of the country’s forest resources?

Perhaps, when the last tree in the mountain has been felled.

Source: http://www.philstar.com/ArticlePrinterFriendly.aspx?articleId=662074&publicationSubCategoryId=66

http://www.philstar.com/ArticlePrinterFriendly.aspx?articleId=662355&publicationSubCategoryId=66

Early meteorological records of Manila: El nino episode of 1864

By J.M. Vaquero, et. al

See link below.

http://www.ejournal.unam.mx/atm/Vol18-3/ATM18301.pdf

Fishing

The Philippines is surrounded by a vast aquatic resource base. In 1976 the government adopted a 200-nautical-mile exclusive economic zone covering some 2.2 million square kilometers. However, the country's traditional fishing grounds constituted a relatively small 126,500-squarekilometer area. Fish and other seafood provided more than half the protein consumed by the average Filipino household. Total fish production in 1989 was 2.3 million tons. Of this, 46 percent was caught by some 574,000 municipal and subsistence fishermen, who operated small boats in shallow water, customarily no more than three kilometers offshore. These fishermen were among the poorest of the poor, with incomes averaging only 25 percent of the national average. Another 27 percent of the catch came from the approximately 45,000 commercial fishermen. An equal proportion of the total catch was provided by the fast-growing aquaculture industry. Prawn production, mostly aquaculture, developed rapidly in the 1980s, averaging 31,000 tons during the 1984-87 period. In 1988 exports of fishery products amounted to US$407 million, approximately 6 percent of total exports.

During much of the 1980s, the livelihood of small municipal and subsistence fishermen was undermined by low production, stagnating at approximately 1 million tons per year. A number of factors contributed to the low production: encroachment of commercial fishermen into shallow waters, destruction of the marine environment, over-fishing, and an increasing number of fish ponds. A large proportion of the mangrove forests was cleared to construct fishponds, seriously damaging the coastal ecological system. Coral reefs sustained serious damage from illegal fishing with dynamite and cyanide, and from the muro-ami fishing technique by which young swimmers pound the coral with rocks attached to ropes to drive the fish into nets. Coral also was damaged by silting from erosion caused by deforestation, and inland freshwater lakes were polluted from industrial and agricultural wastes.

Source: http://countrystudies.us/philippines/68.htm

Land Tenancy and Land Reform

An important legacy of the Spanish colonial period was the high concentration of land ownership, and the consequent widespread poverty and agrarian unrest. United States administrators and several Philippine presidential administrations launched land reform programs to maintain social stability in the countryside. Lack of sustained political will, however, as well as landlord resistance, severely limited the impact of the various initiatives.

Farm size is a significant indicator of concentration of ownership. Although nationwide approximately 50 percent of farms in 1980 were less than two hectares, these small farms made up only 16 percent of total farm area. On the other hand, only about 3 percent of farms were over ten hectares, yet they covered approximately 25 percent of farm area. Farms also varied in size based on crops cultivated. Rice farms tended to be smaller; only 9 percent of rice land was on farms as large as ten hectares. Coconut farms tended to be somewhat larger; approximately 28 percent of the land planted in coconuts was on farms larger than ten hectares. Sugarcane, however, generally was planted on large farms. Nearly 80 percent of land planted in sugarcane was on farms larger than ten hectares. Pineapple plantations were a special case. Because the two largest producers were subsidiaries of transnational firms--Del Monte and Castle and Cooke--they were not permitted to directly own land. The transnationals circumvented this restriction, however, by leasing land. In 1987 subsidiaries of these two companies leased 21,400 hectares, 40 percent of the total hectarage devoted to pineapple production.

In September 1972, the second presidential decree that Marcos issued under martial law declared the entire Philippines a land reform area. A month later, he issued Presidential Decree No. 27, which contained the specifics of his land reform program. On paper, the program was the most comprehensive ever attempted in the Philippines, notwithstanding the fact that only rice and corn land were included. Holdings of more than seven hectares were to be purchased and parceled out to individual tenants (up to three hectares of irrigated, or five hectares of unirrigated, land), who would then pay off the value of the land over a fifteen-year period. Sharecroppers on holdings of less than seven hectares were to be converted to leaseholders, paying fixed rents.

The Marcos land reform program succeeded in breaking down many of the large haciendas in Central Luzon, a traditional center of agrarian unrest where landed elite and Marcos allies were not as numerous as in other parts of the country. In the country as a whole, however, the program was generally considered a failure. Only 20 percent of rice and corn land, or 10 percent of total farm land, was covered by the program, and in 1985, thirteen years after Marcos's proclamation, 75 percent of the expected beneficiaries had not become owner-cultivators. By 1988 less than 6 percent of all agricultural households had received a certificate of land transfer, indicating that the land they were cultivating had been registered as a land transfer holding. About half of this group, 2.4 percent, had received titles, referred to as emancipation patents. Political commitment on the part of the government waned rather quickly, after Marcos succeeded in undermining the strength of land elites who had opposed him. Even where efforts were made, implementation was selective, mismanaged, and subject to considerable graft and corruption.

The failure of the Marcos land reform program was a major theme in Aquino's 1986 presidential campaign, and she gave land reform first priority: "Land-to-the-tiller must become a reality, instead of an empty slogan." The issue was of some significance inasmuch as one of the largest landholdings in the country was her family's 15,000-hectare Hacienda Luisita. But the candidate was quite clear; the land reform would apply to Hacienda Luisita as well as to any other landholding. She did not actually begin to address the land reform question, however, until the issue was brought to a head in January 1987, when the military attacked a group of peasants marching to Malacañang, the presidential residence, to demand action on the promised land reform killing 18 and wounding more than 100 of them. The event galvanized the government into action: a land reform commission was formed, and in July 1987, one week before the new Congress convened and her decree-making powers would be curtailed, Aquino proclaimed the Comprehensive Agrarian Reform Program. More than 80 percent of cultivated land and almost 65 percent of agricultural households were to be included in a phased process that would consider the type of land and size of holding. In conformity with the country's new Constitution, provisions for "voluntary land sharing" and just compensation were included. The important details of timing, priorities, and minimum legal holdings, however, were left to be determined by the new Congress, the majority of whose members were connected to landed interests.

Criticism of Aquino's plan came from both sides. Landowners thought that it went too far, and peasant organizations complained that the program did not go far enough and that by leaving the details to a landlord-dominated Congress, the program was doomed to failure. A World Bank mission was quite critical of a draft of the land reform program. In its report, the mission suggested that in order to limit efforts to subvert the process, the Comprehensive Agrarian Reform Program needed to be carried out swiftly rather than in stages, and land prices should be determined using a mechanical formula rather than subjective valuation. The World Bank mission also was critical of a provision allowing incorporated farm entities to distribute stock to tenants and workers rather than the land itself. The scheme would be attractive, the mission argued, "to those landowners who believed that they would not have to live up to the agreement to transfer the land to the beneficiaries." The mission's recommendations were largely ignored in the final version of the government's program.

On June 10, 1988, a year after the proclamation, Congress passed the Comprehensive Agrarian Reform Law. Landowners were allowed to retain up to five hectares plus three hectares for each heir at least fifteen years of age. The program was to be implemented in phases. The amount of land that could be retained was to be gradually decreased, and a non-land-transfer, profit-sharing program could be used as an alternative to actual land transfer.

Especially controversial was the provision that allowed large landowners to transfer a portion of the respective corporation's total assets equivalent in value to that of its land assets, in lieu of the land being subdivided and distributed to tenants and farm laborers. In May 1989, the 7,000 tenants of the Aquino family estate, Hacienda Luisita, agreed to take a 33 percent share of the hacienda's corporate stock rather than a portion of the land itself. Because the remaining two-thirds of the stock (the value of non-land corporate assets) remained with Aquino's family, effective control of the land did not pass to the tillers. Proponents of land reform considered the stock-ownership provision a loophole in the law, and one that many large landowners would probably use. Following the example of the Hacienda Luisita, thirty-four agrocorporations had requested approval for a stock transfer as of mid-1990. Although legal, the action of the president's family raised questions as to the president's commitment to land reform.

It is difficult to estimate the cost allowing for inflation of the Comprehensive Agrarian Reform Program. Early on, in 1988 estimates ranged between P170 billion and P220 billion; the following year they were as high as P332 billion, of which P83 billion was for land acquisition and P248 billion for support services and infrastructure. The lowest mentioned figure averages to P17 billion a year, 2.1 percent of 1988 GNP in the Philippines and 8.9 percent of government expenditure that year. The sum was well beyond the capacity of the country, unless tax revenues were increased substantially and expenditure priorities reordered. To circumvent this difficulty, the Aquino government planned to obtain 50 to 60 percent of the funding requirements from foreign aid. As of 1990, however, success had been minimal.

Government claims that in the first three years of implementation the Comprehensive Agrarian Reform Program met with considerable success were open to question. Between July 1987 and March 1990, 430,730 hectares were distributed. About 80 percent of this, however, was from the continuation of the Marcos land reform program. Distribution of privately owned lands other than land growing rice and corn, 3,470 hectares, was insignificant not only in absolute terms, but it was also only 2 percent of what had been targeted. The inability of the Department of Agrarian Reform to spend its budget also indicated implementation difficulties. As of June 1990, the department had utilized only 44 percent of the P14.2 billion allocated to it for the period January 1988-June 1990. In part because of Supreme Court rulings, the Department of Agrarian Reform cut its land acquisition target in late 1990 by almost half from 400,000 hectares to 250,000 hectares.

Source: http://countrystudies.us/philippines/65.htm

Sugar

From the mid-nineteenth century to the mid-1970s, sugar was the most important agricultural export of the Philippines, not only because of the foreign exchange earned, but also because sugar was the basis for the accumulation of wealth of a significant segment of the Filipino elite. The principal sugarcane-growing region is the Western Visayas, particularly the island of Negros. In 1980 the region accounted for half the area planted in cane and two-thirds of the production of sugar. Unlike the cultivation of rice, corn, and coconuts, sugarcane is typically grown on large farms or haciendas. In the mid-1980s, more than 60 percent of total production and about 80 percent of Negros's output came from farms twenty-five hectares or larger. Countrywide, tenancy arrangements existed for approximately half the sugarcane farms; however, they were generally the smaller ones, averaging 2.5 hectares in size and accounting for only slightly more than 20 percent of land planted in the crop. Elsewhere, laborers were employed, generally at very low wages. A survey undertaken in 1990 by the governor of Negros Occidental found that only one-third of the island's sugar planters were paying the then-mandated minimum wage of P72.50 per day. The contrast between the sumptuous lifestyles of Negros hacenderos and the poverty of their workers, particularly migrant laborers known as sacadas, epitomized the vast social and economic gulf separating the elite in the Philippines from the great mass of the population.

In the 1950s and 1960s, sugar accounted for more than 20 percent of Philippine exports. Its share declined somewhat in the 1970s and plummeted in the first half of the 1980s to around 7 percent. The sugar industry was in a crisis. Part of the problem was a depressed market for sugar. A dramatic increase in the world price of sugar had occurred in 1974, peaking at US$0.67 per pound in December of that year. The following two years, however, saw prices fall to less than US$0.10 a pound and remain there for a few years before moving upward again toward the end of the decade. Sugar prices fell again in the early 1980s, bottoming in May 1985 at less than US$0.03 per pound and averaging US$0.04 per pound for the year as a whole. In early 1990, prices had recovered to US$0.14 cents per pound then declined to approximately US$0.08 to US$0.09 per pound.

Historically, the Philippines was protected to a certain degree from vicissitudes of the world price of sugar by the country's access to a protected and subsidized United States market. In 1913 the United States Congress established free trade with its Philippine colony, providing Filipino sugar producers unlimited access to the American market. Later, in 1934, a quota system on sugar was enacted and remained in force until 1974. Although Philippine sugar exports to the United States were restricted during this period, the country continued to enjoy a relatively privileged position. Philippine quotas for the United States market in the early 1970s accounted for between 25 and 30 percent of the total, double that of other significant suppliers such as the Dominican Republic, Mexico, and Brazil. After the quota law expired in 1974, Philippine sugar was sold on the open market, generally to unrestricted destinations. As a consequence, shipments to the United States declined.

On May 5, 1982, the United States reestablished a quota system for the importation of sugar. Allocations were based on a country's share in sugar trade with the United States during the 1975-81 period, the period during which Philippine sugar exports to the United States had dwindled. The Philippine allotment was 13.5 percent. Efforts by the Philippine government to have it raised to 25 percent, the country's approximate share during the previous quota period, were unsuccessful. The loss of sales imposed by the reduced quota share was compounded by a dramatic 40 percent drop in total United States imports of sugar in the mid-1980s as compared with the early 1970s. Philippine sugar exports to the United States that had averaged just under 1.3 million tons per year in the 1968-71 period averaged only 284,000 tons from 1983 to 1988, falling to approximately 161,000 tons in 1988. In 1988 only 273 thousand hectares were planted in sugar, about half that of the early 1970s.

During the earlier quota period, Philippine producers enjoyed high profits, but operations were inefficient and lacking in mechanization. Sugar yields in the Philippines were among the lowest in the world. Increases in production occurred through expansion of land area devoted to sugarcane. With falling prices and the end of the United States quota, attempts to improve productivity through mechanization increased yields, but caused a dramatic fall in labor requirements, initially by 50 percent and, over a longer period, by an estimated 90 percent. In an island economy such as that of Negros, where sugar has accounted directly for 25 percent of employment, the consequent actual and potential lost livelihood was disastrous.

The decline of the sugar industry was complicated by the monopolization that took place during the martial law period, a process not dissimilar to what occurred in the coconut industry. In 1976, as a reaction to the precipitous decline in sugar prices, Marcos established the Philippine Sugar Commission (Philsucom), placing at the head his close associate Roberto Benedicto. Philsucom was given sole authority to buy and sell sugar, to set prices paid to planters and millers, and to purchase companies connected to the sugar industry. A bank was set up in 1978, and the construction of seven new sugar mills was authorized at a cost of US$40 million per mill.

By the 1980s, considerable resistance to Philsucom and its trading subsidiary, the National Sugar Trading Corporation (Nasutra) had been generated. As with the monopoly in the coconut industry, the government acquiesced in its 1985 agreement with the IMF to dismantle Nasutra. But the damage had been done. In a study undertaken by a group of University of the Philippines economists, losses to sugar producers between 1974 and 1983 were estimated to be between P11 billion and P14 billion. Aquino established the Sugar Regulatory Authority in 1986 to take over the institutions set up by Benedicto.

Source: http://countrystudies.us/philippines/64.htm

Coconut Industry

The Philippines is the world's second largest producer of coconut products, after Indonesia. In 1989 it produced 11.8 million tons. In 1989, coconut products, coconut oil, copra (dried coconut), and desiccated coconut accounted for approximately 6.7 percent of Philippine exports. About 25 percent of cultivated land was planted in coconut trees, and it is estimated that between 25 percent and 33 percent of the population was at least partly dependent on coconuts for their livelihood. Historically, the Southern Tagalog and Bicol regions of Luzon and the Eastern Visayas were the centers of coconut production. In the 1980s, Western Mindanao and Southern Mindanao also became important coconut-growing regions.

In the early 1990s, the average coconut farm was a medium-sized unit of less than four hectares. Owners, often absentee, customarily employed local peasants to collect coconuts rather than engage in tenancy relationships. The villagers were paid on a piece-rate basis. Those employed in the coconut industry tended to be less educated and older than the average person in the rural labor force and earned lower-than-average incomes.

Land devoted to cultivation of coconuts increased by about 6 percent per year during the 1960s and 1970s, a response to devaluations of the peso in 1962 and 1970 and increasing world demand. Responding to the world market, the Philippine government encouraged processing of copra domestically and provided investment incentives to increase the construction of coconut oil mills. The number of mills rose from twenty-eight in 1968 to sixty-two in 1979, creating substantial excess capacity. The situation was aggravated by declining yields because of the aging of coconut trees in some regions.

In 1973 the martial law regime merged all coconut-related, government operations within a single agency, the Philippine Coconut Authority (PCA). The PCA was empowered to collect a levy of P0.55 per 100 kilograms on the sale of copra to be used to stabilize the domestic price of coconut-based consumer goods, particularly cooking oil. In 1974 the government created the Coconut Industry Development Fund (CIDF) to finance the development of a hybrid coconut tree. To finance the project, the levy was increased to P20.

Also in 1974, coconut planters, led by the Coconut Producers Federation (Cocofed), an organization of large planters, took control of the PCA governing board. In 1975 the PCA acquired a bank, renamed the United Coconut Planters Bank, to service the needs of coconut farmers, and the PCA director, Eduardo Cojuangco, a business associate of Marcos, became its president. Levies collected by the PCA were placed in the bank, initially interest-free. In 1978 the United Coconut Planters Bank was given legal authority to purchase coconut mills, ostensibly as a measure to cope with excess capacity in the industry. At the same time, mills not owned by coconut farmers--that is, Cocofed members or entities it controlled through the PCA--were denied subsidy payments to compensate for the price controls on coconut-based consumer products. By early 1980, it was reported in the Philippine press that the United Coconut Oil Mills, a PCA-owned firm, and its president, Cojuangco, controlled 80 percent of the Philippine oil-milling capacity. Minister of Defense Juan Ponce Enrile also exercised strong influence over the industry as chairman of both the United Coconut Planters Bank and United Coconut Oil Mills and honorary chairman of Cocofed. An industry composed of some 0.5 million farmers and 14,000 traders was, by the early 1980s, highly monopolized.

In principle, the coconut farmers were to be the beneficiaries of the levy, which between March 1977 and September 1981 stabilized at P76 per 100 kilograms. Contingent benefits included life insurance, educational scholarships, and a cooking oil subsidy, but few actually benefited. The aim of the replanting program, controlled by Cojuangco, was to replace aging coconut trees with a hybrid of a Malaysian dwarf and West African tall varieties. The new palms were to produce five times the weight per year of existing trees. The target of replanting 60,000 trees a year was not met. In 1983, 25 to 30 percent of coconut trees were estimated to be at least sixty years old; by 1988, the proportion had increased to between 35 and 40 percent.

When coconut prices began to fall in the early 1980s, pressure mounted to alter the structure of the industry. In 1985 the Philippine government agreed to dismantle the United Coconut Oil Mills as part of an agreement with the IMF to bail out the Philippine economy. Later a 1988 United States law requiring foods using tropical oils to be labeled indicating the saturated fat content had a negative impact on an already ailing industry and gave rise to protests from coconut growers that similar requirements were not levied on oils produced in temperate climates.

Source: http://countrystudies.us/philippines/63.htm

Rice and the Green Revolution

Rice is the most important food crop, a staple food in most of the country. It is produced extensively in Luzon, the Western Visayas, Southern Mindanao, and Central Mindanao. In 1989 nearly 9.5 billion tons of palay were produced. In 1990 palay accounted for 27 percent of value added in agriculture and 3.5 percent of GNP. Per hectare yields have generally been low in comparison with other Asian countries. Since the mid-1960s, however, yields have increased substantially as a result of the cultivation of high-yielding varieties developed in the mid-1960s at the International Rice Research Institute located in the Philippines. The proportion of "miracle" rice in total output rose from zero in 1965-66 to 81 percent in 1981-82. Average productivity increased to 2.3 tons per hectare (2.8 tons on irrigated farms) by 1983. By the late 1970s, the country had changed from a net importer to a net exporter of rice, albeit on a small scale.

This "green revolution" was accompanied by an expanded use of chemical inputs. Total fertilizer consumption rose from 668 tons in 1976 to 1,222 tons in 1988, an increase of more than 80 percent. To stimulate productivity, the government also undertook a major expansion of the nation's irrigation system. The area under irrigation grew from under 500,000 hectares in the mid-1960s to 1.5 million hectares in 1988, almost half of the potentially irrigable land.

In the 1980s, however, rice production encountered problems. Average annual growth for 1980-85 declined to a mere 0.9 percent, as contrasted with 4.6 percent for the preceding fifteen years. Growth of value added in the rice industry also fell in the 1980s. Tropical storms and droughts, the general economic downturn of the 1980s, and the 1983-85 economic crisis all contributed to this decline. Crop loans dried up, prices of agricultural inputs increased, and palay prices declined. Fertilizer and plant nutrient consumption dropped 15 percent. Farmers were squeezed by rising debts and declining income. Hectarage devoted to rice production, level during the latter half of the 1970s, fell an average of 2.4 percent per annum during the first half of the 1980s, with the decline primarily in marginal, nonirrigated farms. As a result, in 1985, the last full year of the Marcos regime, the country imported 538,000 tons of rice. The situation improved somewhat in the late 1980s, and smaller amounts of rice were imported. However, in 1990 the country experienced a severe drought. Output fell by 1.5 percent, forcing the importation of an estimated 400,000 tons of rice.

Source: http://countrystudies.us/philippines/62.htm

Agricultural Production and Government Policy

The percentage of the population living in rural areas declined from 68 percent in 1970 to 57 percent in 1990, and the share of the labor force engaged in agriculture, forestry, and fishing also decreased to less than 50 percent by the late 1980s. Roughly two-thirds of agricultural households farmed their own land or were tenants; the others were landless agricultural workers. Some 75 percent of agricultural value added came from crops and livestock. The remaining 25 percent came from forestry and fishing. Value added in agricultural crops grew rapidly in the early 1970s, averaging growth rates of 7.7 percent. In the 1980s, however, with the exception of corn, which was in growing demand as an animal feed, the growth rate of agricultural production declined and was sometimes negative for bananas and sugarcane. Low world prices combined with the high cost of inputs such as fertilizers were two of the most important reasons.

The government pursued sometimes contradictory goals of maintaining cheap food and raw material prices, high farm income, food security, and stable prices, at times through direct intervention in agricultural markets. In 1981 the National Food Authority was created. It was empowered to regulate the marketing of all food and given monopoly privileges to import grains, soybeans, and other feedstuffs. The ability of the National Food Authority and its predecessor organizations to stabilize prices and keep them within the established price bands, at either the farm gate or the retail market, has been quite limited because of insufficient funds to affect the market, strict purchasing requirements, and corrupt practices among authority personnel. In 1985 the role of the National Food Authority was reduced, and price ceilings on rice were lifted. Beginning in the 1950s, government efforts to stimulate industrial development, such as tariffs on manufactured goods, overvaluation of the currency, export taxes on agricultural commodities, and price controls had a deleterious effect on the agricultural sector, making it relatively unprofitable. On the other hand, irrigation water was distributed at below-cost prices, and fertilizer manufacturing was subsidized.

Beginning in the latter half of the 1970s, the Marcos regime gave increased attention to agriculture and the rural sector in general, including agribusiness development. The Aquino government continued that emphasis, although its policy evolved from a commodity-specific orientation to a general, cropdiversification approach that relied more on market signals to guide crop selection. The rice-price stabilization program remained in effect, and a program was implemented to increase small-farmer access to postharvest facilities such as warehouses, rice mills, driers, and threshers.

Providing credit to the agricultural sector, particularly to small-sized and medium-sized farmers had been a government policy since the early 1950s, one that met with mixed success at best. By the early 1980s, there were approximately 900 privately owned, rural banks, which were the principal implementors of government-sponsored, supervised credit schemes. The Masagana 99 program was initiated in the early 1970s to encourage adoption of new, high-yielding rice varieties. No-collateral, low-interest loans were made available to small farmers, mainly by privately owned, rural banks, with the government guaranteeing 85 percent of any losses suffered by the banks. In general, however, regulated interest rates made rural banks unattractive to depositors.

In 1975 more than 500,000 farmers participated in the Masagana 99 program. By 1985, however, the program had expired because of high arrearage and the tight monetary policy instituted as part of an agreement with the IMF. The program was revived in the Aquino administration's Medium-Term Development Plan, 1987-92. According to a government report, however, as of 1988 the program had not yet reached most of the intended beneficiaries. Government efforts were also underway to rehabilitate rural banks, the majority of which had experienced severe difficulties during the economic crisis of the early 1980s and the subsequent monetary squeeze.

Source: http://countrystudies.us/philippines/61.htm

Agriculture

Agricultural Geography

In the late 1980s, nearly 8 million hectares--over 25 percent of total land--were under cultivation, 4.5 million hectares in field crops, and 3.2 million hectares in tree crops. Population growth reduced the amount of arable land per person employed in agriculture from about one hectare during the 1950s to around 0.5 hectare in the early 1980s. Growth in agricultural output had to come largely from multicropping and increasing yields. In 1988 double-cropping and intercropping resulted in 13.4 million hectares of harvested area, a total that was considerably greater than the area under cultivation. Palay (unhusked rice) and corn, the two cereals widely grown in the Philippines, accounted for about half of total crop area. Another 25 percent of the production area was taken up by coconuts, a major export earner. Sugarcane, pineapples, and Cavendish bananas (a dwarf variety) were also important earners of foreign exchange, although they accounted for a relatively small portion of cultivated area.

Climatic conditions are a major determinant of crop production patterns. For example, coconut trees need a constant supply of water and do not do well in areas with a prolonged dry season. Sugarcane, on the other hand, needs moderate rainfall spread out over a long growing period and a dry season for ripening and harvesting. Soil type, topography, government policy, and regional conflict between Christians and Muslims were also determinants in the patterns of agricultural activity.

Source: http://countrystudies.us/philippines/60.htm