News Analysis Reforms

Levelling the land for agri-investment

New rules are in the pipeline to speed up agricultural-land ownership transfers and attract more investment to Philippine agribusiness. They are also intended to remove red tape and clarify contractual issues which have created difficulties between land owners and crop investors. According to the Department of Agrarian Reform (DAR), easing of the regulations will also make the sector sustainable.

Contract disputes between Filipino farmers and investors in produce from the land occur regularly – vagueness of agreements and financial pressures being the main contributing factors. Poor farmers are at a disadvantage when it comes to negotiating long-term land-use deals with absentee farmers – overseas crop investors.

Spiegel Online, the web version of German news magazine, Der Spiegel, reported in 2013 that a full 49% of the Philippines’ agricultural land was in the hands of foreign farming interests and that 17% of that was land producing crops for Saudi Arabia. From other reports and some government data, it’s clear that Middle Eastern investors – Bahraini, Kuwaiti, Qatari and from the UAE, whose homelands have limited agricultural potential – have signed or are negotiating deals with the Philippine Government for thousands of hectares of land.

The prime driver behind much of this investment is the Philippine Agricultural Development Corporation, set up during the presidency of Glorial Macapagal-Arroyo, herself a huge promoter of land leasing to foreign governments and enterprises. During her overseas trips as president she brokered deals for some 1.37 million hectares of agricultural land for the production of a host of agro-fuel feedstock including coconut, jathropa and oil palm for biodiesel, and sugar, sweet sorghum, cassava, and molasses for bioethanol.

The reforms, described by the DAR as a streamlining process, have been presented via two administrative orders: the first provides new rules for agribusiness-venture agreements; the second is for regulating the transfer of agricultural-land ownership. Agri-venture contracts, between the beneficiaries of agrarian reform and investors, deal with land possession, produce distribution, and the land owner’s commitment to grow certain crops.

The reforms were arrived at after consultations between the DAR, independent analysts and the United Nations Food and Agricultural Organisation. One of the main purposes of the new guidelines is to simplify and smooth deal-making between farm holders and investors and make it more transparent. The two parties should negotiate on an equal footing; land-use consent should be mutually agreed and not result from any undue pressure. The reforms have yet to be approved by the Presidential Agrarian Reform Council which, under the Comprehensive Agricultural Reform Programme, protects the interests of agrarian-reform beneficiaries and supplies them with support services.

Under the Investor’s Lease Act of the Philippines a foreign national or corporation may enter into a lease agreement with a Filipino landowner for an initial period of up to 50 years, renewable once for an additional 25 years. Land occupation by foreign interests remains a contentious issue in some parts of the country.