IBON Features– Peasant and indigenous people’s groups in the region mark March 29 as the Global Day of the Landless. Initiated by the Asian Peasant Coalition (APC), it highlights the rural communities’ continuing struggle for land.
In the Philippines, such struggle remains meaningful amid widespread landlessness still gripping its countryside. Decades of attempts at land reform have apparently failed. Land remains concentrated in the hands of a few. Official census could only claim at most 62% of farms under full ownership. The rest are under various forms of tenure, including tenancy at 15 percent. According to the Land Bank of the Philippines, 76% of so-called land reform beneficiaries are not paying amortization, 15% are struggling to pay and only 9% have fully paid.
Additionally, the Technical Working Group (TWG) on the Comprehensive Agrarian Reform Program Extended with Reforms said that around 1.2 million hectares of land are under various forms of contract growing schemes under agribusiness venture arrangements (AVAs) that are profit-oriented.
Foreign interests continue to be one of the biggest threats to farmers’ access to land. US firms Dole and Del Monte, for instance, have been operating banana and pineapple plantations here since the American colonial era. Together, they now have effective control over more than 100,000 hectares of mostly Mindanao lands and are seeking further expansion.
Some like Dole and Del Monte have used the traditional forms of control by directly managing plantations and through leasehold contracts with farmers. But some are also deepening and expanding control via more complex schemes like using financial instruments to indirectly control land.
Such land investment scheme is part of the phenomenon called financialization of agriculture. Global firms that have long dominated food production, trading, processing, distribution and marketing are also setting up their own investment funds.
Acquiring lands through investment funds gives them greater monopoly over the supply chain. At the same time, it also gives them additional venues for profit making through speculation on agricultural land and commodities. In countries like the Philippines, it allows them as well to skirt legal restrictions on foreign ownership and control of farmlands.
One example is Cargill. The US-based company is no longer just an agricultural trading giant but is also operating a large financial services arm. In 2003, it set up a hedge fund called Black River Asset Management. Today, Black River is the world’s largest agribusiness private equity fund. From 2008 to 2014, it has raised a total capital of more than US$1 billion for agribusiness-dedicated vehicles. It represents about 17% of the global total during the period.
Cargill has been operating in the Philippines since 1947 primarily as a trader of agricultural goods. But through Black River, Cargill is also now acquiring farmlands that deepens and expands its control over the supply chain.
In 2011, Black River bought a 28.11%-stake in local food exporter Agrinurture Inc. for US$30.45 million, which it increased in 2013 to 30.92% with an additional Php355 million (around US$7.13 million). With investments Black River, Agrinurture has started targeting lands for banana, rice and palm oil plantations in Mindanao through contract growing and lease arrangements. The targeted area is initially pegged at around 1,400 hectares.
Agrinurture became national news in 2014 when its CEO and president Antonio Tiu was dragged into the so-called “Hacienda Binay” controversy. Tiu was allegedly the Vice President’s dummy in the ownership of an agro-industrial park in Batangas. Aside from Cargill, Agrinurture has also been partnering with agribusiness firms from China and Saudi Arabia for farming ventures in the country. These reportedly cover more than 60,000 hectares for export production of rice, fruits and vegetables.
The deepening role of foreign capital in Philippine agriculture through financial actors mirrors the global trend of increasing private equity investment in agribusiness. From an annual average of about US$1 billion from 2008 to 2013, private equity in agribusiness ballooned to US$2.6 billion in 2014 largely due to deals such as between Cargill/Black River and Agrinurture.
Financialization has opened up new opportunities for foreign capital to tighten its grip on Philippine agriculture. But the pressure to create an even more favorable environment for foreign investment is not easing down. The US lobby to allow 100% foreign ownership of land through charter change, for instance, remains strong. Indeed, it will continue to intensify as the US and other big capitalist countries forever seek ways to accelerate profit rates for their corporations like Cargill. IBON Features