Introduction

Agrarian reform is recognized as a prerequisite for growth with equity in developing countries as evidenced in Japan, Republic of Korea, Taipei,China, and People's Republic of China, which have successfully implemented this reform (Morales, 1999). The redistribution of land helps reduce poverty by granting full ownership and control to the farmer-beneficiaries and providing the necessary support services and infrastructure to make the land productive, while laying the foundation for broad-based development. Through successful implementation of land reform programs, these countries have achieved sustained economic growth and successfully reduced absolute material poverty among their populace.

Rural poverty is a serious problem in the Philippines, and the Agrarian Reform Communities (ARC) are among the most disadvantaged population groups. Baseline studies conducted in 1997 by the University of the Philippines Los Baños determined that more than 70% of agrarian household members lived below the poverty line. In US equivalents, the average agrarian household annual income was US$792.72 compared with the national poverty threshold of US$1378.36. Recognizing that poverty is most prevalent among landless farm workers and sharecroppers, the government's dominant way of addressing poverty has been to transfer ownership and control of land assets to such agricultural reform beneficiaries. An integral component of land distribution is the provision of rural infrastructure and support services to complement agricultural productivity and enhance welfare of impoverished farm workers and sharecroppers.

Jointly funded by the Asian Development Bank (ADB) and the Government of the Philippines and commenced under the umbrella of the government's ARC development strategy, the Agrarian Reform Community Project (ARCP), begun in 2000, aims to alleviate poverty through the provision of rural infrastructure and other support services. The investment project was a loan of about US$72.6 million, 72% of which is allocated for rural infrastructure. The project also enhances community participation in the transition from subsistence to commercial farming.

This paper attempts to determine the impacts of the ARCP, in particular the rural infrastructure, on ARC households after two years of implementation. The paper also evaluates how project benefits are distributed among different population groups.

A. Poverty in the Philippines

Thirty percent of the 2003 population lived below the poverty line; this translates to 3.96 million families living below the poverty line.¹ A majority of the poor are in Mindanao, where more than 40% of families have difficulty providing for everyday needs. According to De Dios (1993), the incidence of poverty is highest among landless farm workers, then coconut and maize farmers, fishermen, rice farmers, and, lastly, orchard growers. Table 1 [ PDF 34.2KB | 1 page ] shows that while overall poverty has declined in the country since 1985, the decline is more in urban than in rural areas.

B. The Agrarian Reform Community Project and Its Interventions

With the aim of reducing poverty among the most disadvantaged communities in the Philippines, the government has launched a number of projects. The ARCP is one such project design based on the ARC development strategy and the overarching goal of poverty reduction of the ADB (ADB, 1999).

Previously, agrarian reform in the Philippines failed since land distribution was not complemented by support services and infrastructure development. Under the present ARCP, many beneficiaries have already received land titles. ARCs, however, remain without much-needed infrastructure, e.g., farm-to-market roads, potable water, communal irrigation, and supported services.

The ARCP is aiming to reduce the poverty of around 200,000 people in 140 ARCs in 35 provinces with specific emphasis in Mindanao (50% of total investment) and Visayas (21.5%), where the incidence of poverty is remarkably high (Figure 1 [ PDF 221.3KB | 1 page ]). The ARCP aims to reduce poverty by providing infrastructure and by developing support services for agricultural enterprises and a capability-building program for Department of Agrarian Reform (DAR) staff, local government units, and ARC organizations (ADB, 1998).

In 2000, the project began with the provision of rural infrastructure as its largest component. The project's three major development interventions include:

1. Rehabilitation/construction of approximately 1,500 km of farm-to-market roads (FMR) including bridges, the majority of which are barangay roads connecting production areas in the ARCs to major market centers;
2. Rehabilitation/construction of approximately 6,500 hectares of communal irrigation systems to augment productivity and land quality by increasing cropping intensity; and
3. Development of about 900 potable water supply (PWS) systems to cut morbidity rates in half and decrease the time it takes to obtain water, benefiting a total of 37,600 households (225,600 persons).
4. Community Strengthening and Introduction of Income Earning Activities to support community organizations such as cooperatives and to introduce income earning activities such as production of high-value crops.

Table 2 [ PDF 27.7KB | 1 page ] provides information of project progress for the time when the study took place.

C. Data Background

In 2001, a baseline survey collected information on 13,000 rural agrarian households in the ARCP area. A survey revisited 2,290 households in 2003. A subset of households with data for both 2001 and 2003 was extracted for this study. Forty percent of the sample is from Mindanao and the Autonomous Region of Muslim Mindanao (ARMM), while 30% each came from Luzon and Visayas. Table 3 [ PDF 27.7KB | 1 page ] shows the geographical distribution of respondents.

D. Methodology

To assess project impacts on households in the project area, the study examines the changes in key household characteristics before and after project interventions, using simple statistical analysis. It then assesses the probability of a household moving into a non-poor category in 2003, given its attributes in 2001, in order to identify key characteristics which affect the move.

The Empirical Model

Using a binary response model (a logit model) a household is classified as poor or non-poor in 2003. The logit model takes the following form:

The dependent variable Y_i denotes household income and enters the equation through p_i such that Pr(Y_i = 1) . The independent variable, x_i, pertains to household characteristics such as age and education of household head, the household's production system, its asset ownership, and transportation access.

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