Fetish

I am not sure where we draw the ideological power to keep our scarcest resource in its least productive state.

It could be a deep-seated pre-modern agrarian mindset that powers what strikes me as a fetishism of land. Or, it could be some old, and lame, orthodoxy that says land is the final definition of our being – so that it is such gross desecration to allow foreigners to touch our land, let alone own it.

If this is a fetish, it is an encompassing one. It is also insidious: bringing slow death to our economy, inflicting a high food price regime on our people and allowing so much of what we have in so little quantity waste away in idleness.

Over the years, we have subdivided our land against the logic of the economies of scale. Everybody wanted a piece of the pie, so to speak, although doing that will undermine the capacity of the land to yield the greatest wealth possible.

We understood land reform as a social justice measure, not an economic one. We broke up large estates, freed the tenants and left a lot of the land idle.

The average age of today’s rice farmer is 57. He is too old to till the land he has finally won, too poor to bring in the required capital to make that land optimally productive and prohibited by some irrational law to use that land as collateral in order to capitalize agriculture. At any rate, the "family-sized plot" of land is too small to encourage modernization of cultivation. Only a small portion of the total family income derives directly from agricultural activity and the next generation would rather not plant, which explains the aging of the actively farming population.

As a consequence of several decades of "agrarian reform", our agricultural productivity is stagnant. Our agricultural methods are backward. Our production costs, and hence the price of our produce, is high – putting upward pressure on wages in those other sectors of the economy where we could be competitive.

The cost of our agricultural products are not competitive. This is the reason it has become profitable to smuggle rice, sugar, onions, garlic and even lanzones from our neighboring countries.

In the name of social justice, we killed our agriculture. In doing so, we endangered the rest of our functional economy and created widespread poverty. We forced massive rural-to-urban migration, induced a lingering armed insurgency fighting for even more irrational agricultural policies and distorted our politics.

Hard-nosed economic logic indicates that the best way to save our agriculture from the quagmire of idleness, subsidy dependence, inefficiency and backwardness it is in is to bring in new investments that will capitalize our scarcest resource. We now have about twice the man-to-arable land ratio of China. Unless we rapidly allow integration of land production, infuse mechanization, rebuild our plantations and allow more efficient land use, our agriculture will wither away.

When our agriculture withers, the rural population will migrate elsewhere. The land, which cannot sustain the cost of living, will be left idle. There will be even greater political pressure to raise tariff barriers resulting in higher food costs, which in turn will create more pressure for higher wages that will make the rest of the economy even less competitive.

This is a horrific scenario. But it has been unfolding the past few years.

A lot of the land is left idle because it is not worthwhile to till the family sized plots. Large landowners have not invested in the land because they fear land reform. The militants, inspired by some dead economic orthodoxy, have restricted property rights of land reform beneficiaries by preventing the use of land as collateral, thereby producing dead capital.

On top of the inefficiencies generated by the land reform program, the 1987 Constitution prohibits foreigners from owning land. That puts another inhibition on the more productive use of our scarcest resource and creates an additional barrier to investment.

In the past few days that the Consultative Commission for Charter Change has been doing consultations, we have come up against the deep-seated superstitions about land ownership and land use our people continue to hold onto dearly.

The Commission has proposed liberalization of the citizenship restrictions that made the 1987 Constitution a major hindrance to our national development.

Many of the groups we consulted with in the Visayas and Mindanao readily accepted that such restrictions on media ownership were counter-productive. They agreed that citizenship restrictions on investments in natural resource extraction, educational institutions and utilities will most likely help improve the lives of our people.

But on the matter of lifting citizenship restrictions on land ownership, many of our people are stumped by the possibility. There is that goblin in their minds: the unfounded fear that should we allow foreigners to own land, they will buy up our property and we will lose our country.

It is an irrational fear, of course. Most countries pose no citizenship restrictions on owning real property, confident that no one will insanely purchase land that he cannot put to profitable use.

The upside is more likely: with the security of actual ownership of the land, we will be able to attract the world’s best companies to come and invest in productive physical plant. The reason General Motors chose Thailand over the Philippines as the site for their billion-dollar physical plant for regional production is the security of actually owning the land on which their expensive facility sits.

In China, if a company brings in a productive facility, the government gives them the land as a welcome gift. It is a reasonable strategy that encourages long-term investment.

We desperately need investment flows into agribusinesses. That will save our agriculture from complete ossification. But that will not happen unless we liberalize ownership of agricultural land.

But to do what is best for our people’s future, we have to exorcise irrational fears about non-citizens owning land. We have to cure the phobia about investors getting into our agriculture. We have to be rid of the bizarre fetish over land ownership that archaic ideologies continue to inflict on our economic future.