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One of the most interesting debates within the left movement re�volves around the question: is the Phil�ippines capitalist or semi-feudal? It is a theoretical issue that has serious impli�cations on left �strategizing� and organ�izing.

Unfortunately, most of those directly involved in the debates have not come up with a clear definition of the terms they are using, especially the term �feudal� or �semi-feudal.� While the classic meaning of a �capitalist mode of production� appears acceptable to eve�ryone, there is some vagueness in the way some writers approach the so-called �feudal� or �semi-feudal mode of pro�duction.� This leads some to a false type of reductionism, for instance, the suppo�sition that if a mode of production is not capitalist enough, then it must be �feu�dal� �feudal.� Or the belief that if the country is  predominantly agrarian, then it must be �feudal� or �semi-feu�dal� as if the agrarian character of an economy automatically makes it �feu�dal� or �semi-feudal.�

The RPMP asserts that the Philippines today is predominantly capitalist even if the overall capitalist development of the country is highly uneven and relatively weak in compari�son to the experience of other countries. To appreciate this; it is necessary to have a clear understanding of the terms �feu�dal� mid �capitalist,� the development of imperialism as the monopoly stage of capitalism and the capitalist transforma�tion of the Philippines under the aegis of foreign monopoly capital.

Feudalism and Capitalism Defined

Feudalism � This refers to a socio-economic formation characterized by serfdom or landlord-vassal relation�ship. This system came into being after the disintegration of the tribal and slave owning societies. Feudalism became the dominant system in Europe during the Middle Ages.

The word feudal is derived from the English and French fief, which is taken from the German fehu-od, mean�ing �property in cattle� and later, �prop-city in land.� The system stresses the importance of land ownership and the rights and privileges associated with such ownership. There are two main classes in a feudal society: the lords and the serfs or peasants. The ruling feudal class includes the nobility and the higher clergy, the latter emerging as the biggest feudal lords in some countries.

The feudal system is marked by a natural or subsistence economy and a stagnant, low level of technology. Specific forms of feudal exploitation vary. Generally, however, the feudal landowner�s main privilege is not to work but simply to enjoy the fruits of the land that is made productive by the labor of the serfs or peasants. The earlier form of feudal exploitation bad the serf tilling the land of the lord for free in exchange for the right to cultivate a small plot of land for the serf�s own use. The serf could be working five days a week on the lord�s land, and the rest of the week on his own plot. The free labor service, or corvee as it is called in some parts of Europe, came to be known as ground rent. Later, this was transformed into ground rent in kind and later still, under the impact of an expanding money econ�omy, ground rent in cash. These two forms of ground rent developed during  the advent of capitalism in Europe and made it unnecessary to divide the lord�s land into one part for the master and the other for the serfs. In many cases, ex�ploitation was (and still is in some coun�tries) intensified by the landlord by merely raising the ground rent peasants had to meet.  

The forms of social existence for labor power was essentially unfree. Feudal rule was based on coercion tied to land and customs favoring the feudal lords. Economic surplus was pumped out under these conditions but of course, feudalism is different from slavery.

Culturally, the relationship between the lord and the serfs has gener�ally been characterized as paternalistic. In addition to the free labor rendered by the serf in cultivating the lord�s land, he and the members of his family are bound to render myriad forms of services to the lord�s family or household. In the expe�rience of other countries, serfs some�times even served as soldiers for the feudal warlord.

Capitalism�This is based on the private ownership of the means of production and the exploitation of wage labor. There are two main classes under capitalism: the capitalist class or the bourgeoisie who own the means of production, and the wage laborers or prole�tariat who, having no means of produc�tion of their own, are forced to sell their labor power in order to live. Compared to feudalism, capitalism is more pro�gressive, particularly during the 16th up to the 19th centuries when the rising bourgeoisie was leading the struggle against the ruling feudal class, and in the sense that it expands the productive capacity of society through industriali�zation and the harnessing of the scien�tific-technical revolution.

The basic law of capitalism is the extraction of surplus value through the intensification of the exploitation of the workers who are forced to produce new wealth or value way above the real value of the wages they get for their labor. Thus, through the law of surplus value, �seed� capital becomes bigger until in the course of competition, it either gets ruined or becomes monopoly capital. The extraction of the new wealth or value to be added to the original capital, however, can only be fully real�ized through the market where the commodities produced by the workers are exchanged. Hence, capitalist ex�ploitation presupposes production for the market.

Historically, capitalism traces its beginnings to simple commodity production, wherein the owners of the means of production are also the work�ers. This set-up is non-exploitative as regards production relations and applies to artisans and peasants who till their own land. It is only when the owners of the means of production start hiring people to work for them that exploita�tion sets in.

Technically speaking, many of the small peasants owner-cultivators and lessees in the Philippines who produce for the market are small commodity producers. They are small producers not only in terms of the �smallness� of the lands they own or are able to till (below

five hectares), but also in the sense that they are unable to produce enough sur�plus that would enable them to expand production through acquisition of more lands, hiring of more workers, or invest�ment in other undertakings. The pres�ence of this sizeable mass of small commodity producers in the country�side indicates the backward and highly uneven development of capitalism in agriculture.

Lenin�s Work on the Development of Capitalism

The above definitions of feu�dalism and capitalism are quite clear enough. However, what causes confu�sion to a lot of left analysts is the fact that a socio-economic formation in a given society may feature a number of modes of production interacting and intermesh�ing with one another. But the more dynamic is found to dominate, even replace, the others. This is especially true in the case of industrially backward and highly agrarian countries where various forms of pre-capitalist modes of production or their survivals prevail. Life is not a straight line, and certainly this is not the case in the development of a socio-economic formation. Oftentimes, the transition from one mode of produc�tion to another, e.g., from feudalism to capitalism, is a complicated and uneven process and defies neat and clear-cut delineations. The classic development of capitalism from the womb of feudal�ism as experienced by England and other European countries cannot be replicated in its primeval form in other countries of the developing world.

It is in this context that the methodology and works of V. I. Lenin find great relevance. Lenin emphasized the need for concrete analysis of con�crete reality, not imagining situations to fit neat theoretical frameworks. Using this approach and the methods of dialec�tics, Lenin came up with two seminal theoretical works that helped guide the Russian Social Democratic Labor Party in the formulation of its program and enlighten the world revolutionary forces on the changing nature of capitalism as a national and global system.

One of These works is The Development of Capitalism in Rus�sia, Lenin gathered the latest economic data to show that Russia, despite its overwhelm�ingly agrarian character and limited number of industries compared to other European countries, was well on the road to capitalist development. To prove his point, he concentrated on analyzing the capitalist transformation of corvee or feudal agriculture of Tsarist Russia as a result of the rapid and general com�mercialization of agriculture, while also paying attention to the essential role historically played by communal lands. He wrote:  

The growth of commercial agriculture creates a home market for capitalism. Firstly, the specialization of agriculture gives rise to exchange between the various agri�cultural areas, between the various agricultural undertakings, and be�tween the various agricultural prod�ucts. Secondly, the further agricul�ture is drawn into the sphere de�mand by the rural population for those products of manufacturing industry that serve for personal consumption; and thirdly, the more rapid is the growth of the demand for rural entrepreneurs is able, with the old-fashioned �peasant� imple�ments, buildings, etc., etc., to en�gage in the new, commercial agri�culture. Fourthly and lastly, a de�mand is created for labour power, since the formation of a small rural bourgeoisie and the change�over by the landowners to capitalist farming presuppose the formation of a body of regular agricultural laborers and day laborers...

Capitalism enormously extends and intensifies among the agricul�tural population the contradictions without which his mode of produc�tion cannot exist...Capitalism for the first time broke with the system of social estates in land tenure by converting the land farmer�s prod�uct was put on sale and began to be subject to social reckoning�first in the local, then in the national, and finally in the international market and in this way the former isolation of the uncouth farmer from the rest of the world was completely bro�ken. The farmer was compelled willy-nilly, on pain of ruin, to take account of the sum-total of social relations both in his own country and in other countries, now linked together by the world market...

...By its very nature, capitalism in agriculture(as an industry) can�not develop evenly: in one place(in one�s aspect of agriculture, in an-other place another aspect, etc. In one case it transforms the technique of some, and in other cases of other agricultural operations, divorcing them from patriarchal peasant econ�omy or from the patriarchal labour service. Since the whole of this process is guided by market require�ments that are capricious and not always known to the producer, capitalist agriculture, in each sepa�rate instance (often in each separate area, sometimes even in each sepa�rate country), becomes more one-sided and lopsided than that which preceded it, but, taken as a whole, becomes immeasurably more many� sided and rational than patriarchal agriculture. The emergence of sepa�rate types of commercial agricul�ture renders possible and inevitable capitalist crises in agriculture and cases of capitalist overproduction, but these crises (like all capitalist  crises) give a still more powerful impetus to the development of world production and of world production and of the socialization of labour.

Before capitalism appeared, the production of agricultural pro�duce was always carried on in an unchanging, wretchedly small way�both when the peasant worked for �community character� of land tenure was capable of de�stroying this tremendously scattered production... Capitalism destroys local seclusion and insularity, and replaces the minute medieval divi�sions among cultivators...

...Indeed, the fact that agricul�ture has been transformed from the  privileged occupation of the top es�tate or the duty of the bottom estate into an ordinary commercial and industrial occupation; that the prod�uct of the cultivator�s labour has become subject to social reckoning on the market, that routine, uniform agriculture is being converted into technically transformed and diverse forms of commercial farming; that the seclusion and scattered nature of the small farmers is breaking down; that the diverse forms of bondage and personal dependence are being replaced by impersonal transactions in the purchase and sale of labour power, these are all links in a single process... (pp. 311-317)

To a great extent, Lenin�s de�scription of Russian agriculture as it was undergoing capitalist transformation can be applied to Philippine agriculture during the last two decades when the government vigorously pursued the Green Revolution program for the food sector side by side with the promotion of agribusiness!

At any rate, the lengthy quota�tion above, taken from the voluminous work (686 pages) of Lenin, is meant to show how Lenin used both the Marxist theory of capitalism and the methods of dialectics in making a concrete analysis of the evolving capitalism in Russia. Despite the strong survivals of feudal�ism and the multiplicity of production arrangements emerging as a result of the commercialization of Russian agricul�ture, Lenin showed with great clarity that capitalism had become the deter�mining and leading factor in the Russian economy, be it in agriculture or in indus�try. This great analytical work of Lenin firmed up the theoretical and organiza�tional foundation of the Bolshevik party, which was dedicated to a proletarian-led revolution based on the strategic alli�ance of the working class and the peasantry.

CHARACTERISTICS of Philippine Capitalist Development

Maldeveloped and Eneven Capitalism

However  capitalism in the Philippines has transformed the contour of Philippine social and political life.  There is an uneveness and maldevelopment of Philippine capitalism.  Philippine society  exhibits many of the most advanced social features cheek-by-jowl with many of the most backward. From the tops of the huge skyscrapers of Makati, one can see villages that have not yet experienced an agricultural revolution. The modern proletarian, working in the sterile atmosphere of the chip manufacturing plant, has a brother who is labouring in the fields. She uses the highest technology known to humanity; he uses the methods and tools that have endured for thousands of years. But the societies are in a constant social turmoil. Modern metropolies are sucking peasant labour in from the countryside and proletarianising it at an astonishing rate. The social and political structures of such societies are necessarily under immense pressures. The beliefs and habits of past times do not disappear overnight, but at the same time new conditions of life produce the germs of new ideas and new horizons, as Marx and Engels famously observed in the Communist Manifesto. This process of social transformation has been the immediate life experience of millions of people in the Philippines. Born into a world of agriculture, they live in a world of industry. Born in villages, they live in cities. Born to obey the old ways, they struggle in a confrontation with the new.

The slow, uneven and maldeveloped state of capitalism in the country is the result of domination of big foreign monopoly capitalists and their extraction of superprofits from the country. The manufacturing sector is limited, with the food processing taking up the great bulk of manufactured products. More importantly, there are no basic Filipino industries to speak of, but only extractive industries. This sad state of the economy makes the Philippines all the more vulnerable to the recurring world and Asian crisis, with the process of maldevelopment being worsened  by the neo-imperialist onslaughts of globalization.

The unevenness and maldevelopment can be seen in the  various sectors of Philippine economy.

Agricultural Sector

Agriculture still maintains a major role in the country�s economy. A significant number of Filipinos live and work in the rural areas. In 1994, almost half of the working population -- 45 percent -- and 45.1 percent of all employed in the household earned the major bulk of their incomes directly through agricultural activities.[1]

In the last three decades, faster and wider in-roads of capitalist development is noticeable in agricultural production.  This could be seen in the agribusiness or cash crop production.  With this, many changes have been brought about in the class forces and relations in the rural areas.

It has also intensified the crisis in agriculture especially in the 80s manifested by the downward trend in prices of traditional exports at the end of the decade resulting in the 3 percent low rate of growth during the period.  The crisis began to be felt in the 70s when agricultural Gross Domestic Product (GDP) plunged from 6.1 in 1970 to 1.5 percent in 1980 then recorded as the lowest rate of growth in Southeast Asia. In 1984, agriculture contributed to about 27 percent of the country�s total GDP. Ten years thereafter, this contribution declined to 22 percent.

Food production per capita likewise decreased from 1.6 percent in the 80s to a negative 1.4 percent in 1992 while agricultural gross value dipped to a negative 3.2 percent in 1992 from 4.9 percent in the 80s.

When viewed in terms of �agribusiness� or agriculture inclusive of related manufacturing activities, the importance of the agricultural sector  to the overall economy may be overwhelming (Putzel 1994). In 1988, the direct contribution of agribusiness to the GDP amounted to 47 percent. Considering other related agricultural activities such as wholesale and retail and transport agribusiness contribution to the GDP may reach 50 percent[2].

But the economy as a whole failed to provide sufficient employment outside of agriculture. In 1990, agriculture employed an additional 140,662 workers. However,  employment dipped to 19.3 percent due to decreasing opportunities,.  By 1991,  the sector accounted for only 113,481 workers employed in 12.5 million  hectares of agricultural lands.

Major Crops

Philippine agricultural produce comprise a variety of crops such as food crops (rice, corn, tubers), root crops, spices, traditional export crops (such as sugar, coconut, bananas and tobacco), non-traditional export crops (such as asparagus and mango),  fruits and nuts, vegetables and fibers.

The crop production sector represents 43 percent of all sectors and establishments involved  in agriculture. In 1991, this sector gained  the largest share of agricultural revenue  amounting to PHP 9.85 billion representing 50.6 percent of total agricultural revenue (NCSO).

Total revenue earned by the agricultural sector reached PHP 19.45 billion in 1991, a slight increase of 1.4 percent from the previous year�s PHP 19.17 billion. Livestock production and the forestry sectors placed 2nd and third earning  production values  of  PHP 7.24 and PHP 1.92 billion respectively (Figure 1).

Figure 1

Percent Distribution of Revenue[3]



According to the NCSO, the crops production sector employs 86,497 workers or 79.8 percent of the total employed in the agricultural sector in 1991.  This include working owners, unpaid workers, managers, supervisors, executives, permanent and seasonal and forestry workers.

Four crops � rice, corn, coconut and sugar � are of major significance to the country�s agriculture.  These crops alone utilize some 9.9 million hectares or 79 percent of the total land devoted to agriculture.[4]

Capitalist Transition

The first factor which determined the path of agrarian transformation in the Philippines was the experiences of Spanish and later American Colonization.  Spanish colonization implanted the concentration of land ownership in two forms: the encomienda system of agriculture dominated by the clerical orders and variety  of labor processes of exploitation coexisted based on serf, debt servitude and slave based form of surplus labor extraction. This variety was later replaced by the hacienda system at the end of the 18th century that more fully resembled European serfdom. The determining motive was to support the needs of the new  settlement established by the conquistadors.

Another factor that influence the direction of agrarian transformation was the expansion of trade. It boosted further agricultural specialization at the beginning of the 19th century. The foreign market made abaca growing and sugar planting highly profitable. Foreigners, mostly British and American, were allowed to engage in agriculture and manufacturing. The large-scale production of �cash� crops like sugar, indigo, coffee, copra, hemp and tobacco became a permanent feature in Philippine agriculture. But the production of cash crops required large areas and big numbers of workers. The land was not parceled out to share croppers and instead was tilled by wage laborer (sacadas). The sacadas often had to be coerced into rendering labor.  Landowners developed patron-client relations to retain and conserved this work force, as wage levels were often below subsistence level. This was not yet, however, �free� wage, as patron-client relations continued.

The coming of the American did not alter the concentration of land ownership nor alter the basic structure of agrarian relations. The free trade policy continued land accumulation process.  Free trade relations have encouraged big land owners to invest heavily in the production of sugar, copra, and hemp for export to the United States. The free exchange of goods without tariff from 1909 to 1934 structured the colonial economy into a pattern of dependence and underdevelopment.

The American investments in the Philippines, on the other hand, were concentrated in the extractive industries like mining and logging. American companies also invested in agricultural export crops such as pineapples. The establishment of large-scale commercial plantations and petty commodity production in Mindanao occurred after the consolidation of American colonial authority.

The capitalist transition in Philippine agriculture showed the monopolization of land by a few families. Few families owned huge tract of land, sugar haciendas  or  commercial agricultural estates. There was also great deal of intermeshing with feudal and pre-capitalist forms of agriculture. The majority of those who sold their labor power and worked on the land remained landless and poor.

The existing of land concentration accounts for the popularity of �semi-feudal� thesis in the Philippines. However, the size of concentrations is not evidence of feudalism itself. Rather the large land holdings reflect the basis upon which capitalist agricultural developed on older class formation. In spite of huge land holdings and landlordism a general process of capitalist expansion occurred, defined as the erosion of the natural economy, growth of social division of labor, accumulation of merchant and usurer capital, and increasing social differentiation into wage laborer, petty commodity producers and capitalist farmers.

This unevenness of capitalist transition is more evident in the race and corn production. We can see remnants of sharecropping and land rent as key forms of surplus labor appropriation. Indeed, these forms intensified despite successive land reform measure especially in the rice and corn areas.  Landowners continue to appropriate surplus labor through share cropping and later leasehold tenancy. Yet, there was also significant development of owner cultivators and large capitalist farms in rice and corn areas in Luzon. The class composition reveals a significant layer of the population dependent on wage labor and the dominant role played by the merchant and finance capital in the production process.

In the study done by the Visayas Group reveals the extend of capitalist penetration in the rice and corn areas which resulted to a combined and uneven development. To quote extensively from the research:

Rice and corn are food staples. Three fourths of the 70 million Filipinos eat rice, and nearly a quarter, mostly in the Visayas and some parts of Mindanao are basically corn eaters.  There were no shifts in uses of these grains until the 90s when corn consumption gradually shifted from  human food to animal feed and corn production gradually shifted from white corn to yellow corn.  By 1992, about 70 percent of corn produced in the country is consumed by the livestock industry, following the shift  from white corn to yellow corn.

Until modern rice varieties were introduced in 1966, average yield per hectare was 1.3 MT and  annual production on 3.1 million hectares of riceland amounted to 4.1 MT. Since then, production has doubled and rice hectarage increased by about 7 percent  to 3.6 million in 1994.  Subsequently, production increased to 10.5 million tons.  Thus, in the same year,  rice production posted a 5 percent real GVA  representing a contribution of 22.32 percent  to  agriculture�s total real GVA.

Corn,  on the other hand,  is planted in 3 million hectares of land representing half of the total area planted to grains.  In 1994, corn output was 4.5 million metric tons.  From the 70s through the 90s, corn showed most promise among the country�s four major crops (namely, rice, corn, sugar and coconut), in terms of GVA growth.  During the period, corn GVA surpassed that of rice (3.3 percent).  In terms of hectarage, corn areas surpassed that of rice since the mid 80s although the trend was reversed in 1991.  By 1994,  corn GVA declined to 1.4 percent of the real GDP, 12 percent lower than its share in 1984.  On the whole, this amounted to a 6.3 percent contribution to total agriculture GVA.

Corn production is concentrated in Mindanao, in the North, South, Central and ARMM regions contributing a total of 68.4 percent to national production (BAS, 1995).  The skew would have been favorable to the Mindanao economy were it not for the fact that end-use is concentrated in the National Capital Region. Majority of feed millers and commercial poultry and livestock raisers operate in the NCR with an aggregate production capacity of 525 metric tons (BAI, Animal Feeds and Control Division). Unlike corn, rice production is scattered although certain areas in the major islands of the country are described  as rice granaries.

Production of basic food crops is costly, labor intensive, and highly dependent on chemical farm inputs such as fertilizers and pesticides.  At present, attaining the national standard per hectare yield of 3 tons of palay over rain-fed areas requires an estimated input cost of about PHP 9,145.00 per hectare (Tables 5).[5] This cost represents a significant 46.04 percent of the overall average production cost of about PHP 19,864.00. 

Cost of production for rice, however,  vary according to  location and purpose.  In a study conducted in Sultan Kudarat, average production cost for one hectare with an average yield of 3 tons would require PHP 16,845.00.  This is significantly higher than costs incurred in San Joaquin in the Visayas (PHP 9,655) for the same size of land.


Table 5

Average Production Cost, %age of Major Budget Items in Rice Production

Over a Hectare of Land in a Single Cropping (San Joaquin, Sultan Kudarat and Tarlac)














Unit Cost



 Total Cost


% of Major Budget Line to Cost of Production

Farm Inputs





Certified Seeds (Bags)





  Fertiliser (Bags)










    Ammonium Sulphate










 Pesticides (Quarts)




















Labor Cost





    Soil Preparation






























Equipment Rental (per 8 Hours)





    Hand Tractor





    Threshing (10% of Yield)











The Philippine corn industry is a high-cost producer. A 1991 study by Setboonsang and Rosegrant reveals that production and marketing costs per metric ton in the country was higher than in Thailand.  Average costs (in US Dollars) were 132.81 and 111.86 respectively.  The most productive provinces like South Cotabato and Isabela even posted higher costs than the national average. In Isabela, production cost per metric tons was 115.25 and marketing 56.64 (1989) or an aggregate cost of  171.89 US Dollars per metric ton.  In South Cotabato, the aggregate cost was at an average of 153.72 US dollars per metric ton.


Table 6. 

Corn Production and Marketing Cost Differentials,

Philippines and Thailand, 1989



(In US$ per metric ton, 1989 official exchange rate)


















Percent Difference at averages

Percent difference with South Cotabato

Cost Item





















Total Cost















Cost Ratio








Capital and Credit

In case studies on corn production conducted by MODE Inc. in South Cotabato and Bukidnon, it was found out that interest rates for production loans ran as high as 10  to 15 percent a month with a maturity of three months payable at the end of the cropping season.

In Sta. Ignacia, Tarlac,  money lenders  charge 5 percent a month over a period of  six months at discounted interest rates.  Some even charge as high as a cavan of palay for every PHP 1,000 loan payable during the harvest season. In Antique,  this system is called aleli  and farmer-borrowers pay two cavans per PHP 1,000.

The financial landscape in rice and corn areas is dominated by the informal credit markets. Formal credit assistance to farmers is scarce, especially among individual farmers. Formal financing institutions such as rural banks and commercial banks usually do not extend production loans due to high risks of delinquency or defaults.  Besides,  rice and corn farmers are considered less bankable because of the smallness of their assets.  From 1981 to 1990, the corn sector received only between 0.79-1.60 percent of total credit assistance granted to agriculture.

According to the Bureau of Agricultural Statistics, the share of corn loans to total agricultural loans was below one percent from 1981 to 1986.  This share rose to two percentage points from 1987 to 1989 but slid down  to 1.60 percent by 1990.

Farm Incomes

High production costs are traceable to high interest rates, high cost of farm inputs and exorbitant land rent.  Very significant portions of farmers� incomes are spent  on imported chemical inputs the prices of  which keep on increasing.  These costs represent foregone income on the part of farmers as well as surplus transfused to inputs dealers and chemical and fertilizer companies.  From 1973 to 1974, prices of petroleum-based fertilizer alone quadrupled from $4.00 to $17.00 a bag significantly eroding farm incomes.[6] 

Farm incomes in rice production vary according to land size, the amount of agricultural inputs applied and tenurial arrangement.  In Sta. Ignacia, a predominantly rice farming community in Tarlac,  58.31 percent of the gross income from a hectare of land of small owner-cultivators represents the cost of production. Of the amount,  21.65 percent or PHP 6,375.00 is spent on hired labor, 16.73 percent (PHP 2,872.00) for equipment rentals and 16.31 percent  (PHP 2,800.00)  for certified seeds.

The average gross income on a hectare of rain-fed land is PHP 29,440.00.  Considering  all the costs incurred in the production process, an owner-cultivator realizes a net income of about  PHP12,273.00.  This represents the household disposable income for six (6) months until the next cropping season.  This would mean that a family of six (6) will have to subsist on a PHP 68.18 daily budget.  This income is further eroded if the farmer is still tied with amortization payments  for his land.

Leaseholders, on the other hand, earn PHP29,204.75[7] from cultivation of a hectare of land in a single cropping period.  Unlike owner-cultivators, they shoulder  added cost such as for  land rent, which is legally set at 25 percent of the net income or  higher  depending on the agreement. 

Thus, leaseholders� incomes vary with a large portion representing foregone income due to exorbitant interests on loans.  On the average, a leaseholder earns PHP 9,204.75 from a hectare of land, which translates to a monthly income of PHP1,534.13 or a measly PHP 51.14 per day.  With production burdened by increasing costs of production and land rent, a leaseholder is compelled to employ more capital and expand land size in order to realize sufficient returns from his productive endeavors.

In a study conducted by MODE, average costs for  all types of corn amounted to PHP 4,422 per hectare against gross returns of PHP 5,536.  Yellow corn gave higher gross returns at PHP 7,087 per hectare.  However, total production costs are also higher at PHP 1,413 per hectare against PHP 963 for white corn farmers.

High production costs for yellow corn HYVs race up against returns.  High production and marketing costs are disadvantages that reinforce each other and translate into high prices. The price of Philippine yellow corn  is 46 percent higher than that of Thailand�s.

The production of  rice and corn is costly and capital intensive. Bad agricultural practices and high doses of chemical inputs contribute to soil erosion and decrease in fertility, hence,  the  long term economic viability of HYVs. The ensuing environmental damage translates into huge social costs. 

The above costs will become more apparent and all the more serious as the government�s Medium Term Agricultural Development Program transform Philippine agriculture.  In the program, 3.1 million hectares of rice and corn lands will be converted for the production of more globally competitive non-food crops.  And by the year 2025, the food security of 115 million Filipinos will hang in the balance and become dependent on global markets impacting on the production of rice and corn in a drastically reduced area.

Market Structure for Rice

In Luzon, the market for rice is a multi-tiered system (Figure 2)[8].  From the farm, rice passes through layers of middlemen/traders before it reaches the consumers.  Similar studies in rice farming communities in the Visayas and Mindanao also reveal the same pattern, the only difference being the layers of middlemen in the whole marketing process. 


Figure 2.

The Rice Marketing Structure









Rice Marketing is largely an affair of the private sector dominated by huge traders and millers organized as cartels in many areas.  Their intricate organization and control of capital enable influence and control over the processes that runs the gamut from production to commodity pricing.

Government intervention in the rice industry is hinged on the goals of maintaining a stable supply of food and low prices at the same time affording reasonable returns to rice production.  These goals underscore the dual nature of rice as a political and economic commodity. The NFAs attempt at supplanting the layers of middlemen in the system only prove as effective as the volume of procurements. In the province of Antique, the NFA is able to influence only 4 percent of the rice market.  In 1995,  it stood inutile during the provincial rice shortage at a time when the province was enjoying a huge surplus in production.

An assessment made by the Asian Development Bank in 1982 revealed that most domestic marketing is handled by private traders.  NFA absorbs only 10 percent of the sales/procurements at the wholesale level and 1 percent at its 500 retail outlets, as against 90 and 99 percent of wholesale and retail trading controlled  by the private sector.[9]

Higher farmgate prices offered by private traders and millers further impose difficulties in NFA procurements.  Moreover, higher farmgate prices become incentives influencing  farmers to unload larger portions of their produce to the commodity market rather than keeping reserves for consumption.

A Philippine Peasant Institute study  notes that 36.46 percent of the average yield per cropping season finds its way to the market for cash, 23 percent for consumption, 15.11 percent for labor payments and about 24.84 percent for seeds, wastage and others.  Pressed by meagre farm incomes and soaring production costs, many farmers are compelled to sell palay meant for consumption raising to 60 percent the volume of produce reaching the market in exchange for cash.  In rice producing provinces like Antique,  this volume reaches 50-80 percent immediately after harvest 

Local Markets  

The  local rice and corn market is basically feasible and viable given the fact that demand for food is constant and demand for feeds is rising. Rice replaces corn for food and vice-versa.  Reduction in corn-for-food demand is partly due to changing food consumption habits and availability of rice.  When the country imported rice from 1970 to 1976, one half of the total corn supply was used for food.  But when rice supplies became abundant from 1978 to 1982, demand for corn-for-food declined to 41 percent (Lara, 1992).  In the long term, demand for these commodities will continue to widen proportionately to the still growing population.

Varieties of corn used in production respond mainly to market demands as against subsistence requirements in the past.  The shift from corn-for-food to corn-for-feed, plus the increasing demand of the expanding  livestock industry drastically changed the market for corn.  Corn demand for food  declined from 44 percent in 1980 to 17.9 percent ten years later, while that of feeds rose from 53 percent to 80 percent in the same period (BAS 1989-90).  Global trade liberalization,  however,  is likely to reverse the domestic demand for yellow corn as traders tend to shift to imported poultry and meat  therefore dampening activity in the domestic livestock market.

While there is a shift in demand for corn use, overall market demand is high and production remain below par.  Market demand for corn amounted to 14,000 bags daily and production never had enough to meet demand.  As a result imports covered the deficit.  Imports averaged 250,000 metric tons or $15 million a year (Lara, 1992).  In 1990, the country imported a record high of 345,000 metric tons amounting to $39.3 million.

Unlike corn, there has been no major shift in rice use.  However, the Department of Agriculture is contemplating on the use of palay and its by-products as feed additive or feed base.  Rice production had always been a race against demand,  thus,  the Philippines remains a net importer of this food crop. In contemporary times,  rice production is threatened by the availability of cheaper sources from other countries like Vietnam and Thailand.

The ideal formula for a responsive market consist of just tenurial arrangements, affordable credit, availability of basic infrastructures and downstream markets in production areas�.

In sum, the following features could be seen in the rice and corn production:

-          landowners appropriating surplus labor through share cropping and leasehold tenancy (rent).

-          merchant capitalist (both trader and usurer)  sector has emerged whose interests has become more determinative than landlord interest in agriculture.

-          A significant small owner cultivator mode or petty commodity production has developed in Philippine agriculture employing wage labor. They also deal with merchant capitalist and banks (finance capital). In small landholdings,  surplus extraction is no longer a monopoly of the landlord over the peasant.  Rather,  surplus is extracted by formal or informal creditors,  traders and agricultural inputs dealers.  In fact,  the commodification of subsistence crops paved the way for the dominant role of traders and creditors in surplus extraction. 

These features show a combined and uneven development of capitalism rather than a �semi-feudal� mode of production in the rice and corn areas.

In agricultural plantation, sugar, banana and other export crops, the mode of production is organized along capitalist lines, wherein the company or landlords extract not ground rent but profits from wage labor.  The same research study mentioned would show this development.

Non-traditonal food crops include banana, tobacco, asparagus,  brocolli, cauliflower and others many of which also fall under the classification of high-value crops.  Some crops, like banana and pineapple, are traditional exports.

Non-traditional exports undeniably command higher prices than traditional export crops.  Even the crisis-ridden banana export industry has a higher return per hectare compared to rice farming.[10] 

Of all non-traditional export crops being produced  today, asparagus stands out as the highest performer.  In the asparagus growing villages of Koronadal and Tupi in South Cotabato, farmers report net earnings of PHP200,000.00 per hectare (Ofreneo, et al, 1994).  This figure support more recent studies conducted by the authors.  In 1993, the total hectarage for asparagus was estimated to be 863 hectares.

Banana and pineapple are considered major agricultural exports with significant earnings together with sugar, coconut, abaca, tobacco, coffee, etc.  Fruits and nuts except for coconut accounted for PHP 6,885,117,000.00 in revenues in 1991.  Tobacco, including flue-curing in farms, registered a total PHP 15,355,000.00 in revenues  while vegetable production, including root and tuber crops,  garnered a total of PHP 11,312,000 in revenues during the same year.

The production of non-traditional export and high-value crops is gaining importance in Philippine agriculture.  This is influenced by the present policy environment that gradually puts a premium on the latter than to the production of basic food crops.  This environment is explicitly laid down in the blueprint for agricultural development, or the Medium-Term Agricultural Development Plan (MTADP).

Attaining �global competitiveness� and �comparative advantage� by putting land to best use are core concerns and operational principles guiding the MTADP. Based on this, the Department of Agriculture projects a reduction of rice and corn lands to 1.9 million hectares.  In this case, 3.1 million hectares would be converted to production of �export winners� namely livestock and commercial crops (DA 1993).  This will be approached through the Key Commercial Crops Development Program (KCCDP), which lists banana, papaya, cutflowers, asparagus and crops with �potential� in the world market such as sesame, pimiento, castor beans and essential oils.  For this, the DA earmarked some PHP26 billion, 25% of which would come from the private sector.

The switch to �high-value� crops is given impetus by the Ramos administration by enacting a law granting additional incentives to production of asparagus, broccolli, celery, carrots, cauliflower, tomato, bell pepper and others.  This according to the government, would liberate  farmers from poverty and create more jobs in the countryside.  Accordingly,  a further boost would be provided by foreign investments on products such as dried/processed fruits, prepared and canned fruits.

It�s quite obvious that there is a growing number of farms that are being organized along capitalist lines, spurred by transnational agribusiness. They grow high value added crops for export. It also gave impetus to landowners to modernize agricultural production causing dislocation among the peasants and sending more people from the countryside to serve as reserve army of labor.

 Peasants in capitalist farms and plantations are reduced to wage laborer. The peasants who are dislocated and not absorbed take on all sorts of jobs that come their way, whether agricultural or not, such as masonry, carpentry, hawking, etc.

Our decades of integration and recent experience in the rural areas point to empirical observations that sufficiently outline the main characteristics of the classes in the rural areas as follows:

1.  Majority of the rural population belong to the proletariat and semi-proletariat whose main source of living come primarily from selling their labor power on a regular and/or seasonal basis and whenever occasions for it arise.

Some have land which are either too small and/or has low productivity due to its location and/or lack of capacity for technological improvements.  Its produce falls far below the daily requirements of daily living in the present society.

2.  There is a sizable number of middle peasants who are owner-cultivators or tenant peasants.  They are able to earn enough from farming to be able to make both ends it.  They do not resort to selling their labor power to produce their basic necessities.  Some may hire farm hands from time to time to maintain their level of income from their farming.

3.  A much smaller number of rich peasants exist who own productive small farms, are tenant farmers of land owned by landlords or who invest money-capital or agricultural inputs to buy and sell produce of direct tillers.  They have varied capacities for technological improvements or investments.  They exploit direct tillers by wage labor in the form of direct hiring.

4.  A few number of landlords who directly exploit the tillers of the land mainly by exacting land rent in the form of rent in kind or rent in money form.

5.  Landlords who exact surplus value from the direct tillers mainly by wage-labor and secondarily by the ground rent they get as "owners" of the land.

6.      Landlords who don't directly exploit the direct tillers but receive rent in the form of money from farmer capitalists who rent the land, usually in the fixed-rent form.

7.      New type of landlord  who are able to maintain large tracts of land through legal manipulations extract surplus not through exploitation of tenants but through tie ups with investors and converting their landholdings to equities.  The rapid growth of the real estate industry is a glaring example of the fusion of the role of landlords,  the State and the capitalists with the latter dictating the rules of the game.

These give rise to the following class contradictions:

a.      contradiction between the landlord class and the peasant class - this is affecting a continuously decreasing number of rural masses due to the differentiation of the peasant class and the bankruptcy or transformation of many landlords to capitalist landlords;

b.      the emergence of a new landlord class

c.      contradiction between the rural proletariat and semi- proletariat, on the one hand, and the foreign monopoly-  capitalists, landlord-capitalists, and the rural bourgeoisie on the other - this is affecting majority of the rural toiling masses; and

d.      contradiction between the landlord class and rural  bourgeoisie.

Through various forms of struggle, the Filipino workers are marching with their kindred to frustrate the efforts of international monopoly capita in preserving its mechanisms of dominance.

[1] Yearbook of Labor Statistics, 1994

[2] A Captive Land: The Politics of Agrarian Reform in the Philippines, James Putzel, 1994

[3] 1991 Annual Survey of Establishments, Agriculture and Forestry, NCSO 1991

[4] ibid

[5] Computations were based on results of  case studies conducted  by MODE Inc. in Bukidnon and South Cotabato  from  March to June 1997.

[6] James Putzel, A Captive Land: The Politics of Agrarian Reform in the Philippines, 1994

[7] Computation is based on the prevailing market price of PHP8.)) a kilo of palay at the time of the study.

[8] Rice Marketing in Luzon,  Philippine Development Studies, Philippine Peasant Institute, 1990

[9] Policy Issues in Rice Marketing, Institute for Policy Studies, UP at Los Ba�os, 1986

[10] The GATT: Philippine Issues and Perspectives, GATT and the Non-Traditional Export: Global Farming for Whom?, Rene E. Ofreneo; 1996