Land Reform in the Philippines

A comprehensive approach to agricultural reforms is helping landowners hold onto property and generate incomes close to home.

“Because of this project, the farmers in this area have been able to hold onto their land. This has been a big help in the development of this area.”

─Nerivi Martinez, municipal administrator for the town of Talavera

TALAVERA, Philippines—Cora Puaso, a 35-year-old resident of the province of Nueva Ecija in the northern Philippines, never thought she would find a job near her home. "There aren't very many jobs for women around here," she says. "We mostly just work in the home or work on the farm."

But today Puaso works neither in the home nor on the farm. She has a job at a dairy plant that was established by a cooperative formed to help rural landowners increase their incomes. Farmers in the area sell the milk of carabao, a Philippine water buffalo, to the dairy plant, which in turn processes it into school milk, chocolate milk, cheese, and ice cream.

"I am making good money for this area and I am learning about pasteurizing and how to produce dairy products," she says. "These are valuable skills."

Beyond land distribution

“One driver of poverty in rural areas has been a lack of land ownership by the rural population. Prior to the initiation of land reforms in the Philippines, almost 50% of the rural population was landless.”

─Agustina Musa, a finance specialist with ADB’s Southeast Asia Department

Puaso benefited from the Agrarian Reform Communities Project, a $139 million Asian Development Bank (ADB)-supported project that ran from 1998 to 2007. The project supported land reform programs in the Philippines. Rather than simply distribute land, the project provided a comprehensive package of agriculture reforms, basic infrastructure, and support services.

The project, which was rated "successful" in an assessment after completion, supported the establishment of the cooperative that owns the dairy plant where Puaso works. The project has also supported the construction or renovation of 1,199 kilometers (km) of roads, irrigation for 6,791 hectares (ha), and the construction of 98 potable water supply systems. This has benefited small farmers and landowners and helped them to keep their property.

In addition, the project introduced organic farming systems and trained 712 extension workers and 4,022 farmer leaders. About 500 demonstration plots were established, or 266% of the appraisal target. The project also trained 16,183 farmers and about 18,000 farmers were helped to adopt improved technologies in high-value and commercial crop, livestock, and aquaculture production. An important part of the project was the establishment of 396 credit unions that resulted in 24,000 poor farmers gaining access to credit.

"Because of this project, the farmers in this area have been able to hold onto their land," said Nerivi Martinez, municipal administrator for the town of Talavera. "This has been a big help in the development of this area. They were isolated and underdeveloped before this project. You can now see new houses going up."

Breaking the poverty cycle

In the Philippines, levels of economic inequality are much higher than in other parts of Southeast Asia. Although the incidence of poverty in the Philippines has decreased in recent years, poverty remains predominantly rural and fairly high, at the level of more than one third of the population (2005). About 49% of rural families rate themselves as poor, with poverty highest among landless and marginal farm families.

"One driver of poverty in rural areas has been a lack of land ownership by the rural population," said Agustina Musa, a finance specialist with ADB's Southeast Asia Department. "Prior to the initiation of land reforms in the Philippines, almost 50% of the rural population was landless."

ADB has worked to help the Philippines support rural families and protect its agricultural and natural resources in part by providing 59 loans totaling more than $1.9 billion, or about 15.4% of its loan portfolio in the Philippines to agriculture and natural resources.

In Talavera, the cooperative established under the ADB-supported program has had wide-reaching impact, according to Wilfred Santiago, chairman of the Bagong Sibul Credit Cooperative. He notes that the original seed money for the credit cooperative was the equivalent of about $1,500. That has grown to nearly $6,000 and continues to grow.

Cooperative members—most of whom are small farmers—borrow at 2% per month and pay upon harvest, which is twice a year. The cooperative gives them access to capital for farming supplies and living expenses at reasonable rates.

Santiago is also a farmer and member of the cooperative.

"Before, we had to borrow from private lenders who charged as much as 30% interest per crop," he says. "Sometimes the interest compounded to the point that farmers lost their entire harvest to the lenders. Now, the farmers can pay off their loan to the coop and still have money left over."

"You can see clearly how life has changed here," he says. "Before this project, the houses in the village were nipa, bamboo, and wood. Now they are 90% concrete. Before, kids only went to high school if their parents were farmers. Now, most of the farmers' kids are going to college."