Friday, November 25, 2011

Breaking Up Hacienda Luisita May Not Be A Good Thing

I can understand the jubilation of some people over the Supreme Court's decision to have Hacienda Luisita broken up and divided among its farmer beneficiaries.  On the surface of things, giving land to the landless may seem like a pretty good way of redistributing wealth and reducing poverty.

Under the CARP, farmer tenants are suppposed to get 3 hectares each, but if you divide the total land to be distributed (around 4,000 or 5,000) by the number for farmer beneficiaries (6,000), that result would be farmers having just .75 hectares each.

Kasangga Party List Representative Ted Harresco pointed put something that I've heard before, and it is simply that small farms are basically losing ventures if operated independently.

First, you don't get the economies of scale that would enable you to get farm inputs at a lower price or employ these inputs efficiently.  Second, being a small independently operated farm, the farmer would have a hard time negotiating for a good price for his crop.

Large collectively operated farms, in contrast, have the benefits of being able to negotiate a better deal on farm inputs either through lower prices or better terms.  Moreover, in selling their produce, they can - to some extent - actually have more control over the selling price.

Harresco believes, based on his view of the average lifespan of farmer cooperatives, that it will be very difficult for the farmer beneficiaries who chose to operate their farms individually to make a profit.

Land is capital in economic theory, but in reality, land that is untilled and unproductive is just empty space.

Poverty, as I have said before, is not the lack of money but the lack of options.

A small plot of land limits a farmers options to the crops that would have the best chance of returning profit, it would limit his access to good financing deals, and limit his ability to negotiate a good price for his produce.

Perhaps one way that the farmer beneficiaries of Hacienda Luisita can ensure the profitable operation of their individual farms is to reintegrate the small individual plots and operate the land collectively.

This might seem similar to the idea of a Share Distribution Option already tackled by the high court, but, if ever the farmer do create a similar arrangement in the future, it will be without the participation of the Aquino-Cojuancos.

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