'I am the son of peasants and I know what is happening in the villages.
That is why I wanted to take revenge, and I regret nothing.'
Gavrilo Princip, assassin of Archduke Franz Ferdinand of Austria[1]
Why should land policy be so important to development? The simple answer is that in a country in the early stages of development, typically three-quarters of the population is employed in agriculture and lives on the land. East Asia after the Second World War was no exception. Even in Japan, which began its development in the 1870s with a three-quarters rural population, almost half the workforce was still farm-based at the start of the war. With most resources concentrated in agriculture, the sector offers poor countries the most immediate opportunity to increase their economic output.
The problem with agriculture in pre-industrial states with rising populations, however, is that when market forces are left to themselves agricultural yields tend to stagnate or even fall. This happens because demand for land increases faster than supply, and so landlords lease out land at increasing rents. They also act as money lenders at high rates of interest. Tenants, facing stiff rents and expensive debts and with little security of tenure, are unable to make the investments – for instance, in improving irrigation or buying fertiliser – that will increase yields on the land they farm. Landlords could make the investments to increase yields, but they make money more easily by exacting the highest possible rents and by usury, which adds to their land holdings when debts cannot be paid and they take over plots that have been pledged as collateral. A situation arises where 'the market' fails to maximise output. At the time of the Second World War, this scenario was present – in varying degrees – everywhere in east Asia, from Japan to China to Indonesia.
In conditions of a growing population, low security of tenure and no restrictions on the charging of interest, a market in land arises in which concentration of ownership trumps improvement of yields as the easiest source of income for land owners. The problem has plagued agriculture in poor countries around the world. What is different in some states in east Asia is that after the Second World War they made radical changes to land distribution and structured a different kind of agricultural market. It was a rural arrangement in which market forces tended to maximise output. There has been no equivalent policy change of such magnitude and effect anywhere else.
The vehicle for the change was a series of land reform programmes undertaken in China, Japan, Korea and Taiwan. Although the first was orchestrated by communists, and the second, third and fourth by anti-communists, the objective was the same in all cases. It was, roughly speaking, to take available agricultural land and to divide it up on an equal basis (once variation in land quality was allowed for) among the farming population. This, backed by government support for rural credit and marketing institutions, agronomic training and other support services, created a new type of market. It was a market in which owners of small household farms were incentivised to invest their labour and the surplus they generated towards maximising production. The result was hugely increased yields in all four countries.
Output booms occurred in conditions in which farming was essentially a form of large-scale gardening. Families of five, six or seven people tended plots of not more than one hectare. To most economists, theory dictates that such an arrangement must be inefficient. So-called 'free marketers' and Marxists are united in insisting that scale is fundamental to efficiency. For Marxists in China, North Korea, Vietnam (and Russia before them) this – fatally for millions of people – meant switching household farming to large collectives.
In reality, the question of efficiency depends on what outcome you are looking for. Big capitalist farms may produce the highest return on cash invested. But that is not the agricultural 'efficiency' that is appropriate to a developing state. At an early stage, a poor country with a surfeit of labour is better served by maximising its crop production until the return on any more labour falls to zero. Put another way, you might as well use the labour you have – even if the return per man hour looks terribly low on paper – because that is the only use you have for your workers. A gardening approach delivers the maximum crop output, as any gardener knows.
Try this at home
Fruit and vegetable gardeners will tell you (indeed they may already have done, at length) just how much you can produce on a tiny plot of land if you put your mind to it. What they omit to mention is the grotesque amount of labour involved. The techniques that maximise output in a backyard garden of a hundred square metres are also broadly those that will maximise yields on a small family farm of 10,000 square metres (one hectare, or 2.47 acres).
The list of time-consuming interventions is almost endless. One of the most effective is to start off seeds in trays indoors so that they are only put in the ground for the more rapid maturation process. Soil-bed temperature also greatly affects yields and can be regulated by using raised beds in temperate climates or pits in tropical climates. Compost is most effective when applied with diligence – high-yield fruit and vegetable gardeners deploy fertiliser on a plant-by-plant basis. Targeted watering (taller plants, for instance, tend to need more) and constant weeding also have a big effect on crop size.[2] The most productive plots utilise an almost solid leaf canopy because close planting minimises water loss and discourages weeds; but this rules out access for machines. The use of trellises, nets, strings and poles – all set up by hand – maximises yields through 'vertical' gardening; a single tomato plant can produce 20 kg of fruit. Inter-growing of plants with different maturities saves more space (the cognoscenti place radishes and carrots in the same furrow because the radishes mature before the carrots begin to crowd them out; but then the radishes can only be harvested by hand). Equally, shade-tolerant vegetables like spinach or celery can be raised in the shadows of taller plants to ensure that no space is wasted; but again, this must be done by hand.
The world of the home fruit and vegetable gardener – including that of the contemporary, rich-world family growing its own organic produce – is very familiar to the post-war east Asian peasant family with its mini-farm. Of course each person in the Asian family tends an area of soil thirty or more times greater than that of the hobby kitchen gardener. But the logic of the labour-intensive gardening approach to cultivation is the same wherever you do it: it gets more out of a given plot of land than anything else.
In the United States, as one example, well-managed vegetable gardens yield 5–10kg of food per square metre (1–2lbs per square foot) per year, which equates to USD11–22 per square metre at shop prices. In 2009 Roger Doiron, a blogger for the popular website Kitchen Gardeners International, weighed and checked the retail prices of all 380kg of the fruit and vegetables that his 160-square-metre kitchen garden produced; the garden's retail value was USD16.50 per square metre. That meant a total value from his plot of USD2,200 – equivalent to USD135,000 per hectare (USD55,000 per acre). As a very loose benchmark, the wholesale price of the US's most common and successful crop from large-scale farming, corn, equated to USD2,500 per hectare in 2010.[3]
So why doesn't everyone do it? The problem is that the gardening level of output needs so much labour. If Mr Doiron gardened full time, he might be able to maintain his yields for 1,000 square metres of land. But that would still require ten Mr Doirons to earn USD135,000 across one hectare before costs. Consequently, American farmers are sensible and use big tractors to grow corn on farms that average 170 hectares. Indeed, the agglomeration of US farms, which started out – except in the southern plantation belt – as much smaller units in the early nineteenth century when the country was opened up by immigrants, is the story of gradually rising labour costs and the consequent pressure for mechanisation over two centuries.
After the Second World War, China and the north-east Asian states were countries in which agricultural labour was far more abundant than in nineteenth-century America, and about to become more abundant because of rapidly rising populations. These countries were ready-made for high-output gardening. In Taiwan, for instance, surveys before and after the shift to equalised household farms showed that there was an increase of more than 50 per cent in the work days invested in each hectare of land after the shift.[4] Although the island continued to produce large volumes of rice and sugar, its new boom crops of the 1950s and early 1960s were asparagus and mushrooms – two of the most labour-intensive crops there are. Taiwan, the most successful agricultural development story in the whole of Asia, really is a story that vegetable gardeners can relate to.
Some economists – again, principally dogmatic free marketers and Marxists – argue that even if small-scale household farming can sometimes work, then its principles do not apply to 'cash crops' grown on plantations in some parts of Asia, such as sugar, bananas, rubber and palm oil. It is certainly true that the plants involved require different types of nurture to household vege-tables or subsistence crops like corn and rice. Sugar cane, for instance, takes almost a year to grow to maturity and benefits from deep ploughing that can only be done by a tractor. It seems plausible that this kind of crop should be grown on larger, more mechanised plantations. Yet, the sugar yield on small household farms in Taiwan or China has traditionally been 50 per cent more than on pre-or post-colonial plantations in the Philippines or Indonesia.[5] From the 1960s, Taiwan's household farmers were also more successful on the world banana market than those from Asian plantation economies. In colonial Malaysia, surveys of natural rubber production revealed in the 1920s that the yields of smallholders were far higher than those of plantations. Most agronomic requirements which suggest a need for large farms can, on inspection, be overcome quite easily – for instance, by leasing a tractor or sharing one through a co-operative in order to plough sugar land or replant rubber trees. It is striking that in so many countries in both Asia and Africa, such as Malaysia, Kenya and Zimbabwe, where European colonists introduced large-scale agriculture, they actively discouraged smallholder competition by native farmers and subsidised large-scale production, either directly or more indirectly, by funnelling tax revenues to infrastructure that supported plantations.[6] If scale plantation agriculture was so efficient, this should not have been necessary.
The arguments about the efficiency of small-scale farms are not without their complexities. The very high yields achieved in Japan, Korea, Taiwan and China are not simply the outcome of farm size, but of farm size combined with complicated infrastructures that have been set up to deliver inputs like fertilisers and seeds, and to facilitate storage, marketing and sales. Without adequate supporting infrastructure, small farms struggle anywhere, as has been the case after failed land reform attempts in places like the Philippines. It is impossible to say with absolute certainty that radical land reform would have produced the stunning yield increases it facilitated in north-east Asia for every country and every crop grown in east Asia. However, the evidence of what occurred in China, Japan, Korea and Taiwan is powerful: good land policy, centred on egalitarian household farming, set up the world's most impressive post-war development stories.
The merits of abundance
In the first ten to fifteen years following the shift to small-scale household agriculture in successful east Asian states, gross output of foodstuffs increased by somewhere between half (in Japan, which was already the most productive country) and three-quarters (Taiwan). Increases in agricultural output are traditionally represented as important by economists because they lead to increased surplus, which implies more savings which can then be used to finance industrial investment.[7]
However, big yield gains also mean big increases in rural consumption – something that may be even more important when farmers create demand for consumer goods. Famous east Asian corporations from Meiji Japan to post-war Korea and contemporary China made their first millions adapting products to the exigencies of extensive but cash-limited rural markets. Local firms learned critical lessons about marketing from rural populations with whom they had a natural cultural affinity. Examples from Japan include Toyota and Nissan building robust cars for unpaved roads on small truck chassis after the Second World War, or Honda's early 50cc engines being used to convert cycles into motorcycles. More recently, in China, firms have grown to scale through rural markets for rooftop solar water heaters and cut-price mobile phone systems that use existing fixed-line infrastructure.[8]
A third way of thinking about the benefits of agricultural output maximisation is from the perspective of foreign trade. States beginning their economic development never have enough foreign exchange, and one of the easiest ways to fritter it away is to spend more than is necessary on imported food. This erodes a country's capacity to import the technology – usually, machines for making things – that is essential to development and learning. For instance, although poorly understood at the time, a large part of what undermined Latin America's efforts to industrialise after the Second World War was that the region proved itself much better at increasing manufacturing exports than at increasing agricultural output. As a result, as incomes rose and people ate more food – including meat, which is more land-intensive to produce than vegetable crops – different Latin American countries either reduced their agricultural exports or increased their agricultural imports. Either way, the net effect was that agriculture tended to bleed away any foreign exchange that industrial exports (or reduced imports) created. Latin America was undone in the 1950s, 1960s and 1970s by a developmental strategy characterised by what the economist Michael Lipton dubbed 'urban bias', or the tendency of the urban elites that run poor countries to undervalue farmers.[9] Like most developing countries – there are strong echoes of this scenario in south-east Asia today – Latin American states paid far too little attention to agriculture. This wasn't just bad for farmers, it was bad for development overall.[10]
Finally, household farms play a vital, and much under-remarked, welfare role. Poor countries do not offer unemployment benefits or other welfare payments. In periods of economic downturn, the opportunity for laid-off migrant factory workers to return to their family farms is therefore of great importance. In Taiwan, an estimated 200,000 factory workers returned to farming during the first oil crisis in the mid 1970s; similar, temporary de-migrations have occurred in slack periods in recent years in China.[11] Asian countries where land reform has worked have avoided the legions of indigent poor or acres of squatter camps that have characterised nations with larger scale farming, ranging from eighteenth-century Britain to the contemporary Philippines.
North-east Asian states gave themselves the best possible start in their economic development by the attention they paid to agriculture. However, the impetus to development was greater still because of the means by which maximisation of agricultural output was achieved. By giving rural families equal amounts of land to farm, governments created conditions of almost perfect, laboratory-like competition. This was the kind of competition involving large numbers, no barriers to entry and freely available information about which mathematical economists fantasise (and at which many other people scoff because it occurs so rarely). But in this case conditions akin to those assumed by textbook economics were indeed created.
Every family had its bit of capital – its land – along with the ability to access technical support, credit and markets, and so competed on a remarkably equal basis with its neighbour. In the United States, American government support for land reform in Japan, Korea and Taiwan was attacked domestically in the 1950s as socialism by the back door. But it was quite the opposite. It represented the creation in north-east Asia of the most idealised capitalist free market ever established for developing economies. For once, there were no landlords born with silver spoons in their mouths and (almost) no landless peasants without capital; everyone was given the chance to compete.
Klaus Deininger, one of the world's leading authorities on land policy and development, has spent decades assembling data that show how the nature of land distribution in poor countries predicts future economic performance. Using global land surveys done by the United Nations' Food and Agriculture Organisation (FAO), he has worked out that only one significant developing country has managed a long-term growth rate of over 2.5 per cent with a very unequal distribution of land. That country is Brazil, the false prophet of fast growth which collapsed in a debt crisis in the 1980s in large part because of its failure to increase agricultural output. Deininger's two big conclusions are that land inequality leads to low long-term growth and that low growth reduces income for the poor but not for the rich.[12]
In short, if poor countries are to become rich, then the equitable division of land at the outset of development is a huge help. Japan, Korea and Taiwan put this in place. The problem for most countries, however, in practice is that efforts to create an equitable distribution of land, and an equitable supply of resources to support the land, usually fail. To understand why this is the case – as well as the extraordinary examples of land reform success in north-east Asia – we must look more closely at the history of land policy.
A very old idea
The most advanced ancient Asian states used 'reformed' land systems more than a thousand years ago. As the world's most sophisticated civilisation in the seventh and eighth centuries, Tang dynasty China operated an agricultural bureaucracy which allocated and rotated household farming plots among families to ensure fair access to natural resources, while the ownership of most land was retained by the state. By contemporary standards, yields were very high.[13] What is called the Taika Reform in seventh-century Japan attempted to copy Tang land policy, but with more limited – and declining – success. Elites in both countries resisted interventions based on fair play, even if they led to higher yields. It was an attempt by China's Song dynasty, which followed Tang, to re-nationalise some farmland in the thirteenth century that convinced many aristocrats to throw in their lot with Kublai Khan and the Mongol invaders when they overran the country.
Modern land reform in north-east Asia has been based on the rediscovery in Meiji Japan of the wisdom of an earlier era. The process began with the overthrow of the Tokugawa shogunate and the formation of a progressive Japanese government under the restored emperor in 1868. Although land in Japan technically still belonged to the state, the system had long since ceased to deliver any kind of protection or equity to ordinary farmers. Instead, quasi-feudal lords known as daimyo (literally 'big land') operated vast estates farmed by smallholders who were, in effect, their serf tenants. The daimyo also controlled the grain-trading system, and hence were in a position to rig the market.
In its most important early reform, the Meiji administration pensioned off the daimyo (generously), gave them seats in Japan's new House of Peers in Tokyo, and gave small farmers title to their lands. One hundred and nine million certificates of ownership were issued in three years. For the first time, land could be mortgaged and sold legally. Taxes were also fixed in cash terms, so farmers kept more of the income from higher yields rather than splitting their physical crop with their landlords through sharecropping. As a result, farmers were incentivised to invest in their land while more liquid markets for crops came into being. The Meiji leadership squeezed farmers quite hard, obtaining a peak of four-fifths of its revenues from land tax in the late nineteenth century, but the tax squeeze was no harder – and probably a little less hard – than under the shogunate.[14]
Overall, these changes produced a spurt in yields and output that ran from the Meiji restoration until around the time of the First World War. Japan's production of rice – its staple food – roughly doubled, a little ahead of a rapidly increasing population. As the industrial economy took off, there was no need to import food.[15] And not only did agriculture feed more mouths, it also supplied the leading export (and hence foreign exchange earner) of Japan's early development era – silk, produced by worms that were fed on mulberry leaves from trees that were planted on the most marginal, hilly agricultural land.
The central government hired American specialists to introduce new farming techniques, and supported the construction of a national network of training services – or what agronomists call 'extension'. The spread of fertiliser use and higher-yield rice varieties was an important driver of output growth. In addition, by the time of the First World War, Japan had brought into cultivation pretty much every acre of cultivable land, including many plots that were converted to farming through considerable investment in clearing, terracing, irrigation and so forth.
Prior to this, no country had begun a period of industrialisation with such an overwhelmingly rural population. The populations of rich European and north American countries were at least 35 per cent urban before industrialisation took off.[16] However, by throwing off feudalism in short order, switching to private smallholder agriculture and mobilising an impressive level of national bureaucratic support, Japan was able to begin industrialisation despite having a three-quarters rural populace. In turn agriculture undergirded what was already becoming, at the start of the twentieth century, the most rapid economic transformation the world had seen. The pace of development in Germany and the United States was put in the shade by Japan. In just three decades after the Meiji restoration, Japanese modernisation was such that the country could defeat China (1895) and Russia (1905) in wars, be welcomed into a bilateral military alliance by Great Britain (1902), and begin to export its goods around the world. None of this could have occurred without the food, taxes and foreign exchange supplied by the countryside. The Meiji government discovered the developmental trick encapsulated in Michael Lipton's dictum as: 'If you wish for industrialisation, prepare to develop agriculture.'[17]
Not yet perfect
Despite this early success, the rural reforms of the Meiji government were limited in their scope. Although the more feudal, absentee, large-scale landlord was swept away and small farmers were given private title, within farming communities considerable variation in landholding remained. In the context of a rising population and limited finance and marketing support, there was always the risk that returns from renting out land and lending money would again outstrip returns from investing in order to increase yields.
This, gradually, is what happened. The data are not clear enough to establish a precise chronology, but there was a tipping point around the time of the First World War. The supply of new agricultural land stopped growing, while population continued to increase. At the same time, the so-called 'terms of trade' between agriculture and manufacturing – what a unit of agricultural output could buy in terms of manufactures or vice versa – began to favour manufacturing, where in the early reform era farmers had done better. This made life relatively more expensive for the rural population. And whereas early industrial development provided lots of extra income for female members of farm families through work in textile factories in rural towns, most new jobs after the First World War were created in larger-scale industry in cities.
In a country where, between the world wars, there was an average of just 1.1 hectares of cultivable land per farm household, these cumulative changes began to tell in the lives of those families that held a little less land or had fewer able-bodied members. There was an increase in money-lending to those who could not make ends meet, and when debts could not be repaid, land was forfeited. There were few really big landlords – even in 1940, less than 100,000 of 1.7 million Japanese landlords held more than five hectares.[18] It was small-time landlordism by attrition – adding a few tan (0.01 hectares) every year or two at the expense of some less fortunate villager. Those with too little land, or rented land, or both, often had to sell their crops as soon as they were harvested, when the market was flooded and prices were low. Landlords stored their rice, and sold it later for better prices, before offering money at interest to those who sold early and now had no money left. Between the world wars, farmer debt in Japan rose eight-fold.[19]
Tenanted land as a share of all cultivated land was around 20 per cent in the first years after the Meiji government instituted its land reform. By the time of the Second World War, almost half of arable land was under tenancy and 70 per cent of Japanese farmers rented some or all of their fields. Despite the global depression, tenant rents did not fall below 50–60 per cent of crops (and this was after the renter had paid the cost of seeds, fertiliser, implements and all taxes and levies bar the main land tax). It was hardly surprising that output stopped rising in the 1920s. A senior official at the Ministry of Agriculture noted in 1928: 'There is a great difference between the productivity of owner-farmer land and that of tenanted land. My officials who go out into the villages tell me that even they – men who have never used a plough in their lives – can tell at a glance by the look of the crop whether the land is farmed by an owner or by a tenant.'[20] It was in this context that in the 1930s the Japanese military pitched itself as the champion of the downtrodden rural populace, recruiting its most fervent supporters from farming communities. Japanese agriculture swung back from post-feudal abundance to brutal conditions of rural capitalist exploitation.
Journey 1: Tokyo to Niigata
You can begin to understand much about Japan's agricultural history simply by driving around, because that history is so heavily dependent on topography. A journey from Tokyo north-west across the main island of Honshu to Niigata prefecture, producer of the country's finest rice, highlights the basic challenges.
First, however, you must exit from Tokyo's urban sprawl. The capital, with its silent, strange residential suburbs, its little lanes and its religiously maintained road markings, ends only in theory. In practice it merges into a series of other, less prosperous towns in a seamless continuum of low-rise clapboard houses, malls, discount stores, fast-food restaurants and car showrooms. Not only has Japan developed with an impossibly small supply of cultivable land per capita, but large swathes of that land have been relentlessly gobbled up by its urban and industrial development. This trend has long been exacerbated by a cultural aversion to high-rise building. The insistence on low-rise, sadly, has done nothing to make modern Japanese construction more attractive.
Avoiding expressways, it is a 40-kilometre, two-to three-hour grind through spirit-sapping urban sprawl, past the vast American Yokota air base, before you see anything remotely rural to the north-west of Tokyo. What happens is that eventually the hills become too steep to build on or, indeed, to farm. And that is the reason why Japan has so little cultivable land – the country is covered in hills and mountains, which in turn are covered in forests. Inside a car, the smell of pine trees announces the ascent. Japan has a lower cultivable land share than any country in east Asia – just 14 per cent of its total area. Even Korea is 20 per cent cultivable, while Taiwan is 25 per cent.[21]
Entering the forest north-west of Tokyo, highway 299 winds up through the hills until it reaches Chichibu, a sleepy, nondescript town with no definable centre. Chichibu's name is synonymous in Japan with the largest farmer rebellion of the Meiji era, put down by state police and troops in 1884. As in other marginal rural areas, the farmers here had little to farm. Forested hills rise steeply on every side. There are a few fields along tiny local rivers and streams, the possibility of some mulberry orchards on steeper slopes. A sharp, temporary drop in agricultural prices in the early 1880s – as the government battled an early bout of inflation – left the people of the area close to starvation. Several thousand poorly armed men took a desperate swipe at authority. The leaders were hanged, and hundreds more convicted of felonies. North of Chichibu, at Minano, a side road drops away past old corrugated metal shacks and crosses a railway line; at the bottom of the road is a reconstructed shrine, where the farmers assembled.[22]
North of Chichibu and Minano, the Kan-Etsu expressway now tunnels its way under the peaks of central Honshu. Speeding along this highway, the pattern you will notice is that whenever a flattish area occurs among the hills and mountains and forest, it is filled to bursting with urban and industrial construction. This recurs for well over a hundred kilometres as the expressway snakes its way north-north-west towards Niigata and Honshu's western shore. Only when the road descends to a suddenly much broader stretch of the Shinano river – at a town called Ojiya – does the coastal delta begin and the scenery change. This is just thirty kilometres from the Sea of Japan.
Suddenly, everything bar essential human structures is rice paddy. Packed in between the mountains and the sea is the rice basket of Japan's most populous island. The Shinano river delta is much the biggest area of cultivable land around the city of Niigata; elsewhere, paddy is pinned into a coastal strip a few kilometres wide. In the Meiji era, the Niigata prefecture was itself one of the most populous in the country, initially providing the labour to produce large yield increases, then later the surplus population to make conditions ripe for increased tenancy and high-rent landlordism. Today what you see are the houses that farmers have built for themselves in the past fifty years, after the deeper, post-Second World War land reform: concrete structures with ersatz, mock-vernacular tiled roofs, double glazing and even – when kitsch breaks completely loose – brown, 'wood-look', plastic cladding.
Nestled at the edge of one village, however, there remains one of the few fully preserved historical relics of life in pre-war rural Japan. The home of the Ito family is an extreme example of what was a tale of rising, near-ubiquitous petty landlordism in the run-up to Japan's second round of land reform. Indeed, the house is preserved as an exaggerated reminder of the bad old days. It is now a museum to rural exploitation. The Itos, through high rents and money-lending, became some of the biggest landlords in Japan. Their lands multiplied in the late nineteenth and early twentieth centuries until by the 1920s they owned 1,370 hectares of paddy and another 1,000 hectares of forest. They had 2,800 tenants. The family were not typical landlords, but they were typical of the trend towards ever greater landlordism. Their former home occupies a 3-hectare site – the size of two average Japanese family farms today – and contains sixty rooms.[23]
Compared with the average European castle or stately home, the house at first appears to involve a less aggressive statement of power. Its 'walking' garden, rice warehouse (with inscribed haiku poem), tea pavilions and reception rooms that look on to an ornamental, koi-filled stream, a becalming, susurrant waterfall and an exquisitely crafted, enclosed garden all seem to point, aesthetically, to some higher form of landlordism. How could anyone with such sublime taste be putting the squeeze on anyone? Yet, on inspection, the tell-tale signs are there: reception rooms of different levels of grandeur for receiving persons of different ranks; entrances of different types through which persons of a given rank must pass; pile after pile of beautifully inscribed and annotated tenant ledgers and loan books. The Ito family employed around eighty manager go-betweens – known as banto – to oversee their tenants. Like the big landlords of today's south-east Asia, they never had to deal with their tenants direct and any requests, such as for rent reductions, were passed up through a hierarchical chain. The beauty of the property is breathtaking, but it does not reflect any softness of human relations. The Ito home, built around 1885 on the family's revenues from its ever-expanding roster of tenants, is in fact a monument to the agricultural market failure that slowly asphyxiated liberal, reformist Japan and helped pave the way for the country's military dictatorship. In the end, Japan's halfway house land reform crumbled.
Chinese Communists take the lead
The Itos would lose their estates, along with their home, in 1946 when Japan implemented a more permanent revolution in agricultural relations. Before that, however, it was the Chinese communists who began to claim the role of vanguard in Asian rural reform. If Japan in the early twentieth century was a place where farmers faced a return to the hardships they had temporarily escaped under the Meiji reforms, China was a place where ordinary farmers had known nothing but the cruellest suffering for centuries.
In the 1920s, when 85 per cent of Chinese people lived in the countryside, life expectancy at birth for rural dwellers was 20–25 years. Three-quarters of farming families had plots of less than one hectare, while perhaps one-tenth of the population owned seven-tenths of the cultivable land. As in Japan, there were few really big landlords, but there was sufficient inequality of land distribution and easily enough population pressure to induce high-rent tenancy and stagnant output. A rather typical landlord of the era was Deng Wenming, father of future Chinese leader Deng Xiaoping, who owned ten hectares in Paifang village in the hinterland of Chongqing in Sichuan province. Deng Wenming lived in a 22-room house on the edge of his village and leased out two-thirds of his fields. He, like so many other landlords, was not a man of limitless wealth. But he controlled the land of more than half a dozen average families.[24]
R.H. Tawney, the British economic historian, wrote after a visit to China in the late 1920s that the precariousness of Chinese agriculture was such that: 'There are districts in which the position of the rural population is that of a man standing permanently up to the neck in water, so that even a ripple is sufficient to drown him… An eminent Chinese official stated that in Shanxi province at the beginning of 1931, three million persons had died of hunger in the last few years, and the misery had been such that 400,000 women and children had changed hands by sale.'[25]
It was William Hinton, an American Marxist writer conducting research in the 1940s, who produced the classic outsider-insider's tale of life in a Chinese farming village, one that was also located in Shanxi province. Hinton wrote about the mundane realities of death by starvation during the annual 'spring hunger' when food reserves ran out, and of the slavery (mostly of girls), landlord violence, domestic violence, usury, endemic mafia-style secret societies and other assorted brutalities that characterised everyday life. One of the most striking aspects was the attention paid to faeces, the key fertiliser. Children and old people constantly scoured public areas for animal droppings. Landlords demanded that day labourers defecate only in their landlords' privies; out-of-village labourers were preferred by some because they could not skip off to their own toilets.[26]
Hinton called his book Fanshen, meaning 'to turn the body'. This was an expression that the Communist Party of China (CPC) and farmers came to use to denote the effects of land reform, the term being a metaphor for a revolution in one's life. The CPC began to expropriate selected landlords and redistribute land in areas it controlled in the late 1920s. This 'land to the tiller' policy expanded in the communists' southern China base area in Jiangxi province. However, when a full-scale war with Japan broke out in 1937, the CPC pulled back from forced land redistribution, demanding instead a so-called 'double reduction' by landlords, of both rents and interest. The new policy was part of a 'united front' with Chiang Kai-shek's Nationalist Party, which counted on many landlords for political support.
In reality, however, when the communists took control of a village during the Japanese war of 1937–45, and again during the Chinese civil war that resumed between communists and nationalists in 1946, bottom-up demand for land redistribution was so great that it happened anyway. This was especially the case at the end of the conflict with Japan in 1945, because most landlords had thrown in their lot with the Japanese occupiers and those Chinese who did their bidding. Revenge against Japan, land redistribution and the politicisation of the peasantry by CPC cadres were rolled up into a single struggle at the local level. In the village called Long Bow in which Hinton lived, and in many like it, when the CPC published its Draft Agrarian Law legislating land reform in December 1947 there were no landlords left to dispossess.[27]
None the less, the Draft Agrarian Law committed the CPC to universal uncompensated expropriation of land and to the cancellation of all pre-existing rural debts. The first lines of the succinct and pointed resolution which prefaced the law are worth restating:
China's agrarian system is unjust in the extreme. Speaking of general conditions, landlords and rich peasants who make up less than 10 per cent of the rural population hold approximately 70 to 80 per cent of the land, cruelly exploiting the peasantry. Farm labourers, poor peasants, middle peasants, and other people however, who make up over 90 per cent of the rural population, hold a total of approximately only 20 to 30 per cent of the land, toiling throughout the whole year, knowing neither warmth nor full stomach. These grave conditions are the root of our country's being the victim of aggression, oppression, poverty, backwardness, and the basic obstacles to our country's democratisation, industrialisation, independence, unity, strength and prosperity.
In order to change these conditions, it is necessary, on the basis of the demands of the peasantry, to wipe out the agrarian system of feudal and semi-feudal exploitation, and realise the system of 'land to the tillers'.[28]
Not a dinner party
In line with Mao Zedong's dictum that 'a revolution is not the same as inviting people to dinner', the land expropriation that Hinton studied in Long Bow village was often violent. Of some 250 families, twenty-six had their lands expropriated immediately after the Japanese surrender in August 1945. Erstwhile landlords were subject to repeated, all-day 'struggle sessions' by villagers and CPC cadres and their land and goods were divided among the most needy. Several were beaten to death; others died later from starvation. By spring 1946, about one-quarter of the land in Long Bow had changed hands, along with draft animals and many sections of housing (which, being wooden, could be dismantled and moved). Villagers dug up the homes and courtyards of landlords, searching for the profits of usury that were traditionally buried for safe-keeping.
All this preceded the founding of a formal CPC village branch in April 1946. When the civil war against the nationalists resumed in the summer, another round of intensified struggle broke out, with physical attacks on the remaining family members of landlords and 'middle peasants' (people who owned slightly larger than average plots and occasionally used hired labour). Two 'middle peasants' were beaten to death. Still more violence, as well as theft and rape, occurred as a minority of CPC cadres began to exploit their new position of power; members of the local militia celebrated Chinese New Year in 1947 with the gang rape of the daughter-in-law of a former 'bad element'. All this happened before the publication of the Draft Agrarian Law at the end of 1947.
Nationally, estimates of the death toll related to land reform in China range from hundreds of thousands of people to several million.[29] The campaign continued until 1952, as areas which only came under CPC control in 1948 and 1949 were made subject to redistribution. Overall, as Hinton observed, land reform was critical to the communist victory itself. The People's Liberation Army secured many recruits during the civil war, first by giving their families confiscated land and then by organising supporters to farm it while the young men were away at the front. 'Only the satisfaction of the peasants' demand for land,' he wrote, 'could provide during the coming period of the civil war the kind of inspiration and cohesion that the spirit of resistance to national subjugation had provided during the war against Japan.'[30]
Despite the dislocations of war, the economic benefits of land reform began to be felt rather quickly. The CPC introduced a more progressive tax system whereby, instead of taking a fixed share of whatever was produced, the state exempted an initial quota of output from tax and subjected the rest to levies based on average local yields. Anyone who beat the average got to retain the upside. Household ownership of land, fairer tax, mutual aid groups to share machinery and draft animals, village land reclamation and irrigation that had never taken place under tenancy, along with the first rural co-operative banks, all began to push up yields.
There was, in the second half of the 1940s and the first half of the 1950s, a very substantial increase in agricultural output in China. The available data are of poor quality, but the increase is widely agreed to have been in the range of 40–70 per cent, taking grain output from a pre-Second World War peak of less than 140 million tonnes to close to 200 million tonnes.[31] For a brief moment, Chinese farmers experienced an unprecedented holiday from want, not to mention a boom in rural textile, handicraft and manufacturing output. There is no reason this state of affairs should not have lasted. No reason, that is, except Marxist dogma, and the obsession with large scale, which soon destroyed much of the progress that China had made through household farming.
In 1956, following the Russian and North Korean examples, Mao Zedong led a drive to create agricultural collectives in which hundreds of families pooled their land, tools and labour in units of production. These changes, together with an industrialisation drive, were presented as China's Great Leap Forward. In reality, the disruption to agricultural output in the late 1950s was such that a famine occurred in 1959–61 in which an estimated 30–40 million people (slightly less than 10 per cent of the population) died.
After the famine, a modified collective agriculture system was introduced whereby labour was rewarded with 'work points' handed out by bureaucrats. But food output under collectivisation barely kept up with the growth in population, and standards of nutrition in China in the 1970s were little better on average than in the 1930s.[32] China waited until the revolutionary son of a landlord, Deng Xiaoping, rose to power in 1978 to rediscover what household farming could do for a developing country. By then, two decades of development had been lost.
The American response
The perversion of Chinese land reform by collectivisation did not occur until the late 1950s. Prior to that, for a decade after the Second World War, China was a beacon to the rest of the region for communist-organised land reform leading to small-scale household farming. In neighbouring North Korea, which was occupied by Soviet forces at the end of the war, another communist party, headed by Kim Il Sung, organised a sweeping land reform programme in 1946. This one achieved its objectives with much less violence than occurred in China. In both countries – at least until North Korea began its collectivisation in 1954 – the communists were hugely popular with farmers. Their agricultural reforms threw down the political gauntlet to the region. The challenge required a response from the pre-eminent power in east Asia, the United States.
American politicians and bureaucrats struggled to reach a consensus about how to respond. On the one hand, despite the longstanding legal right of Americans to claim homesteads, the mandatory redistribution of other people's private property was decidedly un-American. On the other hand, Washington's more liberal foreign policy specialists argued that land reform was necessary to make Asian societies fairer and – in the context of an incipient Cold War – less susceptible to the rising tide of communism. (There was no significant body of empirical evidence, as of 1945, to show that land reform would inevitably lead to faster economic growth.) The tensions between the property rights camp and those who viewed land reform as the key to stabilising US allies in Asia were never resolved; this led to a see-sawing of policy for several years, followed by a retreat from support for redistribution despite its manifest successes.
At the end of a world war in which 50 million people had died, there was more appetite than usual for bold policy and the land reformers won a crucial early victory with respect to Japan in the winter of 1945–6. General Douglas MacArthur, Supreme Commander for the Allied Powers (SCAP) that were occupying Japan, was persuaded to make 'land to the tiller' official policy. However, the momentum for change in other US-influenced states quickly hit a road block in South Korea. There the US military commander on the ground was vehemently opposed to land redistribution and the Washington political elite was less interested in forcing the issue. It was Kim Il Sung's spring 1946 land reform in the north which put the US and its favoured political stooge in Seoul, Syngman Rhee, on the spot. Reform legislation was passed, but President Rhee dragged his heels on implementation and Washington did not press him. The issue was eventually brought to a head for the second time by the 1950–3 Korean civil war, after which land redistribution was instituted.
In mainland China, the American response to the land reform issue during the 1946–9 civil war was hopelessly and embarrassingly belated. The US government sponsored the setting up of a Joint Commission on Rural Reconstruction (JCRR) with its Kuomintang (Nationalist Party) allies in October 1948 – long after most communist-controlled areas had completed land reform. The JCRR funded some small 'land to the tiller' experiments in that bit of central China still under nationalist sway in the last twelve months of the civil war.[33] However, once the nationalists had been defeated and fled to Taiwan, the negligible US intervention on the mainland gave way to much greater political determination. The work of the JCRR was transferred to Taiwan, where it was greatly expanded. When Chiang Kai-shek's resolve to redistribute private property showed signs of flagging in the early 1950s, it was his US ally that insisted he should move ahead. This, however, was the last time Washington used its influence to make land reform happen in east Asia. America's south-east Asian allies were never put under the same pressure.
The US contribution was a fitful one, reflecting the mixed emotions that land reform inspired among American politicians and their military commanders. There was early, decisive action over defeated Japan, vacillation in South Korea until events forced the US hand, far too little too late in mainland China, and a belated but important intervention in Taiwan. The victory of communism in China and North Korea demanded clear American leadership. In the end, enough of it was provided to stabilise the political situation in north-east Asia and to fix the boundaries of the incipient Cold War. But such leadership was born of necessity and did not come from any real conviction in Washington. That is why the impetus for land reform proved so fleeting; indeed, too fleeting for south-east Asia – including the US colony of the Philippines and the US orphan colony of South Vietnam – to taste the benefits of US-backed land redistribution. The political will that existed in the early 1950s came not from the US polity as a whole, but from a few clear-thinking individuals. Among these, one of the greatest was Wolf Ladejinsky.
A few brave men
Ladejinsky was the most important adviser to the US government on agricultural issues in Asia. A naturalised American born in the Ukraine in 1899, who had fled the Russian Revolution, he recalled that: 'I came to this [work] chiefly as a result of a lesson I learned from my experience before I left Russia in early 1921, namely that the communists would never have attained political power if they had not dealt with the land question resolutely, by turning the land over to the peasants.'[34] Ladejinsky also noted, however, that the Russian communists, having won popular support with a transition to household farming, then switched to forced collectivisation. He predicted, correctly, that the same pattern would occur in China, where he was sent in 1949 by the US Department of Agriculture as part of the JCRR's belated attempt at land reform in the final months of the Chinese civil war.[35]
Four years before that, in 1945, Ladejinsky had been seconded to General MacArthur's SCAP staff, which administered the defeated Japan. It was in this role that he provided the technical input for an October 1945 US State Department memorandum to MacArthur which made the case for the expropriation of all tenanted farmland.[36] Many people around MacArthur were arguing for the lesser policy of rent reductions but Ladejinsky insisted that a radical policy was necessary to undermine local communist support. He also argued that forced rent reductions would lead many landlords to farm land themselves, and thereby create more landless peasants. Ladejinsky and his allies persuaded MacArthur – whose instincts were conservative and who had showed no previous interest in the subject – to insist on land reform legislation in Japan.
The instruction MacArthur sent to the Japanese government neatly echoed the Communist Party of China's preamble to its Draft Agrarian Law of 1947:
In order that the Imperial Japanese Government shall remove economic obstacles to the revival and strengthening of democratic tendencies, establish respect for the dignity of man, and destroy the economic bondage which has enslaved the Japanese farmer to centuries of feudal oppression, the Japanese Imperial Government is directed to take measures to ensure that those who till the soil of Japan shall have more equal opportunity to enjoy the fruits of their labor… The Japanese Imperial Government is therefore ordered to submit to this Headquarters on or before 15 March 1946 a programme of rural land reform.[37]
There was already a move by progressive politicians in the Japanese parliament to introduce new land reform legislation. Indeed, a first Land Reform Bill was passed in late 1945. However, this contained a higher retention limit for landlords than was likely to be effective, as well as numerous legal loopholes for land owners to exploit. MacArthur and his SCAP staff, with Soviet and British representatives on the Allied Council for Japan urging them on, demanded that parliament write a second, more radical and more watertight bill, which was passed in October 1946. While the bill itself originated in the Japanese parliament, much of its technical detail came from Wolf Ladejinsky and his team.[38] And so it was that Japan's remarkable second phase of development began.
Theory into practice
The reform involved a maximum 3-hectare limit for farms in almost all areas of the country. The critical mechanism to implement this was the creation of land committees on which local tenants and owner-farmers outnumbered landlords. These committees had the adjudicating power in what for landlords was a distinctly painful process: they would lose their land in return for 30-year bonds paying 3.6 per cent interest on below-market valuations, despite an inflation rate so high that it would render the payment almost worthless.[39] Approximately 2 million families stood to lose by the land reform and 4 million to gain.
In the months before redistribution began, the Ministry of Agriculture estimated there were 250,000 cases of landlords attempting to retain their land by taking it back from their tenants. But the land committees, which were required to review all transfers that attempted to circumvent land reform, managed to reverse almost all of them. Despite this, only 110 incidents of violence between landlords and tenants were reported in the reform years 1947–8 and not one life was lost. The agricultural historian Ronald Dore remarks: 'The very fact that it [the reform] was imposed from outside was a powerful factor in making the land reform a peaceful and orderly one. Tenants could take over the land, not with the light of revolution in their eyes but half-apologetically, as if it hurt them more than it hurt their landlords, for the cause was not in themselves but in a law for which they bore no responsibility either personally or collectively.'[40]
As well as requiring land redistribution, the Agricultural Land Law placed numerous restrictions on land sales once the reform was complete. Land was not to return to tenancy as it had after the Meiji reforms. Almost two-fifths (just under 2 million hectares) of cultivable land changed hands, and by the mid 1950s less than one-tenth of farmland was tenanted. Most rental payments disappeared, while post-war inflation wiped out farmer debts – just as it destroyed the value of the bonds given to landlords – and led to high prices for farm products sold on black markets outside of official government procurement. It was a good time to be a farmer.
Rural output and consumption raced far ahead of pre-war levels in the early 1950s, even as Japan's urbanites were still struggling to get back to a 1930s standard of living.[41] The government spent heavily on rural infrastructure, offering scores of different subsidies and grants-in-aid to farmers and providing an average of one agricultural extension worker per village. Relatively low-interest credit was also offered through village co-operatives. As a result, agricultural production rose by a robust 3 per cent a year from 1955 to 1970.[42] Japan was self-sufficient in food and rural employment boomed.
Agriculture was still the provider of two-fifths of employment and almost one-fifth of national income in 1955. The introduction of a more deep-rooted, enduring land reform – which kept the agricultural economy focused on yield gains rather than tenancy profits – set the stage for Japan's post-war miracle. It made possible economic development with high levels of income equality and supported the growth of manufacturing capacity in rural towns. However, the impact of comprehensive land reform in Japan must be considered in the context of a country which had already progressed further in its economic modernisation than any other Asian state by the time of the Second World War. The results were far more interesting when the same land reforms were repeated in South Korea and Taiwan. These were states starting from the lowest rungs of the developmental ladder. Their ascent under the impetus of radical land policy provided a clearer laboratory study of its potential.
The rise of stir-fried development
Land ownership in South Korea prior to reform was the most unequal among the north-east Asian states. Wolf Ladejinsky, writing about Korean agriculture before partition in 1945, quoted a 1928 US State Department research report which said that less than 4 per cent of households owned 55 per cent of agricultural land, while there were a quarter of a million landless squatter families.[43] Relatively less public investment went to agriculture when compared with Taiwan during the colonial period. Japan operated a more repressive regime in Korea in the face of greater political opposition to her rule than she faced in Taiwan. By the end of the colonial era in 1945, Japanese interests owned about one-fifth of all Korean land and the majority of farmers were pure tenants.
The American Military Government (AMG) that became the occupying force in South Korea from September 1945 instituted rent controls and requirements for written leases on previously Japanese-controlled land. However the US military governor, General Archer L. Lerch, was not disposed to land reform, regarding it as a socialist policy; his concern was to keep the Soviets north of the 38th parallel and to suppress communism in the south. The attentions of pro-land reform US liberals in Washington, meanwhile, were focused on Japan.
The American hand was forced by events. From March 1946, land reform with a (generous) retention of five hectares was introduced in North Korea. There was little violence and grass-roots support for the emerging communist government increased markedly. In the south, resentment against heavy-handed government by the AMG and its barely legitimate local ally Syngman Rhee – an elitist, long-time expatriate who had only recently returned – increased. In the autumn of 1946, the US State Department concluded that land reform had to be pushed. None the less, General Lerch and Syngman Rhee continued to resist.
After the former died in 1947, the AMG organised redistribution of lands formerly controlled by Japanese interests. The reform affected only a little over 10 per cent of South Korea's cultivable land. However, it raised expectations. In 1948, South Korea became a sovereign state, and the following year, despite being heavily linked to landlord interests, the new Korean parliament passed a substantive land reform bill. The bill was significantly more radical than President Rhee wanted. He vetoed it only to have his veto overridden by the legislators.
Rhee was forced to sign the Land Reform Act in June 1949. A legislature with considerable vested interests in land took a principled stand on the question of redistribution – a reminder that democracy is not always inimical to development.[44] Rhee himself continued to prevaricate over the implementation of reform, which finally began the week before the Korean War broke out in June 1950. The opening of the war involved a North Korean invasion, in the wake of which northern forces quickly set up farmers' committees in most parts of the south, redistributing more than half a million hectares of land for free to more than 1 million families. After US–UN forces reoccupied the south in late 1950, the communist land reform was declared illegal and Rhee – urged on by the US – belatedly moved to implement the south's own programme. This was completed by the end of 1952.
The formal terms of the Korean reforms were much like those which had already been enforced in Japan and which were to come in Taiwan. There was a 3-hectare retention limit. Remuneration to landlords was particularly ungenerous, with some losing 90 per cent of the value of their assets. However, the reform was more centrally managed and there was much less farmer participation in the process than in Japan and Taiwan. This helps explain a number of variations in outcomes. First, a large amount of land was sold by landlords outside the formal land reform process, sometimes to third-party tenants but sometimes to relatives. Second, tenancy – much of it illegal under the terms of the land reform law – reappeared in South Korea and by the late 1970s affected about a quarter of agricultural land. None the less, owners increased from not much more than one-tenth of farm households in 1945 to over seven-tenths in 1964.[45] After land reform, almost 50 per cent of farmers farmed less than half a hectare.
Korean agricultural output did not increase as fast as that in Japan. Syng-man Rhee's government in the 1950s forcibly procured rice at less than the cost of production; under the circumstances, farm households increased output somewhat, but preferred to eat the extra themselves than sell at a loss. In the late 1950s, Korea became dependent on US food aid to avoid famine. Then, following the 1961 military coup of General Park Chung Hee, government raised procurement prices and increased investment in rural infrastructure and domestic fertiliser plants. It was in the 1960s and 1970s, when the state provided household agriculture with the kind of support seen in Japan and Taiwan in the 1950s, that yields increased appreciably. Rice paddy yields rose from an average 3 tonnes per hectare in the mid 1950s to 5.3 tonnes per hectare in the mid 1970s – less than in Japan or Taiwan, but one-and-a-half to two times what was achieved in south-east Asian states, or in 1970s China under collective farming.
The Korean state was less able to extract wealth from its relatively less productive agriculture in order to fund industrialisation than either Meiji Japan or post-Second World War Japan and Taiwan. When it came to finance, the Korean government relied heavily on foreign borrowing. Still, agriculture delivered a great deal to national development: it gainfully employed vast numbers of people until industry was ready to absorb them; it provided cheap food – via subsidised state procurement – to urban workers; it generated considerable local consumption for the early output of Korean manufacturers; and it staved off what could have been a much more serious food import dependency. Korea's post-reform agricultural performance was a world apart from what the country had known before the Second World War, or what less successful east Asian states continued to endure after it.
The one to beat
Taiwan is the most interesting agricultural story in north-east Asia, for two reasons. First, the island produced the most remarkable developmental results as a consequence of land reform. Second, with its subtropical climate Taiwan is geographically more south-east Asian than north-east Asian and hence the success of land reform there gives us a powerful reminder that geography is not destiny in development. The less successful agricultural economies of other south-east Asian states are the outcomes of policies, not climatic conditions. Indeed, climate in geographic south-east Asia is generally much more favourable to agriculture than in north-east Asia because of a year-round growing season and abundant, regular rainfall. The worst climatic and soil conditions for agriculture in the region are to be found in South Korea and parts of Japan.
At the end of the Chinese civil war in 1949, the defeated Nationalist government under Chiang Kai-shek retreated to Taiwan. Around a million refugees from the mainland moved to the island, pushing up its population from 6 million people to well over 7 million in a matter of months. Under Japanese colonial occupation, which ended in 1945, considerable investment had been made in rural infrastructure, particularly in irrigation works and in land reclamation – Japan used its Taiwanese colony as a supplier of rice and cane sugar. The promotion of fertiliser use and the introduction of new seed varieties also led to impressive increases in yields, and real per capita income in agriculture probably doubled under the Japanese occupation.[46] However, as in Japan, tenancy tended to increase in the run-up to the Second World War; rents, if anything, were higher than in Japan – reaching 70 per cent of output for high-quality land, with frequent demands for payment in advance and for high minimum rents irrespective of the size of the year's crop.
Chiang Kai-shek's Kuomintang government, which could see the end of the civil war coming well before its formal defeat, introduced legislation on Taiwan to limit rents to 37.5 per cent of crops at the beginning of 1949. The Kuomintang had just started working with the American-sponsored JCRR on the mainland, and Taiwan rent control represented an act of ingratiation towards the rural population of an island that was not universally thrilled by the idea that the Nationalist military and political machine might be coming to stay. Landlords were also required to sign written tenancy agreements of a minimum of six years, under which the requirements for repossession of land were onerous.
Beginning in 1951, the Nationalists offered a second prize to Taiwan's rural constituency by starting the sell-off of lands confiscated from former Japanese owners. By the end of the decade, 140,000 families had benefited from this programme, buying an average of half a hectare. The case for fully-fledged land reform, however, was not addressed.
It was the JCRR, now operating in Taiwan, and the US government that sponsored it, which pushed for a more radical policy. American policymakers wanted the Kuomintang to build a genuinely popular support base and were encouraged by the non-violent implementation of land reform in Japan. Chiang Kai-shek's government – which had studiously avoided land reform on the mainland for decades – was persuaded to change its approach. If the desire to win the support of Taiwan's rural population was the major driver, the fact that the Nationalist elite had few vested interests on the island was the facilitating consideration.
The government passed land reform legislation in 1953. The terms were similar to those employed in Japan and South Korea: expropriation of land in excess of approximately three hectares; landlord compensation amounting to two and a half years' average crop (compared with three to eight years on the open market); payment to landlords mostly in low-yield bonds; purchase of the land by tenants in instalments over ten years. In the event, half of landlords were required to sell less than a hectare and fewer than a fifth sold more than three hectares.[47] As in Japan, there were few big landlords – but the effects would prove to be enormous all the same.
Wolf Ladejinsky's influence continued to be felt. It was he who recommended that the Kuomintang set up tenancy committees, which adjudicated thousands of land sales and purchases at the village level. The participation of tenants, as well as of owner-farmers and landlords, helped prevent widespread evasion of the rules, just as the activities of similar committees had done in Japan. In contrast to what was to occur in south-east Asia, popular participation in the process was at the root of successful implementation.
Whereas a little over 30 per cent of agricultural land in Taiwan was farmed by owner-cultivators in 1945, the proportion by 1960 was 64 per cent.[48] Farmers who gained new land in effect paid nothing for it because their payments to the government were offset by their not having to pay rent. As in Japan, it was forced sellers who lost. By one estimate, the transfer of wealth involved in the land reform was equivalent to 13 per cent of Taiwan's GDP passing from one group of people to another.[49]
The structural effects were the creation of a textbook market environment in which everybody had a small amount of capital, and an evening out of income distribution. When the share of property income in a society falls (here because fewer people were renting out land), income from current work is relatively more important and overall incomes diverge less. Household income surveys in Taiwan showed that the country moved from a Gini coefficient – the standard measure of equality, where 0 is perfect equality and 1 is perfect inequality – on a par with Brazil in the early 1950s (scoring 0.56) to a level in the mid 1960s that was unprecedented for a developing country (0.33).[50]
Greater equality was welcomed by the average Taiwanese, but it was the impact of land reform and a more incentivising market structure on output which was truly revolutionary. Taiwanese agriculture in the 1950s needed to provide a vast amount of additional food and employment – the population increased faster than anywhere else in the region – and to generate foreign exchange in order to plug a large gap in the state's balance of payments. All this was achieved. Yields of traditional crops like rice and sugar went up by half, and those of specialist fruit and vegetables doubled. In the 1950s, raw and processed agricultural goods produced two-thirds of Taiwan's export receipts.[51] To begin with, sugar was the dominant foreign exchange earner. The government nationalised formerly Japanese-owned sugar refineries under the Taiwan Sugar Corporation, but bought sugar cane from household farmers.[52] From the 1960s, family farms also diversified into new, value-added and highly labour-intensive crops, including mushrooms and asparagus and, in the south, bananas.
As in every instance where it succeeds, land reform was coupled with state investments in rural infrastructure, agricultural extension services and marketing support. The JCRR – which had been a monument to US foreign policy failure in mainland China – was hugely important in supporting these initiatives in Taiwan. By one estimate, the agency handled one-third of US aid to the island between 1951 and 1965, running 6,000 projects and accounting for a little over half of net investment in Taiwanese farming. Through it, Taiwan acquired the world's proportionately largest cohort of agricultural research and extension workers.[53]
The JCRR was instrumental in developing high-yield varieties for existing crops and in publicising alternative high-value crops, while the Taiwanese government frequently guaranteed minimum prices for export-oriented produce to limit farmer risk. To take one example of a popular new export vegetable, asparagus was calculated to require 2,900 times as much labour per hectare as rice, providing ample work in a country where industrial job creation did not begin to exceed the rate of population growth until the end of the 1950s. Processing of foodstuffs, which began with sugar and moved on to asparagus, mushrooms, tropical fruits and other crops, was Taiwan's first 'manufacturing' export industry. The textile business did not begin to kick in until the second half of the 1950s.
Taiwan stands out among north-east Asian states for the extent to which agricultural goods drove and dominated exports at the beginning of the country's development process. The experience was testament to just what a powerful catalyst labour-intensive, private household farming can be. Indeed, such was the contribution of the agricultural sector to Taiwan's economy that government was able to squeeze considerable financial resources out of it without apparently undermining farmers' incentives to produce more. The state operated a fertiliser monopoly which sold different fertilisers to farmers at a premium of 10–30 per cent over world market prices, and also bought around a quarter of rice output by compulsory purchase at significantly less than market rates. Yet still the sector continued to operate efficiently.
There is much debate about how hard agriculture was squeezed in the aggregate, since government was also putting investment into the sector, but there is no doubt that the Taiwanese farmers helped to fund their country's early industrialisation. And not only did their household savings pay to build factories, they also provided the key market for early manufactures as farm incomes more than doubled in real terms in the 1950s.[54]
Taiwan set a high-water mark for agricultural input into development. More-over, early industrial development echoed that in Meiji Japan (and to a lesser extent that in post-Second World War Japan) and in post-1978 China by being concentrated in rural areas. In other words, agricultural progress became bound up with industrial progress not only financially – because the former was the early generator of new wealth and markets – but also geographically, because rural areas were home to many new manufacturing enterprises and produced many industrial entrepreneurs. In this respect, it is artificial to separate the rural and manufacturing stories of Japan, China and Taiwan. These states, however, are not typical of the developing world. The more common developmental tale is one of 'urban bias', in which town and country, agriculture and manufacturing, remain worlds apart.
That is what happened in south-east Asia. There, post-colonial governments toyed with land reform, but never followed through to fundamentally restructure their rural economies. And the United States failed to apply the external political pressure that it used to such positive effect in north-east Asia. This lack of domestic and international political conviction over the importance of household farming in development was the first step towards the relative economic underperformance of the south-east Asian region. No country bears this out more painfully than the Philippines.
Journey 2: Negros Occidental
Out on the runway of Manila's Ninoy Aquino airport, a large private jet comes in to land in the afternoon sun. It is a useful reminder, if you have travelled down from north-east Asia, that you have left the world of 0.3 Gini coefficients and entered the world of 0.5 Gini coefficients – that is, a different kind of 'developing' economy. The plane I am on is travelling to Bacolod, the dominant city in Negros Occidental, the western half of the island of Negros. It is an area of the Philippines sometimes referred to as 'Sugarlandia', because of its historical role as the epicentre of the plantation sugar industry.
It is a brief one-hour flight. On the descent, light green fields shimmer up and down the coastal plain. Only a few darker wooded areas remain of what was once forest. Plumes of smoke rise from fields where sugar cane stubble is being burned; it is November, the middle of the harvest season. Around the new airport, sugar cane grows right up to the airfield apron. On the ride into town we pass by one sugar cane field after another, while large trucks fully laden with harvested brown canes trundle off to refineries. Skinny sacadas, the seasonal cane-cutters and the lowest of the low in the pecking order of agricultural labour, are dotted around the fields or loading trucks, each with his long machete.
Bacolod is well past its heyday, which came in the 1970s. Back then, a large US import quota gave sugar producers in the former colony access to the heavily protected US market, where sugar prices – despite America's free market claims – are among the highest in the world.[55] In the 1960s and early 1970s, sugar barons rode around Bacolod in the latest American stretch open-top sedans. In photographs of the era downtown seems more California than Asia. Today, Bacolod still has its casino with security guards toting sawn-off shotguns, but the old swagger has gone.
The fundamentals of Third World agriculture, however, are intact: landlords are ascendant; most farming is conducted by landless peasants;[56] farmers who have been granted plots through poorly conceived, half-cocked land reform initiatives have mostly leased them back to landlords or lost control of them through indebtedness; yields are low (and on many farms are lower than in the 1970s); and the going wage for a farm labourer is PHP120 (USD2.60) a day.[57]
It was not meant to be thus. Nowhere in Asia has produced more plans for land reform than the Philippines. But, equally, no ruling elite in Asia has come up with as many ways to avoid implementing genuine land reform as the Filipino one. Back in 1904, a new US colonial government – imposed after the American defeat of Spain in a war of 1898 – promised to help tenants with a first land reform affecting estates owned by the Catholic church. However the Americans insisted on a full market price, making the tenants' right of first refusal to purchase meaningless – they didn't have the money. Almost all of the 165,000 hectares in question ended up in the hands of businessmen.[58]
In the 1930s, the periodic agrarian unrest born of poverty that has afflicted the Philippines for centuries became permanent armed resistance with the development of the communist-led Huk rebel movement in Luzon, the largest island in the Philippines. Local politicians (power had been devolved by Washington in 1916) responded with a new tenancy law, which was not enforced, and undertook resettlement of a few thousand landless farmers. The Huk rebellion increased in scale and spread through the archipelago. After the Second World War, when General MacArthur had retaken the Philippines, many landlords recovered their land from Huk rebels by raising private forces; the country was awash with weapons left over from conflict. Following independence in 1946, the Huk rebellion reached a new level of intensity. The US, still heavily involved in the Philippines through its military bases, commissioned two reports in 1950 and 1951, both of which stated that redistributive land reform was the only way to end agrarian unrest.[59]
However, while radical land reform was supported by the US embassy in Manila, it did not win support in Washington – unlike the reforms in Japan, South Korea and Taiwan. A Philippine Rural Reconstruction Movement was set up and funded by various US agencies, including the Central Intelligence Agency, but it did not promote compulsory land redistribution. In 1954–5, the Philippine government gave rice and corn farmers the right to demand written tenancy agreements, legislated to expropriate private tenanted estates over 300 hectares, and began a more aggressive programme to settle landless farmers and rebels on public lands (even though this frequently displaced defenceless tribal groups). Combined with US training for the Filipino military and an anti-insurgency drive, these very limited agricultural reforms were enough to take the heat out of the Huk rebellion. In 1963, there was a further 'enhancement' of the mid-1950s reforms when the expropriation limit for rice and corn land was reduced from 300 hectares to 75 hectares. However, compulsory purchase only occurred when a specific locality was declared a 'land reform area'.[60]
A pattern was established whereby government undertook the absolute minimum amount of agricultural reform needed to head off outright civil war. There was no shift to a fundamentally more productive rural economy. It is a pattern that has persisted. In 1969, the remnants of the Huk movement resurfaced, together with a reformed Communist Party of the Philippines, to create the New People's Army (NPA). In the early 1970s, the NPA began to co-operate with Christian socialist activists who, despairing of peaceful reform, set up rural base areas inspired by the Chinese revolution. The NPA enforced rent and interest reductions, and occasionally the redistribution of land, in areas it controlled, just as the Chinese communists had in the 1930s and 1940s.
It was during the early rise of the NPA that Ferdinand Marcos declared martial law, in September 1972. He repeatedly justified military rule on the basis that authoritarian government was the only means by which land reform could be achieved. In a speech on the first anniversary of martial law in which he talked about his promise of a 'New Society' (Chiang Kai-shek had promised the Chinese something similar in the 1930s with his New Life Movement), Marcos opined: 'Land reform is the only gauge for the success or failure of the New Society… If land reform fails, there is no New Society.' As with Chiang in China, there was very little land reform and there was no new society. The land reform that Marcos did pursue remained limited to corn and rice land, involved a high, 7-hectare retention limit, and was largely targeted at property belonging to his political enemies.[61]
By the time of Marcos's fall in 1986, he had achieved less than a quarter of his own, very limited targets. The Philippine military, meanwhile, estimated that the NPA had 25,000 members and was present in one in eight villages in the country. In January 1986, a month before Marcos fled, in an act of desperation the government began handing out thousands of land reform 'Emancipation Patents' – titles to plots of land – to farmers who had not even completed the land reform application process. Just as when the United States formed the JCRR to support land reform in Nationalist China in the winter of 1948–9, or when Washington finally backed land reform in South Vietnam under Nguyen Van Thieu in 1969, it was far, far too late. By one calculation, the cumulative achievement of land reform in the Philippines between 1900 and 1986 was the redistribution of 315,000 hectares, or about 4 per cent of the cultivated area.[62]
The revolution that wasn't
If Ferdy failed land reformers, his successor Cory Aquino – brought to power by 'people power' – did little better. To be fair, she was the wife of an assassinated political leader (Ninoy, shot by Marcos's agents at Manila airport in 1983) and more used to making small talk with her husband's guests than dealing with the snake-pit of Philippine politics. She was the figurehead for anti-Marcos protest, but she had no political party of her own. She was also from a landed family, the Cojuangcos, one of whose main assets is a 6,400-hectare estate in Tarlac in central Luzon; her brother, Jose Cojuangco Jr, was one of the anti-reform leaders of the landowner bloc in congress. Cory Aquino only confronted the land reform question when a huge farmer demonstration in Manila in January 1987 ended with police killing at least thirteen people and wounding ninety – what came to be known as the Mendiola Massacre, for the bridge around which the killing took place. Her response was to ask the Philippine congress to work out the details of a new land reform law, rather than taking the lead herself.
The result was a law that was long-winded, unduly complex, insufficiently radical, with many loopholes and with an absurdly extended time-table for implementation. A quarter of a century and two extensions later, the Comprehensive Agrarian Reform Law (CARL) of 1988 is still being implemented. Despite this, the effects of a change of government, the promise of radical reform and another of the Philippines' periodic counter-insurgency drives were enough to undermine the NPA. The movement lost both active and passive support, and splintered internally.
During the land reform legislation debate, Cory Aquino produced some of the Philippines' most famous political last words: 'I shall ask no greater sacrifices,' she told her countrymen, 'than I myself am prepared to make.'[63] When her family's vast estate sought and received permission to avoid break-up under the new land reform law, it was clear that radical reform under people power was not going to happen. Hacienda Luisita, as the Aquino–Cojuangco latifundia is called, exploited a clause in the Comprehensive Agrarian Reform Law called the Stock Distribution Option (SDO) which allowed the family to give its tenants equity in a new farming business rather than family plots.
SDO, like other loophole mechanisms in the CARL such as Voluntary Land Transfer and Voluntary Offer of Sale, broke one of the cardinal rules of successful land reform as implemented in north-east Asia: do not let landlords negotiate directly with tenants. In such circumstances, landlords almost invariably manage to negotiate arrangements that are not favourable to tenants. In an SDO case, for instance, a landowner can overvalue non-land inputs and management expenses in a business and undervalue land, meaning that his or her shareholders work for very little return. Luisita has been plagued with strikes and unrest ever since it became a 'shareholder business'; farmers say their 'dividends' are as little as PHP2,000 (USD43) a year.
To those who know their Luisita history, this is one more chapter in a story that is fatally emblematic of the bigger history of Filipino land. The Cojuangcos originally built up their agricultural holdings in Tarlac in the nineteenth and early twentieth centuries through agricultural usury. Then, in 1957, the family acquired Hacienda Luisita with a government loan on the specific condition that the farmland would be resold 'at reasonable terms and conditions' to the tenants.[64] The Cojuangcos were supposed to retain only the large sugar mill on the estate. But the undertaking to sell off the land was never honoured and the Cojuangcos were never held to account. That such people can become presidents – Cory's son Noynoy is the current president, as this book goes to press – places a glass ceiling above the possibilities for Filipino development.
Official success
The Philippine government claims that the implementation of the Comprehensive Agrarian Reform Law has met most of its national targets. According to official data, by the end of 2006, 6.8 million hectares of a targeted 8.2 million hectares of farmland were subjected to land reform to the benefit of 4.1 million rural households.[65] This sounds like north-east Asia. But it is not.
To begin with, the Filipino statistics count all kinds of new land titles that have been issued, not practical and physical changes in ownership. One-third of new titles are collective (and almost by definition incomplete), often covering hundreds or thousands of supposed beneficiaries. Much of the land which on paper has been redistributed has been leased back, or sold illegally, to the original owners or to others. Moreover, only one-third of the targeted 8.2 million hectares under land reform is private land – the rest is publicly owned forest where some farming takes place, or new farmer resettlement projects, or other non-private categories. The CARL objective was originally 10.3 million hectares and covered much more private land, but a couple of million hectares of private estates have been dropped from the target without explanation.[66]
Commercial farms like Luisita have hardly been affected. Prior to the reforms, no reliable land survey was conducted, guaranteeing perpetual confusion about both objectives and outcomes. Land reform has been overseen not by tenant committees but by government bureaucrats, who are under-resourced and frequently bribed. Most private land has been 'redistributed' through direct negotiations between owners and tenants – Voluntary Land Transfer and Voluntary Offer of Sale and other related categories – sometimes on terms so unfair to farmers that the process has involved a transfer of wealth from poor to rich.[67]
The hardest number that exists in the Philippines to define meaningful land reform is that for compulsory acquisition, reflecting the kind of forced land redistribution that occurred in north-east Asia. By 2006, compulsory acquisition under the CARL affected just under 300,000 hectares of land – 5 per cent of the area the government says has been reformed, and 2.5 per cent of the Philippines' total cultivable land area.
These data are even worse when one considers the land retention limit under the CARL was set too high – at five hectares plus three more hectares for every owner's child over fifteen years of age; some land owners turned out to have a remarkable number of kids. Today, an estimated 8.5 million of 11.2 million rural workers in the Philippines are landless.[68] The majority of people in the countryside live in poverty. Yields are also shockingly low and not increasing. And all this in a country where cultivable land is one-third of the land mass – far more than in Japan, Korea or Taiwan – and climate and soil quality are more naturally conducive to high yields. In the Philippines, man's capacity to seize failure from the jaws of opportunity is writ large.
A world of lords…
A drive south of Bacolod, into the heart of the Negros countryside, soon reveals the realities of Filipino agriculture.[69] Despite the official data extolling the extent of land redistribution to households, it is not long before we are trundling past kilometre after kilometre of commercial mango, pili nut (used in foods from chocolate to ice cream), rambutan (a relative of the lychee), banana, jackfruit and durian plantations. From time to time, groups of labourers come into sight. If there has been land reform in the Philippines, then the average plantation landlord has not noticed. In this part of Negros we are entering the world of the man known to his employees as 'Boss Danding', the biggest landowner in the area.
Eduardo 'Danding' Cojuangco is Cory Aquino's estranged first cousin and one of the Philippines' richest businessmen. He is also the most powerful agricultural and political force in Negros Occidental. In recent years, Danding converted much of his land away from sugar cultivation to other plantation crops. Despite the theory that there is ongoing land redistribution, he continues to build up estates that currently total at least 6,000 hectares and stretch between six Negros towns.[70] Near one of these towns, Pontevedra, he lives in a secluded mansion known locally as the White House. Boss Danding's recreational tastes are standard playboy-billionaire fare: vintage luxury cars, big motorbikes, racehorses, private jets – plus two Filipino specialities: guns and cock fighting. Hundreds of his prize-fighting cocks strut in individual cages in large, manicured fields. They are worth PHP5,000 (USD108) each, the same as the monthly income that constitutes the Philippine poverty line. Ascending a hilltop in the nearby Raphael Salas Nature Park, one sees the full extent of Danding's local estates – the orchards dark green, the sugar a lighter green. This elevated position used to be a New People's Army guerrilla base. Today, with armed struggle in one of its periodic lulls, thugs from an NPA splinter group are employed to guard Danding's land. The arrangement is much cheaper than keeping a standing army. At the height of the insurgency in the mid 1980s Danding was reckoned to have 1,600 fighters on his payroll.[71]
It is hard to believe that Danding is at liberty in the Philippines, let alone acquiring more and more land in Negros Occidental and other parts of the archipelago. He was Ferdinand Marcos's number one crony and accompanied Ferdy and Imelda when they were evacuated by the US military in February 1986. Under Marcos's protection, Danding was governor of the Development Bank of the Philippines (lending money to his own firms); ran a coconut marketing monopoly (taxing the leading 1970s export industry to fund the growth of his personal business empire, including the takeover of the nation's leading firm, San Miguel Corp.); and set up the United Coconut Planters Bank (which deployed even more of other people's money to Danding's ends).[72]
Despite all this, after a period of exile, Danding was able to return to the Philippines in November 1991. Other Marcos cronies who fled and returned were forced to cut deals with Cory Aquino's government to give up part of their assets; Danding never gave up anything. On his return, he settled down in Negros Occidental, where his wife comes from and where he now controls his own political party and most of the local mayors and congressmen.[73]
Danding's response to the Comprehensive Agrarian Reform Law was a variant on the Stock Distribution Option used by his cousin Cory's side of the family to evade the aims of the law at Hacienda Luisita. He proposed 'corporative land reform', a joint venture with his tenants which involved the nominal transfer of land to them over which he retained management control. Indeed, accepting Danding's continuing control was a precondition of the ownership 'transfer'.[74]
The joint venture was negotiated direct between Danding and farmers without government oversight. Under its terms, workers are paid the going rate for day labour plus a minority, 35 per cent share of profits after all Danding's costs. Needless to say, outsiders are not invited to pore over the books. When Danding needs to talk to his tenant 'partners' in Negros, he has them assemble at the giant cock-fighting arena, called Gallera Balbina, which he has constructed near the White House. The central government has never challenged the questionable legality of Boss Danding's 'corporative land reform'. Indeed, former president Joseph Estrada lauded him publicly, and apparently without irony, as 'the godfather of agrarian reform'.
… and a world of serfs
We drive up to the confines of an estate of another Marcos crony that is nestled in among Danding's lands. Roberto Benedicto, now deceased, was almost, but not quite, as close to the former dictator as Danding. He ran a Philippine sugar marketing monopoly similar to Danding's coconut trading monopoly and is remembered in Negros for having funded local vigilante groups which murdered people hostile to the Marcos regime.[75] This 564-hectare estate is called Hacienda Esperanza.
Danding offered to buy Esperanza after his return from exile. However, a group of estate workers applied for land reform under the CARL. The story that then unfolded is illustrative of the failings of the reform mechanism. The Benedicto family responded to the CARL application by setting up a 'union' among their more deferential employees, who declared themselves opposed to land redistribution. Lobbying groups became involved on both sides and the case featured in the national media. After a long campaign, central government determined to move ahead with that relatively rare event, compulsory land reform, and issued Certificates of Land Ownership Awards (CLOAs) to the hacienda's farmers. The Secretary of Agrarian Reform himself travelled to Negros to lead the 'installation' of the emancipated workers on their plots. However, he was refused access to the estate by armed guards and members of the Benedictos' union. The holders of CLOAs then tried to occupy by force the land they had been granted. The guards shot dead one of them and wounded two others.[76]
Ultimately, compulsory land reform was enforced. It was impossible to avoid after the shootings. However, like most Philippine land reform, the Esperanza tale does not have a happy ending for most of the farmers. The reason is a complete lack of state support for those who were granted plots. The new title holders were too poor to be able to farm independently and most immediately leased their plots back to the Benedicto family for just PHP12,000 (USD240) a year, becoming wage labourers once more.
Some individuals, more stoic, struggled to make a go of independent farming, borrowing working capital from informal lenders at interest rates of 50–120 per cent a year . The Benedictos' estate manager, for instance, lends at 10 per cent a month. With the Benedictos controlling the local sugar mill as the sole buyer of sugar cane, the maths almost never summed to a positive return. Farmers found themselves mortgaging their sugar canes at an earlier point in the growing season each year, and not replanting the canes after the optimum three years to avoid borrowing more money, which led instead to declining yields and to yet more debt by another route. When a debt situation runs out of control, the money lender takes possession of the land and controls it until the debt and interest are repaid – if ever. The process has followed exactly the same form as the unravelling of land reform in 1920s and 1930s Japan.
Only the usurers are happy: the independent farmers are mired in poverty while the sugar yield on the land farmed by the Benedictos is a paltry 52 tonnes per hectare, more than 50 per cent less than post-land reform sugar farmers in Taiwan and China (after 1978) achieved. As elsewhere in the Philippines, the beneficiaries of land reform have even greater need of credit, marketing and agricultural extension support than those in north-east Asia did. They are almost always farm labourers, used to being told what to do, rather than the more autonomous tenants who were given the right to buy land in Japan, Korea and Taiwan, or occupy it rent-free in China. Yet where credit and technical support was present in every village in north-east Asia, the Filipinos get almost nothing. Ninety-seven per cent of land reform beneficiaries in Negros told a provincial survey they have received zero support.[77] It is hardly surprising that an emblematic image one sees in Negros is the 'reform' family that immediately leased its land back to the landowner and now sits around a karaoke TV set bought with the proceeds of the rental advance. In the absence of any real chance of household farming success, people put their capital into a KTV machine and sing in a shack.
Sticking plasters for state failure
The only occasions on which land reform has worked in the Philippines have been when non-government organisations (NGOs) have stepped into the breach left by the state and provided lending, extension, crop processing and marketing support that household agriculture needs to prosper. Otherwise, families like the Benedictos, who have dominated agricultural workers as feudal estate owners, have continued to do so even where they have theoretically given up title.
Within Esperanza, there is a small group of twenty-one farming families which have obtained NGO support. Needless to say, these farmers are more politicised, better educated and more articulate than the 250 other farming families which do not have NGO support. Lito, the group's leader, came down to the hacienda boundary to guide us past the Benedictos' armed guards to their 20-hectare enclave; along the way we saw a wooden cross erected to the farmer the guards killed when he tried to claim his CLOA land. Sitting under a tree in front of a meeting hut, Lito explains that a PHP1.2 million (USD24,000) rotating credit facility, at 20 per cent interest per annum, is what separates his group from the other independent farmers – 95 per cent of whom, he claims, are mired in insurmountable usurious debt.
The NGO lender, Alter Trade, also provided extension support to help the farmers convert to organic sugar and new crops. They now produce most of their own food and no longer face the prospect of hunger if something goes wrong with the sugar harvest. The sugar itself is sold by the NGO through the Fair Trade movement in Europe and equivalent groups in north-east Asia. Ironically, it is bourgeois consumers made rich in Japan and Korea off the back of proper land reform who are now the most significant buyers of the premium brown mascobado sugar sold by these Filipino farmers.
Since agreeing terms with Alter Trade in 2004, Lito's group has paid all its interest and made enough profit to buy a 20-year-old tractor, a truck and ten bull carts. The group achieves a 25 per cent higher sugar yield than the Benedicto-farmed land and is saving for irrigation equipment that should push its yield – helped by the Philippines' more favourable agronomic conditions – up to or beyond Taiwanese and Chinese output levels.
Not far away, on a hacienda called Isabel, another group supported by Alter Trade does even better. Eighty holders of Certificates of Land Ownership Awards, supporting a total population of 500, farm eighty hectares of sugar and food crops as a collective enterprise. The leaders of that group proudly show off a large, brand new tractor, which cost them PHP1.5 million (USD30,000). They have already bought another, mid-size tractor and a truck from retained earnings. By local standards, they are rich; four-fifths of the group's adolescent children attend secondary school, and some are going on to college.
Like Lito's group, however, this one is thoroughly atypical – mainly because it is politically organised. Some members were political officers and medics in the NPA and so were able to hold together the kind of collective enterprise that does not occur spontaneously in a society of impoverished and cowed agricultural labourers. These farmers fought for and took the things their government failed to provide. They lobbied for and obtained a compulsory land reform order. They are pursuing the hacienda family in court, asking for more land which they say was illegally retained by registering entitlements for seven heirs when the family has only two children. In addition to a working capital facility from AlterTrade, they secured a loan for their new tractor from a Dutch church-based charity. They electrified members' properties with a grant from a sympathetic German supermarket. And, in the winter of 2009–10, they were building a 20-room boarding house for the rich Japanese and Korean consumers who fly down to Bacolod because they want to meet the people who grow their organic brown sugar. In short, they know how to work the NGO system.
The Esperanza and Isabel farmers are a source both of optimism – for what some people and some NGOs can achieve despite the odds – and of pessimism, because the resourcefulness of the collectives and the size of the NGO's input simply bring into focus the extraordinary impotence of the Philippine state. The reality is that most agricultural labourers will never be able to organise themselves as effectively as these groups, while NGOs in Negros are able to support farmers who number in the hundreds, versus an official tally of 120,000 local people the government claims have been 'beneficiaries' of land reform. The NGOs quite sensibly target the farmers they believe are most capable of succeeding, leaving the weakest to fend for themselves.
It is a matter of sticking plasters for the open wound that is Philippine agriculture. Charity can take the edge off, but never substitute for, the state's developmental failure. In north-east Asia, the remarkable growth of agricultural output was the result of the state itself mobilising effectively to redistribute land quickly and fairly and then to provide the credit, extension and sales support necessary to enable and incentivise households to maximise output. There has never been any equivalent focused effort in the Philippines. Instead, the weakest state among the major economies of east Asia has given rise, proportionately, to the largest number of NGOs – an estimated 60,000–100,000. Typically tiny, they scramble around desperately trying to make up for the state's hopelessness.
Inefficient by every measure that counts
Back on the road, heading south-east towards the town of La Castellana, we cross the estates of some more elite Filipino families. Powerful irrigation pumps watering sugar cane mark out land of the Arroyo family of recently defeated Philippine president Gloria Macapagal Arroyo; the family has several Negros estates. Gloria's landowner husband is Mike Arroyo and her brother-in-law is Ignacio 'Iggy' Arroyo, member of congress for the Negros Fifth District, where we are driving. Back in 2001, Gloria promised that the Arroyo land would be placed under land reform; it didn't happen. A tour of rural Negros Occidental takes us past estates that read like a Who's Who of the families which helped bring the country to its knees in the post-independence era: Cojuangco, Benedicto, Arroyo, Cuenca, Lopez… Task Force Mapalad, the biggest of the pro-land reform groups in the Philippines, estimated in 2005 that, after more than fifteen years of the CARL, seventeen families still controlled 78 per cent of all sugar land in Negros Occidental.[78]
Filipino farming remains grotesquely inefficient. Despite the insistence of Negros landlords that sugar growing can only be competitive on plantations of a minimum scale, yields have always been less than in the family-farmed areas of southern Taiwan and China: around 56 tonnes per hectare on average, compared with 85–90 tonnes. Land redistributed under the Comprehensive Agrarian Reform Law in Negros fails to lead to increased yields because the state provides no support for the household farming it claims to be implementing and because landlords undermine the reform process.
A 2007 survey of the province referred to the 'dismal income of agricultural reform beneficiaries and minimal increase in terms of agricultural productivity'; seven in ten agricultural reform beneficiaries in Negros said they were no better off than before reform.[79] Even the Alter Trade-supported groups at haciendas Esperanza and Isabel operate at well below Taiwanese and Chinese yields (although they are, at around 70 tonnes per hectare, a quarter above the average Negros yield). The Alter Trade farmers are still saving for the irrigation systems that in north-east Asia would typically be a part of the state's infrastructural support service. When all they seem to do in rural Negros is ford rivers, it is absurd that most sugar cane is unirrigated. The traveller is constantly reminded that the greatest rural poverty in east Asia is concentrated in the areas of greatest natural abundance.
The mesmerising poverty of the Philippines does not make its agricultural output cheap. The final cost of producing sugar in Negros, inclusive of refining expenses, is US15 cents per pound versus a world market wholesale price (before a spike in the summer of 2009) that has ranged between 10 and 12 US cents per pound in recent years. Negros' twelve sugar mills, known as 'centrals', feature some of the global industry's most outdated equipment; sugar extraction rates in the Philippines were higher fifty years ago. With the Philippines having moved to tariff-free sugar imports in 2010, the outlook for the local industry is not good. Landlords conspire to do relatively well only because they have access to the formal banking system and to the remaining US sugar quota, which guarantees a minimum of 18 US cents per pound. As Michael Billig, historian of the Philippine sugar industry, observes, a planter with sixty hectares will still keep a dozen servants at his house in Bacolod and maintain an apartment in Manila.[80]
The inefficiency of Filipino sugar farming extends to other crops. Average yields of rice and corn – the two biggest crops – are 3.8 tonnes and 2.6 tonnes per hectare respectively; in Taiwan they are 4.8 tonnes and 3.8 tonnes. A survey of total agricultural value-added in various Asian countries in the 1980s, which counted output across both crops and agricultural livestock, produced figures of USD655 per hectare for the Philippines, USD2,500 for China, USD5,000 for Taiwan, USD7,000 for Korea and USD10,000 for Japan. By this point the numbers for the north-east Asian states included considerable subsidies that were being paid to support agricultural prices in already prosperous societies. But the enormous difference between the Philippines and China, which had returned to high-yield household farming at the end of the 1970s, tells a clear story.[81]
Wolf Ladejinsky made several visits to the Philippines, witnessing the reality of early land reform attempts in the countryside, and as ever had wise observations. After a trip in December 1962 he wrote that 'I couldn't forbear from telling Mr Perez [the acting minister of finance] that, as I listened to him, the fundamentally richly endowed Philippines reminded me of the more depressed areas of India.' Ladejinsky noted the same conversations 'in the stately homes of the rich of Manila' that one still hears today – that Filipino farmers are congenitally 'lazy' and hence beyond salvation. He visited the International Rice Research Institute at the 'Nature and Science City' of Los Ba?os, in Laguna, which launched the green revolution in Asia. Ladejinsky observed that high-yield rice seed varieties from Los Ba?os changed the lives of millions in north-east Asia but could do little in the Philippines where the mechanisms to put irrigation, fertiliser, credit and marketing supports in place were absent. With respect to the true character of the Filipino farmer, he concluded: 'A tenant in prevailing Philippine conditions would act as an irrational economic man if he tried to apply to the land practices that make for higher production, knowing full well that a lion's share of this would go to the landlord, moneylender or merchant.' Ladejinsky's observation holds true half a century later.[82]
Sukarno talks the talk
The Philippines is perhaps the most extreme example of land policy dysfunction in south-east Asia. None the less if you proceed, clockwise, around the rest of the region, you will see a pattern of agricultural development elsewhere that is not dissimilar, although it occurs in paler and less pale imitations.
In Indonesia, following independence in 1945, President Sukarno promised increasingly radical agricultural development policies during the 1950s. In 1957, foreign-owned (mostly Dutch) plantations were nationalised. In 1960, a general programme of land reform was announced. However, while the Marxist-influenced Sukarno talked revolution, his personal ignorance of rural issues and the defensive manoeuvrings of the land-owning elite rendered his policies ineffective. The Indonesian land reform legislation and implementing regulations followed the Filipino model.
By 1960, the principal island of Java was already one of the most densely populated parts of Asia, with the average landholding of those fortunate enough to have land at all of under half a hectare, and 60 per cent of the rural population landless.[83] Despite this, Indonesia's minimum retention allowance for landowners was set at five hectares, and could be as high as twenty hectares because of loopholes. A widespread, kulak-type class of richer peasants – known as sikep – was left untouched by land reform. And larger-scale, absentee landlords were given a six-month window in which they could either claim residency on their land or sell it to a resident in order to reduce or avoid expropriation.[84] Implementation of the land reform was rife with anticipatory transfers and very little land changed hands. There were land reform committees, but these were run by the landlords, who unsurprisingly tended to block land redistribution.
Wolf Ladejinsky made three trips to Indonesia in the early 1960s, involving several months of field observation. Describing the land reform programme as over-complex, inefficient and very slow, he estimated that Java was redistributing less than 2 per cent of its cultivable land and Bali perhaps 4 per cent. He wrote to a US government colleague that 'only a miracle can help them to make some sense out of their voluminous, disjointed, contradictory, and altogether too politically, conservatively inspired agrarian reform legislation'.[85]
There was no miracle. Proof of failure was found in yields that did not rise. Despite the extraordinarily rich, volcanic soil of Java, Ladejinsky noted after a long visit in 1963 that rice output per hectare was still one-third that of Japan. The government did orchestrate extension campaigns to raise crop yields, providing fertiliser, improved seeds and funds for infrastructure, but in the absence of land reform these had little impact on yields. Indebted tenants and agricultural labourers were not incentivised to produce more when most of the upside would go to landlords. Moreover landlords and other local elites pilfered a large part of the development funds.
After Suharto became president in 1967, there was a more focused push to increase yields through agricultural extension support, which initially led to more edifying results. Part of the reason was that the Suharto regime introduced minimum price guarantees for rice. None the less, yield gains tailed off in the mid 1970s amid widespread evidence that extension and other funds were again being misappropriated, not least by government marketing co-operatives at village level which, instead of paying the mandated minimum prices to peasants for their crops, pocketed the money.[86]
Indonesia failed to change its landholding pattern, and it also failed to escape from south-east Asia's colonial approach to food policy which had long emphasised the provision of cheap food for consumers rather than higher food prices to incentivise small farmers. The policy made sense to colonial governments whose constituency was plantation and mine operators wanting to keep down labour costs.[87] It was not conducive to rural development in an independent state. Post-independence leaders, however, consistently prioritised their urban populations ahead of their rural ones, a mix of the old colonial bias and the urban bias of the new indigenous elite. As the population rose, low agricultural yields meant that Indonesia was forced to import huge volumes of rice and wheat, draining away foreign exchange for which it had more pressing developmental uses. Rice self-sufficiency was eventually achieved in the mid 1980s, but general food self-sufficiency remained beyond reach.
The story of the nationalised plantations in Indonesia is no happier. Most of the formerly foreign-controlled estates were taken over by state-owned companies and run inefficiently. In the 1960s sugar plantations – which covered the largest area – saw yields fall to half pre-Second World War levels, posting heavy losses.[88] Again, government was guilty of urban bias, determined to keep domestic sugar prices low and to tax the plantations heavily. Under Suharto, a radical shift to smallholder sugar growing was proposed in 1975 as a means to raise yields.[89] However, smallholders were compelled to take up sugar farming, their commercial relationship with the sugar mills was not put on attractive terms, there was no provision of adequate credit and extension services, and sugar continued to be more heavily taxed than other crops. The predictable outcome was that farmers grew sugar against their will at low yields.
Ultimately, Indonesia switched to what Michael Lipton has dubbed one of the 'two great evasions'[90] of developmental land policy – a farmer resettlement programme. (The other one, says Lipton, is when a government focuses purely on tenancy issues without any land redistribution.) As Java's population pushed up to 80 million in the 1970s, the Suharto administration began shipping tens of thousands of families off to new farming areas on less populous islands, in particular Sumatra. By far the most intense period of sponsored migration was between 1979 and 1984, when 1.5 million settlers were paid by the government to move.[91] The policy did not address the fundamental problems of land reform or effective agricultural extension – and the relocation costs to the state were very high – but it did manage temporarily to alleviate pressure in some of Indonesia's poorest areas.
Ironically, for those millions of landless and subsistence farmers who remain on Java, the one thing which often keeps them from starvation is the garden around their dwelling. It is the same for inhabitants of other equatorial countries in Asia, Latin America and the Caribbean. The equatorial climate means that some form of foodstuff can always be in season. Studies in Java show that food output per square metre of domestic gardens is far higher than in paddy fields or other areas that are given over to formal agriculture and are farmed by tenants or day labourers. It turns out that the high yields of north-east Asian agriculture are present in places like Java – but only on the tiniest of scales in the micro-plots cultivated for personal consumption.[92]
The British view of agricultural efficiency
In the colonial era, Indonesia was the most profitable colony for the Dutch. For the British, Malaysia was even more profitable. The reason for this was that Malaysian farming was structured even more heavily in the interests of plantation agriculture, which put profit per hectare for small numbers of third-party investors ahead of output per hectare and food self-sufficiency. By the time of the First World War, about 400,000 hectares of Malaysia had been converted to plantations, a far higher proportion of available land than in Indonesia.[93]
The land belonged in theory to the Malay sultans, but was leased out at the discretion of British 'Residents', or advisers. Better quality land, and land which fronted on to the extensive road network constructed during this time – essential to the marketing of produce – went to plantations. Government infrastructure investments beyond the road network, from irrigation and electrification to agricultural extension services, were also largely targeted at plantations. And colonial banks dealt only with plantations. These considerations amounted to a hefty subsidy to the plantation sector. As Malaysia's leading agricultural historian, Lim Teck Ghee, put it: 'Peasant producers were thought to be inefficient and backward, and so they were relegated to a subsidiary role in the development of the Malay States.'[94] The only investment support given to smallholders encouraged them to grow rice in order to limit the country's food import requirement necessitated by its plantation economy.
The fallacy of the claims about plantation efficiency, however, was unexpectedly exposed in Malaysia in the 1920s, when British officials were forced to conduct yield surveys. The country was then the world's biggest rubber producer. The story began when global rubber prices began to fall precipitously in 1920 as demand waned after the First World War. It was not long before the mostly European owners of supposedly efficient plantations were demanding output controls to shore up prices. Despite the imprecations of the colonial government to focus on rice, Malay smallholders had also piled into rubber growing and accounted for one-third of production. However, they did not join the campaign to restrict output. A committee of inquiry chaired by Sir James Stevenson was appointed by the Secretary of State for the Colonies, Winston Churchill. This committee found in favour of limits on rubber output and, from November 1922, the Stevenson Restriction Scheme came into force in Malaysia and in Sri Lanka, Britain's other main rubber-growing colony. For plantations, the system restricted output based on their historic records. For smallholders, most of whom could not produce formal production records, it limited them on the basis of an arbitrary government estimate of expected smallholder yields. The estimate, at 320 pounds per acre per year, was well below that of plantations, which was typically around 400 pounds.[95]
The announcement of the details of the Stevenson scheme almost caused a peasant rebellion. Violent protests occurred around Malaysia. The reason was that the smallholder yield estimate bore no relation to reality. A new investigation was quickly announced. This revealed, much to the colonial government's embarrassment, that smallholder rubber yields were consis-tently higher than plantation ones. Indeed, the average smallholder yield was more than 50 per cent higher than that of the average plantation, and in some cases several multiples higher. Evidence submitted to the Stevenson committee showed that, on surveyed smallholdings, yields ranged between 600 pounds and 1,200 pounds per acre per year.[96]
The reasons for the higher smallholder yields were the usual 'gardening' ones. Peasants planted their trees more densely – often 200 per acre versus 100 on a plantation – and they tapped them daily, maximising their output at the expense of extra labour. The peasants were also far more resilient than the plantations to the global commodities depression, because they intercropped foodstuffs with their rubber and frequently also had secondary non-farming occupations. Without the overheads of the plantation owners, they were willing and able to take lower prices. Yet they were forced to accept output restrictions in order to stop the plantations going bust.
The Stevenson committee recommended an increase in the smallholding average estimated yield from 320 pounds to 533 pounds, which was still too low but was at least no worse than that of the more efficient plantations. However, both the colonial government and the British government failed to support the proposal and the peasants were allocated an average yield of 426 pounds per acre, of which their allowed production was then a fraction. The Stevenson restriction ran until 1928. A second, international restriction agreement made in 1934 was also biased against smallholder interests.
A British government-commissioned report published after the Second World War estimated the loss to Malaysian smallholder rubber growers from the two schemes had been GBP40 million, or around GBP2.1 billion at today's prices – equivalent to two years of rubber output for the whole of Malaysia. The report's author, P.T Bauer, condemned the bias of the restriction schemes against smallholders as 'a clear breach of certain definite moral obligations'.[97] The farmers received no compensation.
The rubber market in colonial Malaysia was a simple case of a market being rigged in such a way that higher-yield family farmers subsidised lower-yield big business. Under the Stevenson scheme, the colonial government even put plantation operators in charge of assessing the size of smallholder plots, leading to many more complaints that the sizes as well as the yields of the household farms were being systematically under-assessed. There was no way that the government was going to be convinced by mere sampling evidence that smallholders were substantially more productive than large plantations which had general managers and London stock listings. Yet, despite all the state assistance given to the plantation sector before and during the depression, this was incontrovertibly the case.
A further example of smallholder efficiency became apparent in the 1920s and 1930s in tin mining areas. As thousands of ethnic Chinese miners were laid off during the depression, large numbers of them turned for survival to market gardening. Food commanded a good price in Malaysia because so much of it was imported, and government noticed that family plots were beginning to supply a high proportion of urban food requirements. Restrictions on the growing of crops on mining land were suspended to further encourage the practice.[98] But there was no rethinking of basic agricultural policy, which continued to favour plantation profit over output maximisation and Malaysian development.
The British view becomes the Malaysian view
The end of the Second World War and Malaysian independence in 1957 augured no significant change in land policy. Unlike the Philippines and Indonesia, Malaysia did not even attempt land reform, although the spirit of the times required some greater sensibility to peasant interests. Legislation passed in 1955 and 1967 was supposed to increase tenant security and ban tenant cash deposits known as 'tea money', but the laws were weak and enforcement was left up to individual states, largely run by landed elites. Subsidies were introduced for agricultural essentials such as fertiliser, but again their distribution favoured large farms over small. A government fund to support rubber replanting was established, but the contributions it required from its recipients were often reckoned to exceed the value of the support offered.[99] As in Indonesia, government fell back on expensive resettlement schemes, run by institutions like the Federal Land Development Agency (FELDA). Many of the European-owned plantations were bought out during the 1970s using petrodollars but were run no more, and often less, efficiently by Malaysian state companies.
In the post-independence era land concentration in Malaysia increased and, as a corollary, tenancy and landlessness increased. As ever, tenancy and landlessness were associated with poverty and indebtedness and, frequently, falling yields.[100] One exasperated observer stated in the mid 1970s: 'Despite some inadequate and half-hearted legislation, tenancy and share-cropping, with all the attending insecurity, exists substantially and the concentration of smallholdings in the hands of speculators, investors, and money-lenders is spreading.'[101]
From 1981, the Mahathir administration brought some relief to rice cultivators by guaranteeing minimum prices. However, most poverty reduction in rural areas in Malaysia since the 1980s has been achieved not by increasing smallholder farming incomes, but instead by farmers finding non-agricultural work related to the export processing economy. Malaysia is not, it should be stressed, a country that faces a shortage of agricultural land. Most local agronomists say there are still several hundred thousand hectares that could be opened up to agriculture, while in periods of recession like the early 1980s thousands of hectares of existing agricultural land have lain idle. Instead, Malaysia is a country that has found a sub-optimal structure for its agricultural economy despite a surfeit of land. This is another reminder that, in order to thrive, smallholders require not only their fields, but also the extension, marketing and credit infrastructure that allows them to compete.[102]
For anyone who missed the point, Thailand puts on a show
The agricultural economist Ronald Herring noted that the most common defence for doing the minimum possible to enforce land redistribution – as has been the case throughout south-east Asia – is that one must be realistic about the difficulty of doing more. The counter to this argument, Herring pointed out, is that 'the political realists seem to assume, rather curiously, that it is politically realistic to leave the status quo in place'.[103]
In south-east Asia, the agricultural status quo has proven to have very high costs. In the Philippines, the state has repeatedly been confronted by peasant-based revolutionary and terrorist groups. In Indonesia in the 1960s, Suharto suppressed a rural-based communist movement with the loss of hundreds of thousands of lives. In Malaysia, the British fought a ruthless campaign in the countryside to suppress a communist insurgency in the late 1940s and early 1950s. And in Thailand, land policy failure is contributing to a state of near civil war even as this book is being written.
In May 2010, the Thai military killed scores of 'Red Shirt' anti-government protesters, whose base is Thailand's impoverished north-east, in street battles in Bangkok. The confrontation came only a few years after a renewed insurgency in the poorest areas of southern Thailand was brutally put down. In the last decade, Thailand has witnessed the worst rural-driven violence since the military fought a long campaign against guerrillas of the Communist Party of Thailand in the north and north-east of the country in the late 1960s and 1970s. As in the past, at the root of the latest violence is a cyclical upsurge in rural poverty – this time associated with the post-boom era after the Asian financial crisis.
The agricultural history of Thailand – which, unlike other south-east Asian states, remained nominally independent in the colonial era – can crudely be divided into two geographically defined parts. The first is the rice-dominated economy of the coastal areas and central plain. Like Malaysia, the Philippines prior to the 1950s and Java in the nineteenth century, Thailand has for most of its modern history been land-abundant. With the spread of colonial mining and cash crop agriculture in other parts of the region in the nineteenth century, the driver for Thai agriculture was a regional demand for rice exports to colonies that were concentrating on growing commodities like rubber and sugar. The Thai plain was drained to create ever more rice paddy. The central government built key drainage canals, but did little more. Land around Bangkok tended to be accumulated into large estates by allies of the royal family, but most of the land further afield was farmed by smallholders who cleared it themselves. Yields were low, but the abundance of land relative to population made this unimportant. For a long time, it was more fruitful for farmers to farm a larger area through broadcast sowing than by careful transplanting of seedlings. By the 1930s, Thailand was exporting 1.5 million tons of rice a year, despite yields of only about 1,200 kilogrammes per hectare – one-fifth of post-land reform north-east Asian yields.[104]
At the Thai court (the country was an absolute monarchy until 1932), the myth grew up of a happy, loyal peasantry tending rice in the provinces. When a minister of finance wrote Thailand's first formal treatise on economics in 1906–7, and had the temerity to argue that credit and other support were necessary for smallholders who were struggling, King Vajiravudh was outraged. 'I am able to attest,' he pronounced, 'that no other country has fewer poor or needy people than Siam.' Both the finance minister's work and the study of economics were banned.[105]
In reality, there was already rising tenancy, landlessness and indebtedness in the lead-up to the Second World War. However, since most land outside the Bangkok area could not be officially taken by creditors because of the absence of formal title, and because peasants could simply disappear and find new land, there were some limits to rural suffering.
After the Second World War, as the population growth rate rose to 3 per cent a year and tenancy, landlessness and wage-based labour increased further, there was a big jump in income inequality in rural areas. The government increased expenditure on rural infrastructure, but its overall policy remained heavily urban-biased. The proof of this was the setting-up of a monopoly state buyer of rice for export, or a monopsony, which pushed down domestic rice prices received by farmers, creating instead trading profits for government that in some years amounted to one-third of total state income. At the same time, the government charged so heavily for imported fertiliser that the cost, expressed in terms of kilos of rice equivalent, was five times what it was for contemporary Japanese farmers.[106]
The exactions on the rice economy were gradually reduced during the 1960s and 1970s as Thailand's rural insurgency expanded. But there were already tenancy rates of 30–50 per cent among rice farmers. The independent smallholder ceased to be the basis of the rice economy, throttled by population growth and state policy. State-organised credit was available from the 1960s, but it went to mid-and large-scale farmers with formal titles and to agribusiness. A Land Reform Act of 1975 led to almost no land redistribution.[107] Thailand's two best-known economic historians, Pasuk Phongpaichit and Chris Baker, conclude: 'Beyond the basic drainage works, the government provided no support for development of the rice economy. With very basic technology and virtually no access to capital, the frontier evolved the most low-tech, low-intensity, and low-yield paddy regime in Asia.'[108]
The even less good bit
This is the first part of the Thai story. The second concerns the push into the less fertile regions of north and, especially, north-east Thailand (the area which borders Laos and Cambodia) after the Second World War.[109] As has already been mentioned, the government's state bank financing favoured large-scale agribusiness, but this became particularly the case in the north-east as the area was opened up at breakneck speed from the 1960s.
In the Philippines, Indonesia and Malaysia, the post-independence governments had inherited plantations and scale agriculture from their colonisers. In Thailand, it was a state that had not been formally colonised that created and nurtured this sector. It did so both by backing domestic agribusiness firms like Charoen Pokphand (now known as CP Group), and by welcoming foreign direct investment from companies like America's Dole.[110]
The creation from scratch of domestic agribusiness firms may have generated greater agricultural and industrial learning for large companies in Thailand than was the case with the takeovers of originally foreign--dominated plantation sectors in former colonies.[111] However, the support for agribusiness, as elsewhere, was very much at the expense of the smallholder sector. Individual Thai farmers tended to clear land in the north (following in the trail of loggers) and farm it, but they were heavily dependent on agribusiness for inputs and sales. And without formal title to their plots they had no access to bank credit.
It was not long before individual farmers were working as captive suppliers to state-bank-supported agribusinesses, which built sugar mills, cassava yards, animal feed mills and pineapple canneries, and other infrastructure necessary for industrial agriculture. CP Group developed a huge business supplying new-born chicks to peasant farmers who then raised them and sold chickens back to CP, which was a near-monopsonistic buyer. With little state investment in irrigation or other supports for smallholders, an impoverished rural economy developed in which many farmers worked at rain-fed agriculture for part of the year and then spent the off-season migrating in search of casual labour. By the 1980s, the north-east contained half of Thailand's poor.[112]
As in Malaysia and Indonesia, what kept the lid on the rural situation in the 1980s and 1990s was the rise of the labour-intensive export processing economy serving foreign multinationals which provided more and more off-farm employment. The agricultural situation was dire, but it was masked. Hundreds of thousands of young, rural Thais migrated from ban to muang – from village to city, from the north-east to Bangkok. They even created their own highly popular country music genre, phleng luk thung, singing lonesome tunes about the hardships of migrant life; a survey of popular titles in the late 1980s noted that one-fifth dealt with prostitution. On the eve of the Asian financial crisis, government income surveys showed that more than four-fifths of agricultural household income in the north-east was coming not from farming but from wages and remittances. This said as much about the failure of Thai land policy as it did about the growth of the export processing economy.[113]
Then came the Asian crisis, factory lay-offs, and spiralling rural poverty. It was in these conditions that a high-born urban tycoon, Thaksin Shinawatra, mobilised rural voters in the north-east behind a new political party, Thai Rak Thai. The resonance of his electoral strategy based on rural discontent was such that Thaksin was catapulted to the premiership in 2001. However, his ascent split the Bangkok military and civilian elite and threatened a national political breakdown. Thaksin was eventually chased into exile by the military in 2006 ending a brief – and rather -disingenuous – attempt to give greater recognition to the rural masses. Thai Rak Thai threw the villages a bit of money; but it never promoted any radical change to land policy.[114]
A chasm-like division between Bangkok and the countryside, and an extreme urban bias in policymaking, have been a constant in Thailand. In the 1970s the agricultural economist Zahir Ahmed described the political view from the capital as follows:
Here are all the trappings of modern civilisation – night clubs, bars, mini-skirted girls, long-haired boys, narcotics, prostitution and perversion… The villages where more than 75 percent of the people live, remain poor, congested and insanitary and the people there toil from day to day in a merciless, lifelong grind… Here is a society of men with no social vision, living on the toil of the peasant, and striving to hold on to power.[115]
Almost nothing has changed. Today, Thailand, and south-east Asia generally, are still farmed by 'peasants', and still exist in a condition of political instability because of rural poverty. By not squarely confronting the agricultural aspects of development, the region's governments have consigned the bulk of their populations to economically fruitless lives and made industrialisation much more difficult. The vastly greater output that would be possible under properly supported household farming has been foregone. Rural populations which could have provided the basis of demand for manufactures and a source of industrial entrepreneurship are instead a dead weight. There has been a straightforward failure of developmental policy.
No good policy lasts for ever
North-east Asia, unlike south-east Asia, no longer has 'peasants'. In Japan, Korea, Taiwan (and, from 1978, China), land reform – backed by the necessary institutional support – unleashed unprecedented agricultural growth, created markets and unlocked very considerable social mobility. However, this does not mean these states managed their agricultural development to perfection. Even the best policy is only a solution to the developmental challenges of a particular moment in time. As the economic environment unfolds, good policies that remain unchanged eventually turn into bad ones.
In agriculture, the initial developmental challenge is to maximise yields and output by utilising all the labour in an economy. Gardening-style cultivation achieves this. However, as industry takes off and rural dwellers begin to move into better-paid industrial and service jobs, farming needs to rebalance towards a greater emphasis on productivity and profit. Gradually, this requires a shift towards larger, more mechanised farms, allowing the incomes of the remaining farmers to rise beyond what is permitted by the cultivation of equalised small plots. There is no reason for tenancy to reappear if surplus farm labour is employed in industry and services, and credit and marketing institutions for family farming remain in place. In the land-abundant United States, average farm size has increased in line with gross domestic product growth from around fifty hectares in the late nineteenth century to nearly 200 hectares today. Yet, three-quarters of farm labour continues to come from families. American farmers steadily used more and bigger machines on expanding farms, accepting lower potential yields per hectare in return for higher profits per farmer.[116]
As a country develops, like its industry its agriculture needs to specialise by activity. Most states do not have high natural resource to population endowments such that farming can remain a large part of their economies, as in the anomalous cases of New Zealand or Denmark. They will have greater competitive strengths in manufacturing or services. But states with good policies will find globally competitive niches that allow farmer incomes to continue to rise as labour leaves the countryside This involves a move away from agricultural protection and guaranteed minimum farm prices. From a global development perspective, reduced protection in already-developed countries also gives other poor countries in turn the opportunity, in turn, to export their agricultural surplus in the period when their labour is cheapest; it keeps the developmental drawbridge down.
Unfortunately, in north-east Asia, governments in Japan, Korea and, to a lesser extent, Taiwan failed to make the transition to larger farms, greater specialisation and reduced protectionism. They gradually eased legal restrictions on the leasing and sale of agricultural land to allow consolidation of farms. But they then undermined incentives to consolidate and specialise by paying increasing, world-beating subsidies to farmers. The main reason for this was that family farms in north-east Asia substituted for welfare systems. Moreover, once they could afford to, governments wanted to show their fiscal appreciation for agricultural sectors that had primed economic take-off. The household farming country in east Asia that largely gave up subsidies and kept farms small – China – has seen urban incomes rise to more than three times rural ones. This level of inequality was never acceptable to governments in Japan, Korea and Taiwan. However, the determination to maintain parity between urban and rural incomes substituted an extreme form of welfare policy for economic development policy.
In Japan, whose industrial boom kicked in at the start of the 1950s, agricultural incomes had begun to decline relative to urban ones by the middle of the decade. The government started immediately to use a crop purchasing system set up during the Second World War to pay farmers above-market prices for part of their output. The core focus of price support was – as has been the case throughout north-east Asia – rice. The price the government paid for rice doubled in the 1960s and doubled again in the 1970s. A combination of rising subsidies, an effective ban on agricultural imports and plentiful off-farm employment opportunities meant that by the mid 1970s the average rural family was earning more than the average urban one – a situation unthinkable in other developing countries.[117] The result was that, instead of scaling up, fewer and older members of farm families cultivated unchanged plots using small-scale machinery. The average age of farmers across north-east Asia has been over fifty years since 1990; in essence, the first land reform generation stayed put on their small plots while their children left for the cities.
A rare rural diary kept by a farmer in Niigata prefecture, near to the former Ito family estate, gives a sense of the transition from poverty to abundance to state indulgence. Nishiyama Kōichi, the diarist, was born into a family of impoverished and indebted tenants in 1902. He grew up in the depression pursuing one failed sideline activity after another – each financed with borrowed money – in his struggle with destitution. At the end of the Second World War, Nishiyama became a farmer representative on his area's land committee during land reform. Following land redistribution, his diary relates how emancipated farmers co-operated on paddy and irrigation improvements, drained marshes and started a collective rice research group. Yields and output shot up. Nishiyama became the archetypal land reform success story. Then, in the 1960s, subsidy payments started to become substantial. The first local farmland was re-zoned for housing development and villagers enjoyed a windfall from the sale of a communal plot to a local politician. Thereafter, Nishiyama's diary entries are less concerned with farming issues and more with the outlook for further commercial re-zoning. With money to pay for all sorts of fancy tools, and land values soaring, Nishiyama was able to retire, leaving his eldest son in charge of family affairs. The son, however, was barely interested in farming. He began to play the stock market and, by 1987, lost JPY300 million (just over USD2 million in today's money[118]), borrowed against the hugely inflated value of Nishiyama's land. The family turned in one generation from impoverished tenant peasantry to super-intensive, frugal household farmers to subsidised – and bankrupted – stock market day traders.[119]
South Korea moved to increasing subsidy and protection of domestic agriculture in the 1970s and 1980s. The government bought larger and larger quantities of rice at above-market prices, which it then sold on to consumers at a discount of up to 50 per cent. A state monopoly on fertiliser supply, which early in the country's development was used to squeeze money out of farmers by charging them above-world-market rates, was redeployed to further subsidise input costs by providing fertiliser cheap. The government acquired a large 'rice mountain' because farmers were encouraged to grow more rice than people wanted to eat and almost every crop benefited from import protection. Of the 547 standard product categories which faced quantitative import restrictions in Korea by the late 1980s, all but a few dozen were agricultural products.[120]
Taiwan's farmers were both the most successful and the least protected in the region. During the island's early agricultural boom, farm exports were almost 60 per cent of the value of all exports in the mid 1960s. The proportion dropped quickly to less than 20 per cent in 1975, as rural and urban industrialisation took off and, in line with this shift, rural incomes fell from near-parity with urban ones to a level one-quarter below urban ones.[121] As in Korea, from the 1970s government adjusted the selling prices of a state fertiliser monopoly to stop squeezing and start subsidising farmers. It also began to buy part of the rice harvest at high prices. Similar supports were put in place for sugar farmers. However, protection was relatively less than in Japan and Korea, and Taiwanese farmers were therefore forced to diversify more and to develop more internationally competitive products. They became, for instance, important regional exporters of pork products.
Everywhere in north-east Asia, agricultural subsidies were paid for by consumers through higher prices and higher taxes. Even after reductions in recent years, the share of farm incomes in Japan and Korea accounted for by subsidies is one-half. This compares with one-quarter in Taiwan, one-fifth in Europe and one-tenth in the United States.[122] The annual direct agricultural subsidy expenditures of the Japanese and Korean governments are well over 1 per cent of GDP – even though in Japan agriculture now accounts for less than 1 per cent of GDP. And there are many indirect costs associated with protecting tiny farms beyond their developmental due date. For the consumer, food prices in Japan are 60 per cent higher than world market prices, and the price of rice is a multiple of the world price. A sense of the extremity of the situation is given by the fact that a single apple in Japan can cost USD5. On my trip from Tokyo to Niigata, I bought apples in convenience stores in Tokyo and Chichibu for USD4 and USD3 respectively, although I balked at paying USD10 for ten strawberries.[123] You know that something is wrong when a few strawberries cost what Japan's lowest-paid temporary workers now make in an hour.
The ossification of agricultural policy presaged many other challenges in the outperforming east Asian states. In general, it pointed to a distinctly limited political capacity to cope with the dynamic nature of economic development. The fact that governments were able to institute land reform and its necessary supporting infrastructure as their strategy for take-off did not mean they were natural experts in the subsequent stages of the development process. They discovered – as have the fast-growth emerging economies of Europe since the Second World War – that knowing how to regulate and how to deregulate are two different things. And while the difficulty of the first is such that few states even get into the ballpark of successful developing countries, the difficulty of the second is no less great.
Credit where due
Despite the recent farm policy woes of north-east Asia, nothing can detract from the impact that the initial household land reform had on rural, and in turn industrial, economies. Household farming produced two enormously beneficial effects that could not have been achieved through other policies. The first was the fullest possible use of labour in rural economies in order to maximise output. As Michael Lipton put it: 'In early development, with labour plentiful and the ability to save scarce, small farming is especially promising, because it is the part of the economy in which a given amount of scarce investible resources will be supported by the most human effort.'[124] Increased agricultural production then translated into rural purchasing power to buy early manufactures. Land reform created a kind of 'consumption shock' as waves of spending power for basic, domestically manufactured consumer goods spread through the economy. Increased farm output also helped countries to pay for the imported technology they needed to industrialise.
The second effect of land reform was separate from the output and consumption shock effect, but combined with it to produce yet more economic virtue. It was the creation of a high level of social mobility as the result of an equal initial distribution of society's most basic non-human asset – land. People not only competed on equal terms but they could realistically believe that they had a chance of success. They did. It is emblematic that in South Korea two key historical figures who appear in the next chapter, President Park Chung Hee and Hyundai founder Chung Ju Yung, were both the sons of farmers; and that a third key character who led the struggle for democracy and institutional development, Kim Dae Jung, was also a farmer's son. In Taiwan, the best-known industrialist, Wang Yung-ching of the Formosa Plastics Group, was a farmer's son, as were many of his entrepreneurial peers. Chen Shui-bian, a leader of the pro-democracy movement who in 2000 became the first non-Nationalist Party president, was a peasant's son. In mainland China, the pioneering entrepreneurs of the 1980s were overwhelmingly from farming backgrounds.[125] This type of social mobility in business and political life is almost unheard of in south-east Asia, where elites still rule the roost from one generation to the next. A major reason is that fairness in land distribution has never been established there and therefore has never led to societies of broadly based opportunity. In terms of social mobility, south-east Asian states are much more like Latin American ones, where land reform has also failed.
In the wake of the Second World War, progressive politicians in north-east Asia, and outsiders like Wolf Ladejinsky, recognised the capacity of land reform to deliver simultaneously on both the economic and political fronts. Land redistribution primed the most impressive economic development performances the world has seen and undercut the attractions of militant communism and other insurgencies. Yet despite being both pro-market and pro-democratic, the land reform case was never taken up with any conviction by the political elite of the world's pre-eminent power, the United States. After Taiwan in the early 1950s, the US never again pushed comprehensive land reform in Asia – excepting the far-too-late programme announced in South Vietnam in 1969, when Washington was already looking to cut and run. South Vietnamese land reform echoed the superficial US intervention in China in 1948. Elsewhere in south-east Asia, America went with the status quo, even though the status quo has meant terrorism and insurgency in each of the major south-east Asian states, and those states remain today as much problems as allies to US foreign policy and national interest. Land reform continues to be dismissed as too difficult, even though land inequality and agricultural dysfunction are at the heart of the world's most dangerous societies. Pakistan is perhaps the outstanding case in point.
In the US domestic politics of the 1950s, the pro-market ideas of Ladejinsky and his ilk were represented by the country's insular right-wing politicians as socialism by the back door. After the victory of the Republican Dwight D. Eisenhower in November 1952, the political atmosphere in Washington swung decisively against those supporting forced land redistribution. Joe McCarthy's 'anti-communist' cabal had been growing in strength since 1950 and Eisenhower's election lent it support. In November 1954, Ladejinsky was turned down for a routine job reassignment at the Department of Agriculture on 'security' grounds. The reasons cited for this by the Secretary of Agriculture, Ezra Taft Benson, were that Ladejinsky had three sisters in the Soviet Union (making him, it was argued, a potential subject of coercion), that he had visited there in 1939, and that he had worked briefly as a translator for the American office of a Soviet trading firm after he first arrived in the US. Benson also made clear to journalists that he did not like the idea of land reform, though he conceded that he understood little of the details of its implementation in north-east Asia.[126] Ladejinsky refused to resign and was fired, although he was defended by some more thoughtful Republicans, who stood up for him against Benson and Eisenhower. For instance, Walter Judd, a Republican congressman, described Ladejinsky's work as 'about the only successful anti-communist step we have taken in Asia'.[127] Ladejinsky went on to take up a job resettling refugees in south Vietnam, and later to positions at the Ford Foundation and the World Bank. He died in 1975.
Poor excuses
Two main excuses are used by those countries in south-east Asia which have failed to institute effective land reform. Neither bears close scrutiny. The first is that the cash crops grown in south-east Asia are unsuited to household production. The plantation managers who reflexively offer up this excuse are usually unaware of the success of household sugar and banana farming during Taiwan's early development, of household sugar cultivation in China today, or indeed of any other hard evidence. The colonial history of smallholder rubber production in Malaysia has also been conveniently forgotten. There, and in Indonesia, the producers of south-east Asia's most important contemporary cash crop – palm oil – insist that it can only be grown effectively on plantations. Yet the large farms' perennial complaints about the price of labour suggest that this might be another crop suitable for household cultivation given the right supporting infrastructure for processing and marketing. Palm oil yields are highly sensitive to labour input. The fruits in oil palm bunches ripen unevenly and have to be surgically cut out at least every ten days to avoid rotting and pest infestation. Engineers have never been able to mechanise the task and the work can only be done by hand. There is no reason why plantation agriculture should have a natural yield advantage over household farms; yields on Malaysian and Indonesian plantations have barely increased in the past two decades. Malaysia's plantations now require imported cheap labour to turn a profit – just like the indentured 'Indian rubber man' who became essential to the profitability of colonial rubber plantations.[128]
Almost anything – and perhaps everything – that grows is able to benefit from increased human attention. This is why there is so much evidence from so many countries that farm yields per hectare are in inverse proportion to farm size.[129] It has been too easy for too long for plantation operators to argue that the case for their crops is otherwise, because most people know little about the agronomy of the crops they grow. However, the basic arguments about why home gardening produces high yields are also applicable to cash crops. Plant exceptionalism, like human exceptionalism, is pronounced more often than it occurs. The economies of scale that exist in agriculture in south-east Asia are not in cultivation, but in processing and marketing, which means that household farming is no less viable there than in north-east Asia.
The second south-east Asian excuse is the political one that successful land reform in north-east Asia was the unrepeatable product of historical circumstances, and of the intervention of the United States. Superficially, this looks to be a more credible argument. Land reform was indeed instituted in Japan, South Korea and Taiwan in the context of military defeat in the Second World War, and against landed interests which were closely identified with defeated forces (in Korea and Taiwan, as in mainland China, landlords had co-operated closely with the Japanese). The United States pressed land reform on the north-east Asian states to varying degrees, and supported its implementation with considerable financial and technical aid. None the less, in Japan and South Korea, and to a lesser extent in Taiwan, domestic politicians also played a significant role in pushing through land reform legislation and its implementation. Ladejinsky wrote that in Japan the socialist Minister of Agriculture, Hiroo Wada, was the single most important person in ensuring that land reform happened.[130] In South Korea, a left-leaning Minister of Agriculture, Cho Pong-am, organised the drafting of the first land reform law in November 1948 and confronted the anti-reform president Syngman Rhee so aggressively it cost him his life; he was denounced as a North Korean spy and executed.[131] On the question of US aid, it should be noted that large amounts of financial support were also given to the Philippines and Thailand, and to Indonesia after Sukarno's fall, but that the governments of those countries chose to spend little of it on rural development.
The political excuse for inaction on land reform is subtle and pernicious. It suggests countries cannot control their own developmental destinies. However, while it may be difficult – and far more land reform attempts around the world have failed than have succeeded – they can. Meiji Japan instituted a first land reform without any external political direction or funding. In India, the state governments of Kerala and West Bengal pushed through land reforms in the 1960s and 1970s despite the rest of the nation's failure to do so. Developing countries are not just little ships blown about on the developmental ocean by the winds of rich states. In agriculture they have a greater capacity to chart their own course than in any other sector of the economy because land policy is entirely a domestic affair. In this respect, land policy is the acid test of the government of a poor country. It measures the extent to which leaders are in touch with the bulk of their population – farmers – and the extent to which they are willing to shake up society to produce positive developmental outcomes. In short, land policy tells you how much the leaders know and care about their populations. On both counts, north-east Asian leaders scored far better than south-east Asian ones, and this goes a long way to explaining why their countries are richer.
The only real defence for south-east Asia is that the influence of European and American colonialism made it harder for politicians there to see what kind of policies they needed. It is incontrovertible that colonialism did a lot of damage to south-east Asia. However it did not guarantee countries' inability to make good development choices. The heart of the problem was that elites in south-east Asia were sufficiently co-opted by colonial rulers (before and after independence) that they lost their -ability – or perhaps their desire – to think clearly about national economic development. In Korea and Taiwan, anger at Japanese colonialism and humiliation from the communist victory in mainland China made leaders think more clearly about how to raise their nations up. The only really angry leaders that south-east Asian states produced were Sukarno, who was utterly dissolute, and Mahathir Mohamad, who knew too little economic history to make informed policy choices for his country.
It is now time to move forward, but without ever forgetting the profound importance of agriculture to rapid economic transformation. The sector that employs the vast majority of the population of a poor country cannot be underestimated.