Economy
Republika ñg Pilipinas


Political Economy
Data as of June 1991
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Agriculture, Forestry, and Fishing


Agricultural Geography

In the late 1980s, nearly 8 million hectares - over 25 percent of total land - were under cultivation, 4.5 million hectares in field crops, and 3.2 million hectares in tree crops. Population growth reduced the amount of arable land per person employed in agriculture from about one hectare during the 1950s to around 0.5 hectare in the early 1980s. Growth in agricultural output had to come largely from multicropping and increasing yields. In 1988 double-cropping and intercropping resulted in 13.4 million hectares of harvested area, a total that was considerably greater than the area under cultivation. Palay (unhusked rice) and corn, the two cereals widely grown in the Philippines, accounted for about half of total crop area. Another 25 percent of the production area was taken up by coconuts, a major export earner. Sugarcane, pineapples, and Cavendish bananas (a dwarf variety) were also important earners of foreign exchange, although they accounted for a relatively small portion of cultivated area.

Climatic conditions are a major determinant of crop production patterns. For example, coconut trees need a constant supply of water and do not do well in areas with a prolonged dry season. Sugarcane, on the other hand, needs moderate rainfall spread out over a long growing period and a dry season for ripening and harvesting. Soil type, topography, government policy, and regional conflict between Christians and Muslims were also determinants in the patterns of agricultural activity.


Agricultural Production and Government Policy

The percentage of the population living in rural areas declined from 68 percent in 1970 to 57 percent in 1990, and the share of the labor force engaged in agriculture, forestry, and fishing also decreased to less than 50 percent by the late 1980s. Roughly two-thirds of agricultural households farmed their own land or were tenants; the others were landless agricultural workers. Some 75 percent of agricultural value added came from crops and livestock. The remaining 25 percent came from forestry and fishing. Value added in agricultural crops grew rapidly in the early 1970s, averaging growth rates of 7.7 percent. In the 1980s, however, with the exception of corn, which was in growing demand as an animal feed, the growth rate of agricultural production declined and was sometimes negative for bananas and sugarcane. Low world prices combined with the high cost of inputs such as fertilizers were two of the most important reasons.

The government pursued sometimes contradictory goals of maintaining cheap food and raw material prices, high farm income, food security, and stable prices, at times through direct intervention in agricultural markets. In 1981 the National Food Authority was created. It was empowered to regulate the marketing of all food and given monopoly privileges to import grains, soybeans, and other feedstuffs. The ability of the National Food Authority and its predecessor organizations to stabilize prices and keep them within the established price bands, at either the farm gate or the retail market, has been quite limited because of insufficient funds to affect the market, strict purchasing requirements, and corrupt practices among authority personnel. In 1985 the role of the National Food Authority was reduced, and price ceilings on rice were lifted. Beginning in the 1950s, government efforts to stimulate industrial development, such as tariffs on manufactured goods, overvaluation of the currency, export taxes on agricultural commodities, and price controls had a deleterious effect on the agricultural sector, making it relatively unprofitable. On the other hand, irrigation water was distributed at below-cost prices, and fertilizer manufacturing was subsidized.

Beginning in the latter half of the 1970s, the Marcos regime gave increased attention to agriculture and the rural sector in general, including agribusiness development. The Aquino government continued that emphasis, although its policy evolved from a commodity-specific orientation to a general, cropdiversification approach that relied more on market signals to guide crop selection. The rice-price stabilization program remained in effect, and a program was implemented to increase small-farmer access to postharvest facilities such as warehouses, rice mills, driers, and threshers.

Providing credit to the agricultural sector, particularly to small-sized and medium-sized farmers had been a government policy since the early 1950s, one that met with mixed success at best. By the early 1980s, there were approximately 900 privately owned, rural banks, which were the principal implementors of government-sponsored, supervised credit schemes. The Masagana 99 program was initiated in the early 1970s to encourage adoption of new, high-yielding rice varieties. No-collateral, low-interest loans were made available to small farmers, mainly by privately owned, rural banks, with the government guaranteeing 85 percent of any losses suffered by the banks. In general, however, regulated interest rates made rural banks unattractive to depositors.

In 1975 more than 500,000 farmers participated in the Masagana 99 program. By 1985, however, the program had expired because of high arrearage and the tight monetary policy instituted as part of an agreement with the IMF. The program was revived in the Aquino administration's Medium-Term Development Plan, 1987-92. According to a government report, however, as of 1988 the program had not yet reached most of the intended beneficiaries. Government efforts were also underway to rehabilitate rural banks, the majority of which had experienced severe difficulties during the economic crisis of the early 1980s and the subsequent monetary squeeze.


Rice and the Green Revolution

Rice is the most important food crop, a staple food in most of the country. It is produced extensively in Luzon, the Western Visayas, Southern Mindanao, and Central Mindanao. In 1989 nearly 9.5 billion tons of palay were produced. In 1990 palay accounted for 27 percent of value added in agriculture and 3.5 percent of GNP. Per hectare yields have generally been low in comparison with other Asian countries. Since the mid-1960s, however, yields have increased substantially as a result of the cultivation of high-yielding varieties developed in the mid-1960s at the International Rice Research Institute located in the Philippines. The proportion of "miracle" rice in total output rose from zero in 1965-66 to 81 percent in 1981-82. Average productivity increased to 2.3 tons per hectare (2.8 tons on irrigated farms) by 1983. By the late 1970s, the country had changed from a net importer to a net exporter of rice, albeit on a small scale.

This "green revolution" was accompanied by an expanded use of chemical inputs. Total fertilizer consumption rose from 668 tons in 1976 to 1,222 tons in 1988, an increase of more than 80 percent. To stimulate productivity, the government also undertook a major expansion of the nation's irrigation system. The area under irrigation grew from under 500,000 hectares in the mid-1960s to 1.5 million hectares in 1988, almost half of the potentially irrigable land.

In the 1980s, however, rice production encountered problems. Average annual growth for 1980-85 declined to a mere 0.9 percent, as contrasted with 4.6 percent for the preceding fifteen years. Growth of value added in the rice industry also fell in the 1980s. Tropical storms and droughts, the general economic downturn of the 1980s, and the 1983-85 economic crisis all contributed to this decline. Crop loans dried up, prices of agricultural inputs increased, and palay prices declined. Fertilizer and plant nutrient consumption dropped 15 percent. Farmers were squeezed by rising debts and declining income. Hectarage devoted to rice production, level during the latter half of the 1970s, fell an average of 2.4 percent per annum during the first half of the 1980s, with the decline primarily in marginal, nonirrigated farms. As a result, in 1985, the last full year of the Marcos regime, the country imported 538,000 tons of rice. The situation improved somewhat in the late 1980s, and smaller amounts of rice were imported. However, in 1990 the country experienced a severe drought. Output fell by 1.5 percent, forcing the importation of an estimated 400,000 tons of rice.


Coconut Industry

The Philippines is the world's second largest producer of coconut products, after Indonesia. In 1989 it produced 11.8 million tons. In 1989, coconut products, coconut oil, copra (dried coconut), and desiccated coconut accounted for approximately 6.7 percent of Philippine exports. About 25 percent of cultivated land was planted in coconut trees, and it is estimated that between 25 percent and 33 percent of the population was at least partly dependent on coconuts for their livelihood. Historically, the Southern Tagalog and Bicol regions of Luzon and the Eastern Visayas were the centers of coconut production. In the 1980s, Western Mindanao and Southern Mindanao also became important coconut-growing regions.

In the early 1990s, the average coconut farm was a medium-sized unit of less than four hectares. Owners, often absentee, customarily employed local peasants to collect coconuts rather than engage in tenancy relationships. The villagers were paid on a piece-rate basis. Those employed in the coconut industry tended to be less educated and older than the average person in the rural labor force and earned lower-than-average incomes.

Land devoted to cultivation of coconuts increased by about 6 percent per year during the 1960s and 1970s, a response to devaluations of the peso in 1962 and 1970 and increasing world demand. Responding to the world market, the Philippine government encouraged processing of copra domestically and provided investment incentives to increase the construction of coconut oil mills. The number of mills rose from twenty-eight in 1968 to sixty-two in 1979, creating substantial excess capacity. The situation was aggravated by declining yields because of the aging of coconut trees in some regions.

In 1973 the martial law regime merged all coconut-related, government operations within a single agency, the Philippine Coconut Authority (PCA). The PCA was empowered to collect a levy of P0.55 per 100 kilograms on the sale of copra to be used to stabilize the domestic price of coconut-based consumer goods, particularly cooking oil. In 1974 the government created the Coconut Industry Development Fund (CIDF) to finance the development of a hybrid coconut tree. To finance the project, the levy was increased to P20.

Also in 1974, coconut planters, led by the Coconut Producers Federation (Cocofed), an organization of large planters, took control of the PCA governing board. In 1975 the PCA acquired a bank, renamed the United Coconut Planters Bank, to service the needs of coconut farmers, and the PCA director, Eduardo Cojuangco, a business associate of Marcos, became its president. Levies collected by the PCA were placed in the bank, initially interest-free. In 1978 the United Coconut Planters Bank was given legal authority to purchase coconut mills, ostensibly as a measure to cope with excess capacity in the industry. At the same time, mills not owned by coconut farmers - that is, Cocofed members or entities it controlled through the PCA - were denied subsidy payments to compensate for the price controls on coconut-based consumer products. By early 1980, it was reported in the Philippine press that the United Coconut Oil Mills, a PCA-owned firm, and its president, Cojuangco, controlled 80 percent of the Philippine oil-milling capacity. Minister of Defense Juan Ponce Enrile also exercised strong influence over the industry as chairman of both the United Coconut Planters Bank and United Coconut Oil Mills and honorary chairman of Cocofed. An industry composed of some 0.5 million farmers and 14,000 traders was, by the early 1980s, highly monopolized.

In principle, the coconut farmers were to be the beneficiaries of the levy, which between March 1977 and September 1981 stabilized at P76 per 100 kilograms. Contingent benefits included life insurance, educational scholarships, and a cooking oil subsidy, but few actually benefited. The aim of the replanting program, controlled by Cojuangco, was to replace aging coconut trees with a hybrid of a Malaysian dwarf and West African tall varieties. The new palms were to produce five times the weight per year of existing trees. The target of replanting 60,000 trees a year was not met. In 1983, 25 to 30 percent of coconut trees were estimated to be at least sixty years old; by 1988, the proportion had increased to between 35 and 40 percent.

When coconut prices began to fall in the early 1980s, pressure mounted to alter the structure of the industry. In 1985 the Philippine government agreed to dismantle the United Coconut Oil Mills as part of an agreement with the IMF to bail out the Philippine economy. Later a 1988 United States law requiring foods using tropical oils to be labeled indicating the saturated fat content had a negative impact on an already ailing industry and gave rise to protests from coconut growers that similar requirements were not levied on oils produced in temperate climates.


Sugar

From the mid-nineteenth century to the mid-1970s, sugar was the most important agricultural export of the Philippines, not only because of the foreign exchange earned, but also because sugar was the basis for the accumulation of wealth of a significant segment of the Filipino elite. The principal sugarcane-growing region is the Western Visayas, particularly the island of Negros. In 1980 the region accounted for half the area planted in cane and two-thirds of the production of sugar. Unlike the cultivation of rice, corn, and coconuts, sugarcane is typically grown on large farms or haciendas. In the mid-1980s, more than 60 percent of total production and about 80 percent of Negros's output came from farms twenty-five hectares or larger. Countrywide, tenancy arrangements existed for approximately half the sugarcane farms; however, they were generally the smaller ones, averaging 2.5 hectares in size and accounting for only slightly more than 20 percent of land planted in the crop. Elsewhere, laborers were employed, generally at very low wages. A survey undertaken in 1990 by the governor of Negros Occidental found that only one-third of the island's sugar planters were paying the then-mandated minimum wage of P72.50 per day. The contrast between the sumptuous lifestyles of Negros hacenderos and the poverty of their workers, particularly migrant laborers known as sacadas, epitomized the vast social and economic gulf separating the elite in the Philippines from the great mass of the population.

In the 1950s and 1960s, sugar accounted for more than 20 percent of Philippine exports. Its share declined somewhat in the 1970s and plummeted in the first half of the 1980s to around 7 percent. The sugar industry was in a crisis. Part of the problem was a depressed market for sugar. A dramatic increase in the world price of sugar had occurred in 1974, peaking at US$0.67 per pound in December of that year. The following two years, however, saw prices fall to less than US$0.10 a pound and remain there for a few years before moving upward again toward the end of the decade. Sugar prices fell again in the early 1980s, bottoming in May 1985 at less than US$0.03 per pound and averaging US$0.04 per pound for the year as a whole. In early 1990, prices had recovered to US$0.14 cents per pound then declined to approximately US$0.08 to US$0.09 per pound.

Historically, the Philippines was protected to a certain degree from vicissitudes of the world price of sugar by the country's access to a protected and subsidized United States market. In 1913 the United States Congress established free trade with its Philippine colony, providing Filipino sugar producers unlimited access to the American market. Later, in 1934, a quota system on sugar was enacted and remained in force until 1974. Although Philippine sugar exports to the United States were restricted during this period, the country continued to enjoy a relatively privileged position. Philippine quotas for the United States market in the early 1970s accounted for between 25 and 30 percent of the total, double that of other significant suppliers such as the Dominican Republic, Mexico, and Brazil. After the quota law expired in 1974, Philippine sugar was sold on the open market, generally to unrestricted destinations. As a consequence, shipments to the United States declined.

On May 5, 1982, the United States reestablished a quota system for the importation of sugar. Allocations were based on a country's share in sugar trade with the United States during the 1975-81 period, the period during which Philippine sugar exports to the United States had dwindled. The Philippine allotment was 13.5 percent. Efforts by the Philippine government to have it raised to 25 percent, the country's approximate share during the previous quota period, were unsuccessful. The loss of sales imposed by the reduced quota share was compounded by a dramatic 40 percent drop in total United States imports of sugar in the mid-1980s as compared with the early 1970s. Philippine sugar exports to the United States that had averaged just under 1.3 million tons per year in the 1968-71 period averaged only 284,000 tons from 1983 to 1988, falling to approximately 161,000 tons in 1988. In 1988 only 273 thousand hectares were planted in sugar, about half that of the early 1970s.

During the earlier quota period, Philippine producers enjoyed high profits, but operations were inefficient and lacking in mechanization. Sugar yields in the Philippines were among the lowest in the world. Increases in production occurred through expansion of land area devoted to sugarcane. With falling prices and the end of the United States quota, attempts to improve productivity through mechanization increased yields, but caused a dramatic fall in labor requirements, initially by 50 percent and, over a longer period, by an estimated 90 percent. In an island economy such as that of Negros, where sugar has accounted directly for 25 percent of employment, the consequent actual and potential lost livelihood was disastrous.

The decline of the sugar industry was complicated by the monopolization that took place during the martial law period, a process not dissimilar to what occurred in the coconut industry. In 1976, as a reaction to the precipitous decline in sugar prices, Marcos established the Philippine Sugar Commission (Philsucom), placing at the head his close associate Roberto Benedicto. Philsucom was given sole authority to buy and sell sugar, to set prices paid to planters and millers, and to purchase companies connected to the sugar industry. A bank was set up in 1978, and the construction of seven new sugar mills was authorized at a cost of US$40 million per mill.

By the 1980s, considerable resistance to Philsucom and its trading subsidiary, the National Sugar Trading Corporation (Nasutra) had been generated. As with the monopoly in the coconut industry, the government acquiesced in its 1985 agreement with the IMF to dismantle Nasutra. But the damage had been done. In a study undertaken by a group of University of the Philippines economists, losses to sugar producers between 1974 and 1983 were estimated to be between P11 billion and P14 billion. Aquino established the Sugar Regulatory Authority in 1986 to take over the institutions set up by Benedicto.


Land Tenancy and Land Reform

An important legacy of the Spanish colonial period was the high concentration of land ownership, and the consequent widespread poverty and agrarian unrest. United States administrators and several Philippine presidential administrations launched land reform programs to maintain social stability in the countryside. Lack of sustained political will, however, as well as landlord resistance, severely limited the impact of the various initiatives.

Farm size is a significant indicator of concentration of ownership. Although nationwide approximately 50 percent of farms in 1980 were less than two hectares, these small farms made up only 16 percent of total farm area. On the other hand, only about 3 percent of farms were over ten hectares, yet they covered approximately 25 percent of farm area. Farms also varied in size based on crops cultivated. Rice farms tended to be smaller; only 9 percent of rice land was on farms as large as ten hectares. Coconut farms tended to be somewhat larger; approximately 28 percent of the land planted in coconuts was on farms larger than ten hectares. Sugarcane, however, generally was planted on large farms. Nearly 80 percent of land planted in sugarcane was on farms larger than ten hectares. Pineapple plantations were a special case. Because the two largest producers were subsidiaries of transnational firms - Del Monte and Castle and Cooke - they were not permitted to directly own land. The transnationals circumvented this restriction, however, by leasing land. In 1987 subsidiaries of these two companies leased 21,400 hectares, 40 percent of the total hectarage devoted to pineapple production.

In September 1972, the second presidential decree that Marcos issued under martial law declared the entire Philippines a land reform area. A month later, he issued Presidential Decree No. 27, which contained the specifics of his land reform program. On paper, the program was the most comprehensive ever attempted in the Philippines, notwithstanding the fact that only rice and corn land were included. Holdings of more than seven hectares were to be purchased and parceled out to individual tenants (up to three hectares of irrigated, or five hectares of unirrigated, land), who would then pay off the value of the land over a fifteen-year period. Sharecroppers on holdings of less than seven hectares were to be converted to leaseholders, paying fixed rents.

The Marcos land reform program succeeded in breaking down many of the large haciendas in Central Luzon, a traditional center of agrarian unrest where landed elite and Marcos allies were not as numerous as in other parts of the country. In the country as a whole, however, the program was generally considered a failure. Only 20 percent of rice and corn land, or 10 percent of total farm land, was covered by the program, and in 1985, thirteen years after Marcos's proclamation, 75 percent of the expected beneficiaries had not become owner-cultivators. By 1988 less than 6 percent of all agricultural households had received a certificate of land transfer, indicating that the land they were cultivating had been registered as a land transfer holding. About half of this group, 2.4 percent, had received titles, referred to as emancipation patents. Political commitment on the part of the government waned rather quickly, after Marcos succeeded in undermining the strength of land elites who had opposed him. Even where efforts were made, implementation was selective, mismanaged, and subject to considerable graft and corruption.

The failure of the Marcos land reform program was a major theme in Aquino's 1986 presidential campaign, and she gave land reform first priority: "Land-to-the-tiller must become a reality, instead of an empty slogan." The issue was of some significance inasmuch as one of the largest landholdings in the country was her family's 15,000-hectare Hacienda Luisita. But the candidate was quite clear; the land reform would apply to Hacienda Luisita as well as to any other landholding. She did not actually begin to address the land reform question, however, until the issue was brought to a head in January 1987, when the military attacked a group of peasants marching to Malacañang, the presidential residence, to demand action on the promised land reform killing 18 and wounding more than 100 of them. The event galvanized the government into action: a land reform commission was formed, and in July 1987, one week before the new Congress convened and her decree-making powers would be curtailed, Aquino proclaimed the Comprehensive Agrarian Reform Program. More than 80 percent of cultivated land and almost 65 percent of agricultural households were to be included in a phased process that would consider the type of land and size of holding. In conformity with the country's new Constitution, provisions for "voluntary land sharing" and just compensation were included. The important details of timing, priorities, and minimum legal holdings, however, were left to be determined by the new Congress, the majority of whose members were connected to landed interests.

Criticism of Aquino's plan came from both sides. Landowners thought that it went too far, and peasant organizations complained that the program did not go far enough and that by leaving the details to a landlord-dominated Congress, the program was doomed to failure. A World Bank mission was quite critical of a draft of the land reform program. In its report, the mission suggested that in order to limit efforts to subvert the process, the Comprehensive Agrarian Reform Program needed to be carried out swiftly rather than in stages, and land prices should be determined using a mechanical formula rather than subjective valuation. The World Bank mission also was critical of a provision allowing incorporated farm entities to distribute stock to tenants and workers rather than the land itself. The scheme would be attractive, the mission argued, "to those landowners who believed that they would not have to live up to the agreement to transfer the land to the beneficiaries." The mission's recommendations were largely ignored in the final version of the government's program.

On June 10, 1988, a year after the proclamation, Congress passed the Comprehensive Agrarian Reform Law. Landowners were allowed to retain up to five hectares plus three hectares for each heir at least fifteen years of age. The program was to be implemented in phases. The amount of land that could be retained was to be gradually decreased, and a non-land-transfer, profit-sharing program could be used as an alternative to actual land transfer.

Especially controversial was the provision that allowed large landowners to transfer a portion of the respective corporation's total assets equivalent in value to that of its land assets, in lieu of the land being subdivided and distributed to tenants and farm laborers. In May 1989, the 7,000 tenants of the Aquino family estate, Hacienda Luisita, agreed to take a 33 percent share of the hacienda's corporate stock rather than a portion of the land itself. Because the remaining two-thirds of the stock (the value of non-land corporate assets) remained with Aquino's family, effective control of the land did not pass to the tillers. Proponents of land reform considered the stock-ownership provision a loophole in the law, and one that many large landowners would probably use. Following the example of the Hacienda Luisita, thirty-four agrocorporations had requested approval for a stock transfer as of mid-1990. Although legal, the action of the president's family raised questions as to the president's commitment to land reform.

It is difficult to estimate the cost allowing for inflation of the Comprehensive Agrarian Reform Program. Early on, in 1988 estimates ranged between P170 billion and P220 billion; the following year they were as high as P332 billion, of which P83 billion was for land acquisition and P248 billion for support services and infrastructure. The lowest mentioned figure averages to P17 billion a year, 2.1 percent of 1988 GNP in the Philippines and 8.9 percent of government expenditure that year. The sum was well beyond the capacity of the country, unless tax revenues were increased substantially and expenditure priorities reordered. To circumvent this difficulty, the Aquino government planned to obtain 50 to 60 percent of the funding requirements from foreign aid. As of 1990, however, success had been minimal.

Government claims that in the first three years of implementation the Comprehensive Agrarian Reform Program met with considerable success were open to question. Between July 1987 and March 1990, 430,730 hectares were distributed. About 80 percent of this, however, was from the continuation of the Marcos land reform program. Distribution of privately owned lands other than land growing rice and corn, 3,470 hectares, was insignificant not only in absolute terms, but it was also only 2 percent of what had been targeted. The inability of the Department of Agrarian Reform to spend its budget also indicated implementation difficulties. As of June 1990, the department had utilized only 44 percent of the P14.2 billion allocated to it for the period January 1988-June 1990. In part because of Supreme Court rulings, the Department of Agrarian Reform cut its land acquisition target in late 1990 by almost half from 400,000 hectares to 250,000 hectares.


Livestock

In 1990 the livestock industry, consisting primarily of cattle, carabao (water buffalo), hogs, and chickens, accounted for almost 20 percent of value added in the agricultural sector, up from 12 percent in 1980. Much of the growth came from the rapid expansion of poultry raising, which had begun to develop as a commercial industry in the 1960s. Chicken raising accounted for half of livestock value added in 1990 as compared with a quarter in 1970. Beginning in the late 1980s, commercial hog raisers also attempted to enter the international market by exporting live hogs to Hong Kong. Although carabao production increased as a result of an intensified livestock dispersal program run by the government, the carabao and cattle industries remained primarily backyard ventures.

In the late 1980s, hogs provided 60 percent of total domestic meat production; chickens provided 15 percent; and cattle and carabao, about 20 percent. The country was relatively selfsufficient in hog and chicken production but imported approximately 4,500 tons of beef annually. The economic difficulties of the 1980s made the lower-priced chicken and carabao attractive substitutes for higher-priced pork and beef, but carabao raising remained oriented primarily toward providing work animals. The dairy industry in the Philippines also was quite small. Liquid milk generally was not available in the market, and virtually all canned and dry milk was imported.


Forestry

Logging was a profitable business at the end of the 1980s. Actual forested land was estimated to be about 6.5 million hectares--more than 21.5 percent of Philippine territory--and much of that was in higher elevations and on steep slopes. The government facilitated the exploitation of the country's forest resources for the first three decades after independence by allocating the bulk of unclassified land as public forest land eligible to be licensed for logging, and by implementing policies of low forest charges and export taxes. Logs were a major foreign-exchange earner. By 1977, 8.3 million hectares of forest area were licensed for logging. In the late 1970s, the government became aware of the dangers of deforestation and began to impose restrictions. The amount of forested land and the volume of forest exports declined. By 1988, 120 licensed loggers, operating on a total area of 4.74 million hectares, cut an estimated 4.2 millon cubic meters of logs and exported 644 million board feet. The contribution of logs and lumber to total Philippine exports declined from 25 percent in 1969 to 2 percent in 1988.

In addition to the officially sanctioned logging industry, there has been considerable illegal logging. The full extent of this activity was difficult to determine, but the discrepancy between Philippine and Japanese statistics on log exports from the Philippines to Japan provided one source of information. From 1955 through 1986, log imports from the Philippines, according to Japanese statistics, averaged about 50 percent more than log exports to Japan according to Philippines statistics. In 1987 and 1988, the discrepancy was considerably reduced, perhaps an indication of the Aquino government's stricter enforcement policy.

Another cause of deforestation was swidden agriculture, called kaingin in the Philippines. The method involves burning a portion of forest area to produce a fertilizing effect, planting a series of crops for two or three years, and then, after the soil has become depleted of nutrients, moving on to another location to allow the burned out area to rejuvenate. Often referred to as slash-and-burn agriculture, swidden as practiced by upland Filipino groups was ecologically sound as long as land was relatively plentiful. But since the 1960s, increased use of land for logging and migration of landless peasants from lowland areas has caused a scarcity of land. Burned-over areas were not allowed to lay fallow for a sufficient period, and the new migrants often had no knowledge of sound swidden practice. As a result, new growth was not allowed to mature before being burned over again; extensive erosion occurred, and once-forested areas were transformed into grasslands.

The widespread deforestation caused massive ecological destruction. Beginning in the early 1980s, the government instituted reforestation programs to stem the destruction. In 1981 Marcos made the granting of timber concessions conditional on the concessionaire's reforesting. After his ouster, however, the new secretary of the Department of Environment and Natural Resources reported that 90 percent of the 170 logging companies with concessions had failed to implement reforestation activities. The Aquino administration also launched a reforestation program to replant 100,000 hectares per year, but it too met with limited success. In 1988, two years into the program, the government reforested 32,000 hectares and awarded reforestation contracts for another 4,500 hectares. Other initiatives included a program to employ upland dwellers in reforestation, limiting the extent of timber concessions, and controlling exports of forest products. Nongovernment, environmental organizations also became involved in forest preservation efforts. One official noted that with more than 5 million hectares of forests already denuded, and with a deforestation rate of 119,000 hectares per year, the country would be facing a timber famine within a decade. Second-growth forests were too young to cut, so timber requirements for the near term would have to be met from the remaining old-forest stands, leaving inadequate reserves for the medium term.


Fishing

The Philippines is surrounded by a vast aquatic resource base. In 1976 the government adopted a 200-nautical-mile exclusive economic zone covering some 2.2 million square kilometers. However, the country's traditional fishing grounds constituted a relatively small 126,500-squarekilometer area. Fish and other seafood provided more than half the protein consumed by the average Filipino household. Total fish production in 1989 was 2.3 million tons. Of this, 46 percent was caught by some 574,000 municipal and subsistence fishermen, who operated small boats in shallow water, customarily no more than three kilometers offshore. These fishermen were among the poorest of the poor, with incomes averaging only 25 percent of the national average. Another 27 percent of the catch came from the approximately 45,000 commercial fishermen. An equal proportion of the total catch was provided by the fast-growing aquaculture industry. Prawn production, mostly aquaculture, developed rapidly in the 1980s, averaging 31,000 tons during the 1984-87 period. In 1988 exports of fishery products amounted to US$407 million, approximately 6 percent of total exports.

During much of the 1980s, the livelihood of small municipal and subsistence fishermen was undermined by low production, stagnating at approximately 1 million tons per year. A number of factors contributed to the low production: encroachment of commercial fishermen into shallow waters, destruction of the marine environment, over-fishing, and an increasing number of fish ponds. A large proportion of the mangrove forests was cleared to construct fishponds, seriously damaging the coastal ecological system. Coral reefs sustained serious damage from illegal fishing with dynamite and cyanide, and from the muro-ami fishing technique by which young swimmers pound the coral with rocks attached to ropes to drive the fish into nets. Coral also was damaged by silting from erosion caused by deforestation, and inland freshwater lakes were polluted from industrial and agricultural wastes.

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