2.4 The transformation of a natural resource: from agriculture to agribusiness

The distinction between forestry and agriculture is sometimes a fine one. Shifting cultivators often follow in the wake of commercial loggers, and because of the marginal character of the logged-over land, farming becomes a tedious and unproductive undertaking. In 1974, the Philippine government attempted to turn denuded forest lands into rice-growing areas by requiring logging concessionaires 'to develop areas within their concessions . . . for the production of rice, corn, and other basic staples to take care of the consumption requirements of their workers and the people within their areas' (Tadem, 1978). This law, which was known as Presidential Decree No. 472. was never really implemented because it also granted exemptions to firms in 'financial distress'.

When the Philippines became a rice-exporting country in 1977, it appeared on the surface that Marcos' agricultural policies were working after all. In the midst of the euphoria surrounding the dramatic turnabout, official propaganda conveniently disregarded the costs that accompanied the statistics of increased production. As public awareness gradually grew about the reality-that the economic and social costs far outweighed the benefits of the rice exports-a severe economic crisis, beginning in 1983, suddenly cast the country back into the familiar role of rice importer. This reversal underscored the fragility of a food-production programme that was highly dependent on imports.

Indonesia does not rely on the importation of fertilizers for its rice industry because it is an oil exporter, and the major fertilizers used are oil-based. Yet, until 1986, the country was one of the world's major rice importers. For fiseal year 1983-4, imports were estimated to reach 900 000 tonnes, a 172 per cent increase over the 1982-3 level. Indonesia's rice imports reached the stage at which they affected the world market prices for the commodity. This situation existed for a long time despite the fact that 51 per cent of food-crop land was devoted to paddy fields and yearly growth stood at 4.8 per cent (Sajogyo, 1982: 48).

Thailand's case is different. Traditionally a rice exporter, the country has long been considered a yardstick for determining the quality of rice traded in the world market by other countries. The government relies heavily on foreign exchange from rice exports to support a basically agrarian and primary-product economy. The three years from 1982 to 1985 however, brought the rice industry to a critical point. World market prices had been deteriorating: from a peak of US$500/ton in mid-1981, the price had fallen to as low as US$200/ton by January 1985, a 56 per cent decline (Sricharatchanya, 1985: 48).

TABLE 2.6 - Production of Agricultural Commodities in ASEAN Countries, Various Years ('000 tonnes)

Source: FAO Monthly Bulletin of Statistics, various issues.

Meanwhile, in the Philippines and Thailand and, to a lesser extent, Indonesia, agribusiness and commercial farming have been growing. This is related to the modernization drive in agriculture in which various actors, both local and foreign, are playing neatly assigned parts. Changes in the social, economic, cultural, and political spheres are also taking place. As is inevitable, the introduction of new methods of production, new philosophies of growth, and new means of surplus generation have engendered conflicts on various levels. The competition for land, for access to its product, and for shares of the surplus are at the roots of conflicts arising in the agricultural sector. The issues are seldom clear, particularly when judgments have to be made regarding the effects of new methods. For example, it is still widely believed that the dislocation of thousands of small farmers to make way for massive hydroelectric projects is justified. The assumption is that the immediate disruption of the productive lives of peasants is only temporary and that in the long run, everyone will benefit from electricity Narrow-minded as this perception may be, it is enough to convince other sectors of the population not directly affected by these projects that sacrifices such as the dislocation of communities must be accepted. Even the affected peoples are made to go along with the scheme through a combination of persuasion, coercion, and intimidation.

The various conflicts that now characterize the competition for land can be traced to the breakdown of subsistence farming in favour of commercialized production, or in some cases, the subsumption of the former to the latter. Subsistence production has its own contradictions, but since this type of agriculture is no longer the dominant mode in the underdeveloped areas in South-East Asia, it is more relevant to examine instead the widespread 'commoditization' that has become the characteristic trend.

The Modern Agricultural Context: Agribusiness

A pervasive characteristic of rural South-East Asia is the inequality in the distribution of land. In Java, 55 per cent of 4.6 million farming families own only 22 per cent of the land while 4 per cent or approximately 400,000 families control 24 per cent (Sajogyo, 1982). Sixty per cent of Javanese households have an average of only 0.2 ha. Tenancy rates in Thailand's Central Plains were as high as 40 per cent as of the late 1970S and continue to be so in the 1980s Farmers engaged in commercial crop production are often in debt and failure to repay on time can mean loss of their lands. In the Philippines, rural poverty has continuously risen, with almost 80 per cent of rural families falling below the poverty line in the late 1980s Landlessness has also increased, and dispossessed workers presently form the majority of the Philippine rural labour force.

A relatively recent phenomenon is the development of large plantations by multinational corporations, the state, or local capitalists for the cultivation or processing of export crops. In the Philippines, multinationals such as Del Monte, Dole, and United Brands pioneered and controlled the banana export industry in Mindanao. Dole joined Del Monte in the production and processing of pineapple for export. Dole also expanded its pineapple operations into Thailand. Transnational agribusiness has exacerbated the conflict between the production of food crops and export crops. Officially welcomed by host governments, this type of agriculture represents a higher level of foreign and local exploitation of resources with minimal benefits for the poor sectors of society.

Agricultural modernization and increasing commercialization have not necessarily meant social progress and economic prosperity. Agribusiness expansion often results in the physical eviction of the actual cultivators. Food-producing communities have been displaced by the development of the banana and pineapple export industries in Mindanao. A Philippine corporate farming programme launched in 1974 also resulted in displacement. In the early 1980s the Philippine government joined with local entrepreneurs and Malaysian transnationals to introduce large-scale palm-oil production in eastern Mindanao. Several thousand settlerfarming households were displaced to make way for Guthrie's 8 000-ha plantation. As late as 1976, the Soyear-old Del Monte subsidiary, Philippine Packing Corporation, forcibly ejected 371 farmers in the Pontian Plains in Bukidnon province by Sloughing through five barrios (PPI, 1983: I). In 1980, on the 13 000-ha Hacienda San Antonio-Sta. Isabel in llagan, Isabela, 300,000 people were threatened with eviction by a large corporation owned by businessman Eduardo Cojuangco, a Marcos crony (PPI, 1983: I). Anca Corporation wanted to transform the newly purchased hacienda into an agribusiness plantation growing coconut and ipil-ipil pulp trees.

The shift from food crops to export crops raises the issue of priorities for agricultural production. severe problems of malnutrition among the majority of the population, it would have been more beneficial if emphasis had been placed on food production for domestic consumption rather than on exports. Ironically, ASEAN countries are also food importers. Philippine and Indonesian wheat imports from the United States under Public Law 480 constitute a drain on local resources. Although PL 480 allows importing countries to pay in their local currency, the process has the overall effect of creating a need for a product that previously was not in the local diet. Even during the years of rice exportation, poor Filipino farmers subsisted on meagre diets that were often nutritionally inadequate.

Agribusiness Versus Land Reform

Agribusiness development brings about conflict between itself and land reform and equity-oriented rural programmes. Large-scale plantations necessarily involve the concentration of land in the hands of a few individuals and corporations. In the Philippines, a land reform programme initiated upon the declaration of martial law in 1972 has been proceeding slowly. Covering only 33 per cent of tenanted lands and 6.8 per cent of total crop area, the Operation Land Transfer (OLT) programme had, as of 1983, benefited only 9 per cent of its targeted number of farms (MAR, 1983). In Indonesia, since the Suharto coup, the land reform programme has been frozen, and those clarnouring for its implernentation are invariably said to be communist-inspired.

A successful land reform programme is a necessity in a country where feudal and semi-feudal relations of production persist. These relations are sources of serious social conflict. Agrarian movements in South-East Asia, and in other areas where similar conditions prevail, revolve around issues of oppressive precapitalist land tenure arrangements such as share-cropping, exorbitant land rent, and usury. Although agribusiness sometimes does away with the old mode of production, it often replaces it with more exploitative structures. In many cases, agribusiness exists alongside old subsistence or feudal modes, the reason being that companies can keep the cost of production low by making the producer directly responsible for reproducing its labour power. Thus labour reproduction does not enter into the determination of plantation wages, which can then be maintained at levels lower than subsistence. This can be observed in both the Philippine and Thai experiences. Wages of Filipino sugar workers are often below subsistence, and if relied on solely, cannot sustain a worker's existence. But since field-work is seasonal, the worker can return to his home (frequently an outlying island) and engage in subsistence or share-cropping cultivation.

Even if plantations are able to completely transform tenants into fulltime agricultural workers who depend wholly on their wages, conflicts still arise. Workers discover that their living conditions are no better and are sometimes worse. The highest yearly income of a Filipino plantation worker in 1983 (as legislated by a presidential wage order) would amount to P8,600. If two family members are working (and this is rare), the total income would still fall below the estimated minimum subsistence income of approximately P20,036 a year required for a rural family (Almazan and Ibanez, 1984). Unlike tenants, plantation workers have no alternative sources of food and income. To add to the gravity of the situation, few plantations pay the minimum legislated wage to their workers. Corporations can easily apply for and secure exemptions from the minimum-wage rule by pleading insolvency or a distressed situation. Another way by which companies circumvent the law is to hire non-permanent contractual or probationary workers and renew their contracts every few months.

Agribusiness and the National Economies

Agribusiness also leads to a monopolistic type of capitalism. Huge capital resources and extensive international marketing contacts are needed for a successful operation. Only the largest corporations, often multinationals, have access to or control over such resources. Conflicts arise between these huge monopolies or oligopolies and the aspirations of local entrepreneurs for a greater share of production and the market. Often local competitors are pushed out after being driven to bankruptcy. Those who manage to survive inevitably enter into joint-venture arrangements with the foreign firms and end up as junior partners. The dominance of multinational agribusiness over certain types of agricultural products in underdeveloped countries serves as a hindrance to the full development of local industries under the control of national capitalists. Indigenous development and nationally oriented growth do not take place at all.

In some instances, however, the transfer of control from foreign to local firms results in the substitution of native, often statecontrolled, companies for foreign monopolies. In the Philippines, marketing monopolies in the sugar and coconut industries were established with the aid of government decrees. Ostensibly the monopolies are private firms, and private individuals sit as board directors. However, the presence of government officials and the fact that marketing control was achieved only through state intervention makes government denials ring hollow. Public outcry against this anomalous arrangement, the disenchantment of a significant section of local entrepreneurs left out of the lucrative market, and demands by no less than the International Monetary Fund and the World Hank for the dismantling of the monopolies led to certain steps being taken by the Marcos government to accommodate other local businessmen. The individuals who controlled both the sugar and coconut industries were leading Marcos cronies. However, it remains to be seen whether these arrangements can be overturned under the Aquino government.

Even as agribusiness firms and state monopolies are developing highly integrated and large-scale agricultural systems, with deleterious effects on society and the national economy, small-scale farming (especially of rice and maize) has had to cope with the technological changes brought about by the Green Revolution that began in the 1960s (Feder, 1983). Green Revolution technology involves the extensive use of high-yielding varieties of seedlings (HYVs), massive inputs of fertilizers and chemical pesticides, a degree of mechanization, and, in some cases, supervised credit.

Although the new technology may have increased crop production, this has been achieved at the cost of damaging the natural ecosystem of paddy fields. Rivers and farm animals are poisoned and extra sources of food (fish and snails) are lost to the farmers (Fegan, 1982). The import-dependent character of the new system poses even greater problems and conflicts. Studies in the Philippines have shown that the tremendous increase in the costs of production due to the expensive inputs have exceeded crop-yield increases by a margin of five to one. In the Philippines, the prices of fertilizers and pesticides increased by more than 100 per cent in 1983-4 alone. Farmers in Central Luzon cut down on fertilizer use or planted less to minimize costs. The result was a decline in rice production and the government had to begin importing rice.

Government support prices for rice farmers have been inadcquate to meet rising costs in Thailand as well. In 1985 Thai farmers were demanding a paddy price of B3,500 a kwien (ton), which is B 500 more than the national average farmgate price. Declining paddy prices in the Thai central plains have forced farmers into greater indebtedness running into tens of thousands of baht each (Sricharatchanya, 1985: 49). The government's dilemma is that it must maintain low farmgate prices for rice in order to subsidize the urban consumer. Instead of taking steps to lower the costs of farm production as an alternative to raising rice prices, governments are apparently locked into the narrow perception that the only factors subject to state intervention are the farm support price and the retail price of rice. Thus the consumer is pitted against the farmer, and both groups are protesting. Farmers' groups are asking why the fertilizer and pesticide companies (mostly multinationals) are not being made to bear some of the costs. Besides, the farmers argue, they are consumers, too.

The Political Consequences

The conflict between agribusiness interests and farmers in the Philippines was brought to a climax when some 5,000 farmers belonging to the Alliance of Central Luzon Farmers (AMGL) staged protest Marches in several provinces on 4-5 February 1985, ending at the Ministry of Agriculture office in Metro Manila. The peasants were joined by hundreds of supporters from the student, worker, urban poor, and professional sectors in a camp-in demonstration in front of the ministry. The AMGL presented the following demands:

1. A drop in fertilizer and pesticide prices to the 1 October 1983 level;
2. A new small-farmer credit scheme in which interest rates do not exceed 12 per cent per year;
3. A write-off of all small-farmer debts incurred in the government Masagana 99 programme.
4. Strengthening of the palay (paddy) support price without increasing the price of rice;
5. Lowered gasoline and electricity costs in order to minimize irrigation fees; and
6. Establishment of a nationalistic agro-industrialization programme and implementation of genuine land reform (AMGL,1985).

A series of dialogues between peasant leaders and the Agriculture Minister during the demonstration ended in a stalemate as officials contended they were powerless to act on the demands and that only the President could help the peasants. The peasants then demanded to meet with Marcos himself, but before this confrontation could be arranged, government troops moved in and violently dispersed the peasants in the early morning hours of 13 February 1985. The farmers and their supporters were chased 3 km to the nearby campus of the University of the Philippines, where they were sheltered by students and the Catholic Church. Though none of their demands were granted, the farmers had made their point and had been heard.

A resurgence of peasant unrest is also brewing in Thailand. Deteriorating conditions for the Thai peasantry set the backdrop for a three-day demonstration by 3,000 farmers joined by members of the opposition Chart Thai Party in front of Government House on 8-IO January 1985 (Sricharatchanya, 1985: 49). The peasants came mostly from the central and upper central plain provinces. Prime Minister Prem Tinsulanond averted a major political crisis by paying the demonstrators a predawn visit on 10 January. In this instance, Prem handled the farmers in a better way than his Philippine counterpart; while the Thai farmers remain dissatisfied, an immediate crisis was averted.

These two examples bring up the issue of peasant organizations and their role in the process of rural change. ASEAN governments generally regard independent rural organizing efforts with suspicion and try to set up state-sponsored groups that champion the maintenance of existing conditions. The extreme case is Indonesia, where the government takes an almost paranoid attitude towards peasant organizations formed independent of state supervision (Mortimer, 1975). Suharto's fear is that there will be a revival of the militant Parti Komunis Indonesia-led organizations that disrupted Javanese society during Sukarno's rule with their revolutionary calls for change among the hundreds of thousands of peasants they mobilized. Because of this history and the government's attitude, minimal rural organizing is undertaken in Java and outer islands.

In the Philippines, there has been a long history of peasant organizing dating from the American colonial period (Constantino, 1975). National organizations arose concurrently with the founding of the Communist Party in 1930, with heaviest activity in Central Luzon, a traditional area of agrarian unrest. Despite the proscription of the CPP, these organizations survived, but they were finally made illegal shortly after the Second World War. The final burst of activity was the abortive Huk peasant rebellion from 1946 to 1954, which was violently suppressed and ended a traumatic first phase in radical peasant organizing. In the years that followed, only moderate and church-sponsored peasant groups were active. Radical groups did not re-emerge until 1964, and a split within the CPP in 1967 led to the birth of a new communist party and the NPA. The NPA currently numbers around 10,000-15,000 armed regulars scattered all over the country. Its main aim is to carry out an agrarian revolution in the Philippines with the peasantry as its main force. The major political conflict in the Philippine countryside today is that between the NPA and the Armed Forces of the Philippines. The NPA platform is based on the issues of lowering land rent and eliminating usury and, in the long term, the implementation of a comprehensive land reform programme that will redistribute land to the landless and organize production around co-operatives and collective farms where feasible.