Why CARP failed - 3

Before proceeding, let me remind our readers that the feast of St. Vincent Ferrer in Talisay City will be commemorated on April 4 rather than on April 5, his feast day. April 4 is a First Friday and on this day, thousands of devotees usually flock to the San Nicolas de Tolentino Church in Talisay. The vespera celebration is intended to accommodate these devotees who come from many places, including other provinces.

There will be a dawn procession, Masses in the morning and the traditional “palapak” and touching and stroking of his image. There will also be a raffle to raise funds for a bigger shrine and ceremonies for testimonies on the miracles attributed to the saint. The number of devotees who come each month to pray to him is testimony enough of how St. Vincent has touched the lives of people.

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Now let’s continue our digression of the position paper of Dr. Raul Fabella containing data indicating the failure of CARP.

Yesterday I cited the first reason for the failure of CARP – the decline of the value of the land as a bankable asset due to the restrictions of the law. The land is also not of economic size that further erodes its credit value.

Fabella believes that the only way for these small plots to attain an economic size and regain their bankable capacity is to consolidate them. “Their only shot at viability,” he says, “is in consolidation with other awarded lands which makes consolidation an almost inevitable outcome.”

But can the agrarian reform beneficiaries consolidate? They can, or I must say, they must but here is the second reason for failure.

He notes that “CARL outlawed consolidation due to the five-hectare retention limit. So consolidation through conveyance of premarket property rights has to be done in the illegal underground market where contracts are less stable.”

The “illegal underground” is a reality. Even the Department of Agrarian Reform found this in its study in 1996 that Fabella cited. The DAR reported “what everyone already knows – ‘rampant selling and mortgaging of lands awarded to farmer beneficiaries.’”

Fabella cited a study (2006) showing the extent of these illegal transactions that make thousands of farmers and their consolidators (lessees mostly) criminal in the eyes of CARL.

The study reveals that “the proportion of farmer beneficiaries in any village who have had sale transaction on land despite its being illegal ranged from 7 percent to 100 percent. Economic logic will not be denied. When the size of land ownership is unviable, consolidation will occur even when outlawed. It is happening but at a much higher transaction cost in the underground market.”

Indeed, people will resort even to illegal acts when forced by circumstance – violate the law in order to survive. The fact that the government has not acted despite their knowledge of these illegal transactions emboldens the commission of the crime.

I do not wish to call the beneficiaries criminal but what else can they and their partners in the transaction be called for violating the law? I am not an expert on moral law but I believe that we must be tolerant of people who are left without any choice. Violate or perish!

What are the consequences of the underground conveyance of property rights?

“They are not protected by the legal system,” Fabella says and “while sale, conveyance of land and land rental (in the form of a waiver) are legal after the prescription period and after full payment, the requirements are so voluminous and corruption-prone that the underground market – despite the high transaction cost – becomes the only way forward. Thus CARL effectively de-modernized agriculture by pushing transactions to the underground market.”

Two things are needed for the awarded farms to go above ground and make legal transactions – the end of the prescription of ten years and full payment.

While this seems good enough, the fact is that the beneficiaries cannot wait for ten years and even after that they cannot transact because they have not paid for the land. There is mistaken belief among the farmers that the land is given to them for free – which is not. They have to pay the amortization and even if they wanted to, the income from an unviable farm sized precludes them for doing so.

This is the reason why even their minimal real estate taxes cannot be paid. They have to resort to the underground which is just enough to keep body and soul together.

Let’s not venture momentarily into the complexity and corruption that force famers to go underground.

I’ll continue next week.*

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