Thursday, November 3, 2011

Book Review Part 1: The Philippines by James K. Boyce

I recently read The Philippines: The Political Economy of Growth and Impoverishment in the Marcos Era, which provides a very readable expert economic analysis of what happened following the Green Revolution in the Philippines. Based on what I saw while I was there, the author hit the nail on the head - and sadly, little has improved for the poor since Marcos left in 1986.

What follows is more of a summary of what I learned in the book than a book review. I've included page numbers of each quote and fact as references. This is part one of two. It focuses on the impact of Green Revolution rice and land reform. The second part will cover foreign debt, logging, and export crops.

The impact of the Green Revolution seeds and inputs in the Philippines did not happen in a vacuum. The inequality at the outset of the period, exacerbated by the policies and the cronyism of the Marcos era, shaped the aftermath of the Green Revolution arguably more than the “miracle rice” itself. The Green Revolution has been accurately described as being “grafted to the rootstock of an unjust social order.” (p. 11)

The period (1965-1986) was characterized by increasing inequality between the rich and the poor, as Marcos carried out his economic policy based on Green Revolution rice, a reliance on export agriculture as a source of income and foreign exchange, and an unbelievable amount of borrowing from foreign banks and institutions like the International Monetary Fund. (p. 1) Ultimately, as the government paid off older loans and their interest with newer, larger loans, the Ponzi scheme had to collapse – and it did in 1983.

Rapid Adoption of Green Revolution Rice
During this period, Filipinos rapidly adopted Green Revolution varieties of rice. By 1970-71, half of the Philippines' rice acreage was planted in Green Revolution varieties, a figure that rose to 75 percent by 1979-80. (p. 62) The importance of rice to Filipino peasants cannot be understated. Rice is served at every meal. When you ask a family what they eat, they reply “rice” without fail. Only when you ask, “What do you eat with your rice?” do they list off fruits, vegetables, fish, and other foods.

One Way to Achieve Self-Sufficiency? Eat Less
But despite insistence by the architects of the Green Revolution that the impact of the new varieties “upon the productivity and profitability of our rice farms” was “the only measure which really counts,” there are a few wrinkles in the data. (p. 62) One often-cited Green Revolution statistic is the year in which a nation reached “self-sufficiency” in a staple crop (such as rice). But in the Philippines, and perhaps in other nations too, “self-sufficiency” does not tell you who is eating the rice, or how much they are eating.

Self-sufficiency can be achieved both by producing more food, or by eating less of it. By 1982, two-thirds of Filipinos did not have enough calories to eat, and 69 percent of Filipino preschoolers were underweight. Simultaneously, more grains were going to feed animals, as demand for meat rose among the wealthiest segment of the population. This was even encouraged by the World Bank, which, in 1979 said that “yellow corn [used for animal feed] should be given priority in future research.” (p. 114-115)

The Winners of the Green Revolution: The Rich and the Commercial Elite
The period following the introduction of “Miracle Rice” can be split into two phases. In the first few years, until 1972, net revenues of rice farmers increased. (p. 118-119) These gains were mostly felt by early adopters who were, by and large, a wealthier and more powerful bunch. (p. 138) After that, net revenues of rice farmers declined. Also, the benefits went disproportionately to those who could afford irrigation. (p. 139)

Another group of Green Revolution benficiaries were those Boyce calls "the new commercial elite." This includes "farm input suppliers, contractors for mechanized farm services, bankers, moneylenders, and rice traders." (p. 143) "Between 1970 and 1978... the farm operator's share in paddy output in a Central Luzon village fell from 39 to 16 per cent and the landlord's share from 30 to 15 per cent, while the share of the 'dealer/contractor/moneylender' rose from 15 to 42 per cent" (p. 143-144) Often the input sellers or moneylenders were the landlord themselves.

Land "Reform"
Another shift in wealth and power took place in the countryside during these years – one that was still playing out, often in a tragic way, when I visited. Until the 1970's, most rice was produced by tenant farmers who split their harvest with their landlords. (p. 127) Often, tenants borrowed money or grain from their landlords. Boyce writes:

Economic transactions between landlord and tenant were underpinned by a social web of reciprocal obligations. In times of need, the tenant expected the landlord to provide assistance in the form of loans, intervention in disputes, and so on. The landlord in turn could call on the tenant for occasional unpaid labor services and political support. More than an interlocking set of market exchanges, their relationship was 'based on mutual moral obligations which were asymmetrical in character.' (p. 128)

Boyce points out that the landlord gained power more than he or she gained profit from extending loans to tenants. The tenant paid both in money and in social deference and subordination to the landlord.

Like so many traditional societies, in the past land rights were not written down in the Philippines. In the late 1800s, the Spanish began introducing formal land titles "initiating a shift in the political basis of property rights from local society to the state." (p. 129) However, this shifted even more land into the hands of the rich, as peasants were often ignorant or lacked resources to gain the titles to their ancestral land. This continued once the U.S. took over. Under this new system, "the traditional social bonds of reciprocity began to become unglued." (p. 130)

Many landlords moved to Manila and did not even know their tenants. Furthermore, population pressure led to worse terms for loans, and less frequent loans at that. For the poor, one of the only ways to gain new land was by expanding the agricultural frontier, moving into areas of newly cleared forest or even clearing forest themselves. (p. 131) However, even still often the wealthy and powerful found out about newly cleared areas before the poor, so once the poor moved in, they found themselves paying a landlord all the same.

An interesting phenomenon Boyce mentions is one I observed during my time in the Philippines, in which the wealthy and powerful claim ownership over "land [that] is nominally under public ownership." (p. 131) The poor, who do not know that the land is actually owned by the state, still ends up paying rent to a landlord who claims the land. What I observed were families living on land that was technically classified as forest and was thus public, which meant they could not get a title to that land even if they could afford it.

By the 1960's, and even more in the 1970's, a new class of landless laborers began to grow. (p. 132) This was exacerbated by Marcos' Presidential Decree 27 in October 1972, which said that landlords with holdings above 7 hectares would have their land expropriated. The landlord would receive compensation for the land. Meanwhile, the tenant who worked that expropriated land would make annual payments to the government for 15 years and would then receive full rights to the land that were "transferable only by inheritance." (p. 135)

Setting aside the fact that the tenants might not have been able to afford 15 years of payments, the decree was "riddled with loopholes," making it largely counterproductive if its intent was actually to redistribute land to the poor. For example, the land reform applied only to rice and corn, so a landlord could evade the law by switching to other crops. Perhaps this ties into the fact that the government wanted to increase the acreage of export crops while feeding the country from higher yields of cereals on existing or even less agricultural land in order to gain more foreign exchange.

Landlords could also register their land in the names of different family members, so that a family with 4 people could have 28 hectares instead of just 7. Some landlords dealt with the law by intimidating their tenants plain and simple. But, the law applied only to tenants, so another easy method for landlords to evade the redistribution was by turning their tenants into landless wage laborers - and many did. (p. 135) Nonetheless, the U.S. supported the "land reform," declaring in 1981 that "88 per cent of eligible families had received land titles" under the Marcos reform. (p. 136) (This was provably not true as, by 1986, less than 800,000 of the 6 million hectares under rice and corn were titled under the land reform.)

Mechanization and Increased Unemployment
Also important to note was the role of mechanization in the Green Revolution. Mechanization was not one of the core Green Revolution technologies like fertilizer, hybrid seeds, pesticides, and irrigation. Thus, the Green Revolution was sold as a way to increase employment, as more labor would be needed for increased weeding or spraying and increased harvests.

But mechanization followed the spread of Green Revolution varieties all the same, and employment declined as a result. (p. 145-148) Boyce says "In practice, the green revolution and mechanization were bound together, not by technology, but by political economy." (p. 145) Following the introduction of Green Revolution varieties, wages fell by 25% in 20 years. Three major changes occurred in the Philippines, and this was typical all over Asia: (p. 150)
  1. Water buffalo were replaced with tractors and two-wheeled power tillers
  2. Hand weeding was replaced with herbicide
  3. Light threshing machines were introduced.

What's more, employees require supervision, but machines don't. (p. 151)

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