COMMUNITY MECHANISMS

IN HAYAMI’S VILLAGE

Jonna P. Estudilloa

Yasuyuki Sawadab

Kei Kajisac

Nobuhiko Fuwad

Masao Kikuchie aCorresponding author: Foundation for Advanced Studies on International Development, 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan, phone +81-3-5413-6038, fax +81-3-5413-0016, email: jonna@grips.ac.jp.

bFaculty of Economics, The University of Tokyo, 3-1, Hongo 7-chome, Bunkyo-ku, Tokyo, 113-0033, Japan; phone: +81-3-5841-5530; fax: +81-3-5841-5521; email: sawada@e.u-tokyo.ac.jp

cSocial Sciences Division, International Rice Research Institute, Los Banos, Laguna, Philippines, and Foundation for Advanced Studies on International Development, 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan; phone +63-2-580-5600; fax +63-2-580-5699; email:k.kajisa@cgiar.org

dAgricultural Economics, Chiba University, 648 Matsudo, Matsudo City, Chiba. 271-8510 Japan, and Southeast Asian Regional Center for Graduate Study and Research in Agriculture, Los Baños, Laguna, Philippines; phone and fax: +81-47-308-8932; email: nfuwa@faculty.chiba-u.jp

eGraduate School of Horticulture, Faculty of Horticulture, Chiba University, 648 Matsudo, Matsudo City, Chiba 271-8510, Japan, phone and fax +81-47-308-8926 ; email: m.kikuchi@faculty.chiba-u.jp

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ABSTRACT

This chapter reviews the literature on the roles of rural communities in irrigation

management, land and labor relations, risks coping, social capital, and development of

rural nonfarm sector. As an example of a typical rural community, we explore the

community mechanisms on economic transactions in the so-called Hayami’s village in

the Philippines. The major finding is that rural communities are far from static but

respond dynamically to changes in technology, resource endowments, and market

conditions that lead to an allocation of resources that is consistent with both efficiency

and equity.

JEL Classification number: O13, O15, O53, Q15 Key words: community mechanisms, common property, land tenure relations, labor relations, rural industry, social capital, risk coping Acknowledgments: The authors benefited greatly from the comments given by Elisabeth Sadoulet, Keijiro Otsuka, and other participants in Hayami’s Festschrift Workshop held in Tokyo on February 27-28, 2009. Vivencio Marciano, Ester Marciano, and Jan Irish Villegas provided excellent research assistance. The usual caveat applies.

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I. INTRODUCTION

One of the most important areas of inquiries in development economics is the choice of

the most appropriate economic system that promotes economic development. In reality,

an economic system is a combination of various interactions of three important

organizationsthe community, market, and state. A community is defined as a small

group of people characterized by intensive social interactions that tend to minimize

information asymmetry between transacting parties, thereby lowering transaction costs of

economic activities (Aoki and Hayami, 2001). A market is an organization that

coordinates the activities of profit-maximizing firms or utility-maximizing individuals

under the guidance of prices, while a state specializes in the supply of public goods by

means of legitimate coercive power (Hayami and Godo, 2005).

Community, market, and state can be combined to lower the costs of economic

transactions, leading to an allocation of resources that is both efficient and equitable. The

community has failures that can be corrected by the state (Hayami, 2001). Traditional

customs and moral principles that are slow to change can be corrected by the

promulgation of dynamic legal laws. Rule enforcement and intensive social interactions

that are limited to small communities only can be corrected by common rules set by the

state. Bilateral monopolistic markets in land and labor can be abolished through the

penetration of the market system and the development of the nonfarm sector.

The community can correct market failures. Externalities of both biological and

physical types can be corrected by the community through customary rules and principles

and the high transaction costs due to quality uncertainty in both the product and labor

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markets can be corrected in a patron-client relationship involving interlinked transactions

in land and labor markets and input and output markets (Hayami and Otsuka, 1993).

This chapter reviews the literature on the role of the community in the

management of irrigation system, land and labor relations, risks coping, social capital,

and the development of the rural nonfarm sector. As a typical example of a rural

community, we explore community mechanisms in economic transactions as observed in

the so-called “Hayami’s village” in the Philippines. The major finding of this piece of

work is that rural communities are far from static but respond systematically and

dynamically to changes in economic conditions that resulted in an efficient and equitable

allocation of resources.

II. DESCRIPTION OF HAYAMI’S VILLAGE

Prof. Hayami found a village

In the Prologue of Hayami and Kikuchi (2000), Prof. Hayami recalls vividly how he

searched and found what, in his mind, is a “typical rice village” in the Philippines. In

1974, bouncing back and forth inside a car, tired and weary after a day’s journey, Prof.

Hayami finally discovered a village, which is to become his very own, as many

economists have referred to the place “Hayami’s village.” In his work, however, Prof.

Hayami calls “his village” East Laguna Village, which is located in the town of Pila in

the province of Laguna. At the time of his first survey, there were 95 households in the

village with a population of 549. The largest majority of them were engaged in rice work,

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either as a farmer or an agricultural laborer. The barangay captain (village chief), whom

he calls ‘Mr. Captain’ was very cooperative, rendering assistance at all times and thereby

boosting his belief that the village was truly to become his own. He conducted 11 rounds

of survey in the village between 1966 and 1997 and published three books and 14 journal

articles using data from these surveys.1 His scholarly work gave a microscopic picture of

the process by which agricultural production, community institutions, and people’s

economic well-being evolved in the course of the development of a village economy.

`

Major events in Hayami’s village2

Settlement began in the village in the 1880s, during which time, growth in the village

economy was based mainly on the opening of new land for rainfed rice farming. The land

frontier closed in the 1950s. The national irrigation system was extended to the village in

1958; this resulted in an almost complete conversion from rainfed single cropping to a

irrigated double cropping for both wet and dry seasons.

The village has experienced dramatic changes in its economy and social

organization since the 1950s. The major factors responsible for such changes are (i) the

dramatic diffusion of modern rice technology; (ii) continued population pressure on

limited land resources; (iii) implementation of land reform; (iv) public investments in

infrastructure such as irrigation systems, roads, and schools; and (v) growing urban

influences accelerated by improvements in transportation and communication systems

1 Mahabub Hossain conducted surveys in Hayami’s village in 1992, 1997 and 2001; Nobuhiko Fuwa in 2003; and Yasuyuki Sawada in 2006.. 2 The chronology of events described here is based on Hayami and Kikuchi (2000, Table 2.1, p.24).

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(Hayami and Kikuchi, 2000, p.13). We identify in the next paragraphs the period of time

when the forces of change became visible.

Major events took place in the 1960s: (1) the hand tractor was first introduced,

replacing the water buffalo in land preparation; (2) improved cultural practices in rice

production such as the use of fertilizers and chemicals, straight-row planting, rotary

weeders, and dry seedbeds were introduced; (3) the gama contract in rice harvesting was

introduced; (4) a primary school was opened up to the 2nd grade in 1962 and extended up

to the 4th grade in 1967; (5) the country road to the poblacion (town center) was opened;

(6) modern varieties (MVs) of rice were introduced and use of fertilizer and chemical

inputs increased; and (7) Operation Leasehold of the land reform program was

implemented and intensified.

The following major events occurred in the 1970s: (1) Masagana 99, which is an

extension-credit-input package program intended to promote the diffusion of MVs, was

launched; (2) electricity line was extended, (3) the South Luzon Expressway was

extended to Calamba, which reduced travel time from Manila to Pila poblacion from

more than 3 hours to about 2 hours, (3) herbicide use was intensified and portable

mechanical threshers were introduced; (4) overseas employment opportunities in the

Middle East became available; and (5) job opportunities in Metro Manila increased.

In the 1980s, the following were major events: (1) there was a major rehabilitation

of the irrigation system, (2) Operation Land Transfer of the land reform program started,

and (3) macroeconomic recession took place, reducing nonfarm employment

opportunities. Epochal changes in the 1990s were the following: (1) the deepwater pump

irrigation system was introduced in response to the deteriorating national irrigation

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system, (2) there was a boom in the number of metal manufacturing firms in the village,

(3) the country road to the poblacion was paved, (4) the primary school now included the

6th grade, and (5) the village chapel began to offer regular Sunday mass service. Finally,

the two important events that took place in the 2000s were (1) the development of a

housing subdivision within the village for sale to outside the village households and (2)

the occurrence of a super typhoon, Milenyo, that brought about major devastating

damages in agricultural production and residential houses.

Household description

Households in the village consist of three major classes: (1) farmer, who operated their

own farms, either as tenants or as owners; (2) agricultural worker, who have no farm to

operate but eke out a living on casual farm work; and (3) nonagricultural worker, who are

purely employed in the nonagricultural sectorsalary work (teachers, clerks, and factory

workers) and self-employed activities in commerce and transport.

It is noticeable that the number of agricultural worker households rose more

rapidly than did the farmer households from 1966 to 1995 (Table 1). The sharp rise in the

number of these households can be attributed to population pressure, land reform

regulations on tenancy contracts, and increased demand for hired labor associated with

the diffusion of MVs and the substitution of hired for family labor that encouraged in-

migration. The land reform laws prohibit the transfer of cultivation rights acquired

through the land reform to other parties, except to legitimate heirs, thereby limiting the

opportunities of landless households to become farmers. A spectacular growth in the

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number of nonagricultural households is evident from 1995 to 2006 and this was due to

the opening of a relatively low-priced residential subdivision in 2000 that attracted

nonagricultural households from nearby areas.

The International Rice Research Institute (IRRI) released the first MV, IR8, on 28

November 1966. Adoption of MVs in the village was quick because of the presence of a

well-developed irrigation infrastructure and access to information regarding new rice

technology owing to the village’s proximity to IRRI and the University of the Philippines

at Los Banos. Almost all the farmers adopted MVs by the 1976 survey (Table 2). Yield

rose from about 2 tons to about 4–5 tons per ha because of the diffusion of MVs, higher

application of fertilizer, and adoption of better cultural practices.

Research institutions, community, and state were all instrumental in the diffusion

of MVs. In the early years following the release of IR8, IRRI disseminated 2 kg of new

seeds free of charge to farmers who came to IRRI. Governor San Luis of Laguna

Province distributed 1 kg of new seeds to all village heads and seven council members

under his jurisdiction. The local branch of the Bureau of Agricultural Extension also

conducted on-farm demonstration experiments on some of these farms located near

Hayami’s village. Local staff of IRRI from farm origin planted the new seeds on their

own farms or their parents’ farms and distributed these to nearby relatives and neighbors.

Needless to say, farmers shared the new seeds among themselves for propagation in their

own farms.

Landholdings in Hayami’s village are, generally, small and scattered,

characterized by pervasive landlordism. Land accumulation in the village proceeded

slowly mainly through the pacto de retrovenda (land-mortgaging operations). The

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relationship between the landlord and the tenant can be considered paternalistic because a

large majority of landlords live in nearby places such as the municipality of Pila, local

towns in Laguna, and neighboring provinces, and only a few reside in Manila.

Five major forms of land tenure exist in the village: (1) ownership, (2) leasehold

tenancy, (3) share tenancy, (4) pawning of ownership, and (5) subleasing of leasehold

land under three arrangements (Table 3). Share tenancy was common in 1966, but it has

been increasingly replaced by leasehold tenancy after the implementation of land reform

in 1974. We will discuss the details of the land reform program and its impact on the land

tenure system in the section landlord-tenant relations below.

In 1966, a larger proportion of household income came from farm sources in

1974/76 and 1980/83 (Table 4). Farm sources of income included rice farming, livestock

and poultry raising, propagation of high-value tree crops, backyard vegetable farming,

and farm wages. Nonfarm sources included formal salary work in the government and the

private sector, as well as self-employed enterprises in commerce, manufacturing, and

transport. In 1995/96, income from nonfarm activities had become the dominant source

of income because of the increase in nonfarm wage earnings and remittances from

members working outside the village, including overseas contract workers. The

proportion of nonfarm income became particularly large in 2006 because of the increase

in the number of nonagricultural households.

III. COMMUNITY ROLES IN HAYAMI’S VILLAGE

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This section is a review of literature on the different aspects of community mechanisms

in irrigation management, land and labor relations, risks coping, social capital, and the

development of the rural nonfarm sector. We identify the roles of the community in

Hayami’s village as an example.3

Irrigation management

The role of irrigation in MV adoption and subsequent yield increase has been well

documented in Asian countries (David and Otsuka, 1994). Irrigation water has the unique

characteristic of being a common-pool or common-property resource, subject to the

danger of overexploitation (the so-called “tragedy of the commons” (Hardin, 1968)). One

solution to avoid the tragedy of the commons is to transfer local commons from

communal to either state or private management. The experience in Hayami’s village

shows that a hasty turnover of the irrigation system to the community led to the system’s

unsatisfactory management because the local community had no strong organizational

capacity to control free-riding problems. Thus, a major role for the government is to

facilitate the development of the communities’ own capabilities first to manage their local

commons before turning the system’s management to them.

Hayami’s village had the long tradition of single-cropped rice production until

1958 with the opening of gravity irrigation systems built and maintained by the National

Irrigation Administration (NIA). The NIA system is wide and complex, designed to serve

4,000 ha cultivated by about 2,500 farmers. The system consists of a main canal, five

3 Some parts of the next sections were drawn from Ch. 4-7 and 9 of Hayami and Kikuchi (2000).

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laterals (A to E), and 16 sub-laterals with Hayami’s village located at lateral C. There is

no metering device to measure water consumption of each farmer so there is a tendency

for farmers located upstream to overuse the water and thereby induce water shortages in

the lower streams. Thus, the NIA irrigation system has the attributes of a local commons.

Prof. Hayami noticed a serious deterioration in the village irrigation during a visit

in July 1995, when NIA’s irrigation had reached only about 20% of the paddy fields. This

situation is not unique to his village but was common in the lower reaches of the major

laterals. The deterioration was brought about mainly by a decline in the operation and

maintenance (O&M) activities of the NIA. The budget of NIA for O&M activities was

reduced to about one-half from the early to the late 1980s. This situation came about

because of the decline in rice prices and the decline in the so-called “project fund,” a

portion of which is intended to finance NIA’s O&M activities. Irrigation fees were paid

in paddy so the revenues of NIA decreased sharply corresponding to the decline in rice

prices during the 1980s. There was also a decline in the contribution of international aid

agencies and the national government to “project funds” for the construction of new

systems and funds designated for small repair on the premise of an abundant supply of

rice.

The system was operated and maintained properly solely by the NIA in earlier

years because of the generous flow of funds to the NIA from international donors and the

national government. With the onset of budgetary pressure, the NIA tried to mobilize

farmers’ participation in its O&M activities by organizing farmer-beneficiaries into

irrigator associations (IAs) and giving the IAs various cash incentives, depending on the

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extent of the responsibilities of IAs on canal cleaning, collecting irrigation fees, and other

O&M activities.

The NIA was able to establish four IAs for the five laterals covering about 70% of

its total service area. Two IAs were successful in suppressing free riding problems, by

strictly monitoring water rotation schedules, while the other two IAs failed to reduce

illegal water take-outs of upstream farmers. The successful IAs had smaller and simpler

systems involving a smaller number of farmers and villages, whereas the IAs that failed

had larger laterals with more technical designs and social structures.4 Hayami’s village,

unfortunately, belonged to a failed IA. To cope with the declining water supply, some

farmers decided to leave the system by purchasing water pumps and not paying irrigation

fees, which naturally led to the decline in revenue of NIA and fewer O&M activities, thus,

further lowering water supply.

The NIA failed to invest adequately by pooling more personnel responsible for

institutional development in IAs that involve a larger system despite the high social

returns associated with such endeavor. This is because the private benefit to NIA in terms

of increases in irrigation fees associated with the effective management of IAs is much

less than the corresponding cost of pooling more NIA personnel in the system. Yet, it is

necessary for the NIA to play a facilitating role in the management of local commons in

the face of difficulties in organizing community efforts through the initiatives of the local

people alone. Overall, the experience in Hayami’s village shows the importance of

4 According to Fujiie, Hayami and Kikuchi (2005), collective action in irrigation management in the Philippines is difficult to organize where (1) water supply is uniformly abundant; (2) water supply is greatly different between upper and lower streams in laterals; (3) size of the association is large; (4) population density is low; (5) share of nonfarm households is high; and (6) the history of irrigated farming is short.

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complementary roles of the government and local communities in effectively managing

local commons, which sharply contrasts with the widely held belief of leaving the

management of local commons entirely in the hands of the community.

Landlord-tenant relations

Prolific literature on landlord-tenant relations has focused on the choice between share

and fixed-tenancy contracts (Binswanger and Rosenzweig, 1984; Otsuka and Hayami,

1988) by exploring the role of risks, transaction costs, and work incentives on the choice

between the two contracts (Coase, 1937; Williamson, 1985). The traditional belief on

share tenancy rests on the Marshallian thesis that share tenancy results in inefficient

resource allocation because the share tenant receives only a fraction of the marginal

product of his labor and this lessens her/his work incentives (Sen, 1966).

While share tenancy may be an inferior form of land contract because of the high

cost of monitoring tenant’s work effort, it can be rationalized on the argument that share

tenancy has the benefit of risk sharing (Stiglitz, 1974). Moreover, the costs in the

supervision of share tenants can be substantially reduced in a small agrarian community

through an interlinked contract in consumption and production credits as well as through

an emergency insurance (Hayami and Otsuka, 1993). The interlinked contract is effective

in suppressing dishonest behavior in a small community where personal ties among

family members, relatives, and friends are valuable for efficient contract enforcement

(Ben-Porah, 1980; Pollak, 1985).

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Yet, in spite of the relative merits of share tenancy, the land reform programs in

developing countries aim to abolish share tenancy on the premise that it is an inefficient

and exploitative form of land contract (Binswanger and Elgin, 1998). We present in the

next paragraphs the case of Hayami’s village, where the abolition of share tenancy led to

the rise of sub-tenancy, which was effectively enforced in the presence of strong

community ties between contracting parties.

Hayami’s village had experienced major changes in tenurial relations when the

Marcos land reform program was implemented. The program has two major components:

(1) tenancy reform (Operation Leasehold) and (2) land redistribution program (Operation

Land Transfer). Tenancy reform converts share tenancy to leasehold tenancy and applies

to tenants whose landlords owned less than the maximum ceiling of 7 ha. Land

redistribution program converts share tenants to amortizing owners (holders of a

certificate of land transfer) and applies to tenants whose landlords owned more than 7 ha.

Leasehold rent and amortization fees were fixed at 25% of the average rice yield

for three normal crop years preceding the land reform implementation in 1972. Rice

yields rose in the village because of the diffusion of MVs so that a divergence between

the returns to land and fixed leasehold rents and amortization fees prescribed by law was

created. This divergence confers an economic value to the possession of cultivation rights

by the land reform beneficiaries.

In 1966, before the land reform, the most common form of land tenure was share

tenancy (Table 3). Seventy percent of farms and 63% of paddy areas were under a share

tenancy contract. There was a decrease in the incidence of share tenancy and a

corresponding increase in the incidence of leasehold tenancy and ownership because of

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the progress in Operation Leasehold and Operation Land Transfer Program. It is

surprising that 27% of the rice area remained under share tenancy in 1976 and 6%

remained so in 2006, despite the prohibition of the share tenancy contract. Some share

tenants simply refused to go to the local Agrarian Reform Office to change their status

because of their good relationships with the landlord, who were either relatives or friends,

an attitude that reflects the social norm of utang na loob (debt of gratitude).

The presence of economic rent led to the rise in the incidence of sub-tenancy.

Sub-tenancy was already observed in the village even before the advent of the land

reform program and its incidence increased with the implementation of land reform

(Hayami and Kikuchi, 2000, p.91). Sub-tenancy works in this fashion. A leasehold tenant

rents out part (or the whole) of her/his operational holdings to other farmers or

agricultural laborers. The leasehold tenant charges the market rent, which is over and

above the leasehold payment to his landlord that is fixed by the land reform law at a level

lower than the market rate. Since the leasehold tenants can pocket the surplus between

the market rent and the actual rent prescribed by law, we can reasonably assume that the

“excess” profit is the main factor behind the rise in sub-tenancy.

There are three types of sub-tenancy arrangements. First, the sub-lessor (the

leasehold tenant) rents out her/his land on a sharecropping arrangement with a sub-

lessee.5 Second, the sub-lessor receives a fixed rent from the sub-lessee. This case is

limited to those where parents sub-lease their land to their children. And, third, the sub-

lessor pawns out her/his land to the sub-lessee in exchange for cash and gives the sub-

5 Land rent under the traditional sharecropping arrangement is about 40% of the total rice output after subtracting production costs shared by the landlord from the 50% share of gross output. Since the land reform law fixed land rent at 25% of the yield, the sub-lessor gains 15% (40% minus 25%) of the output from this arrangement.

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lessee the right to cultivate the land until the loan is repaid. Sub-tenancy is illegal and,

thus, is contracted between people who are closely related such as family members,

relatives, friends, and persons within the small circle of community members.

The third type is the so-called sanglang bili (pawning) in which the sub-lessor

(pawner) temporarily transfers his cultivation rights on the farmland to the sub-lessee

(pawnee) in exchange for cash for a specified period of time with an agreement to redeem

it upon loan repayment without interest charges. Sanglang bili has been observed not

only in the ownership right, but more importantly, in the usufruct rights on farmland

obtained through the land reform. According to Otsuka (1991), the incidence of sanglang

bili is higher in favorable areas, where the land reform program has been vigorously

implemented. Estudillo, Sawada and Otsuka (2009) reported that revenues from sanglang

bili are important sources of funds to finance investments in tertiary schooling of children,

pay for placement fee of overseas job, and start nonagricultural business. On the other

hand, remittances from well-educated family members holding lucrative jobs in the cities

and overseas are sources of money to finance pawned-in land and outright purchases of

land.

There are cases of outright sale of leasehold rights that were obtained through the

land reform program. In fact, prices of leasehold and ownership rights have risen over

time, simultaneously with the progress of Operation Leasehold. Transfer of cultivation

right in that fashion is legally acceptable, provided the leaseholder (seller of right) is able

to get the signature of his landlord to the effect that the landlord accepts her/his voluntary

surrender of the land and accepts the buyer of cultivation right as the new tenant. While

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sale of leasehold right is legal under the land reform law, the sale of CLT right is illegal

because, under the law, CLT right can only be transferred to legitimate heirs.

In brief, this section has demonstrated how sub-tenancy had risen as an alternative

form of land tenure contract to avoid the rigidities of the land reform laws. While deemed

illegal by the land reform laws, sub-tenancy is consistent with community norms and

tradition, as the terms of agreement are acceptable to stakeholders, who are both

members of a closely knit community. The question is whether the sub-tenancy is

consistent with efficiency and equity. Sub-tenancy is consistent with efficiency because it

exploits the excess profits and appropriately distributes it to the legitimate owner (i.e., the

sub-lessor) of the resource (i.e., cultivation right). In the case of pawning, the sub-lessor

is able to ease up her/his credit constraint and explore profitable opportunities in the

nonfarm sector by using the pawning revenues. Sub-tenancy is consistent with equity

because it opens up opportunities for the noncultivating households to have an access to

land in the midst of institutional constraints imposed by the land reform laws. Sub-

tenancy also increases the demand for hired labor supplied by the poor agricultural

households, when children of the beneficiaries of land reform retreat from farm work in

favor of nonfarm work and/or leisure.

Labor relations

Studies on labor contracts in agriculture have focused on the choice between casual- and

permanent-labor contracts (Eswaran and Kotwal, 1985; Bell and Srinivasan, 1985) or the

choice between piece-rate and time-rate compensation schemes within the casual labor

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contracts (Roumasset and Uy, 1980). Piece rate contract in harvesting manifests the

principle of mutual help and income sharing to secure a subsistence wage for the casual

labor force. We discuss the changes in rice harvesting contracts in Hayami village to

illustrate how the community is able to adjust institutional wages to accommodate

changes in labor market conditions brought about by the increase in labor supply and

technological change.

Hunusan (a Tagalog word for “sharing”) is the traditional labor contract in rice

harvesting in the village. This is a contract that allows anybody in the village to

participate without restriction when a farmer specifies a date of harvesting in her/his field.

Harvesters commonly receive one-sixth share of the gross harvest as their compensation.

Family members seldom come to monitor the work until the harvest is piled on the

ground ready for sharing. Such an attitude is consistent with the social norm of income

and work sharing because retreating from farm work means giving up income-earning

activities to relatively lower income members of the community.

When rice yield was low, the one-sixth share of harvest may well represent the

harvesting labor contribution to output (labor marginal productivity). When rice yield

rose because of the diffusion of MVs and higher use of fertilizer, the harvester’s share

rose in proportion to rice yield. Meanwhile, market wage rates remained relatively stable

because of the increase in labor supply. Harvester’s compensation under the traditional

hunusan contract rose above the prevailing market wage rates, making this contract

disadvantageous to the farmer-employer.

A new system of labor contract called gama (a Tagalog word for “weeding”)

emerged and rapidly replaced hunusan in the 1960s and 1970s. Under the gama, the

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harvesters receive the traditional one-sixth share of harvest, but the employment on

harvesting is limited only to workers who perform weeding services without receiving

compensation. Under gama, weeding is free so that the one-sixth share represents

compensation to both harvesting and weeding. The shift from hunusan to gama

effectively decreases labor compensation per hour of work. Yet, this is acceptable to the

community because it maintains the long-established traditional sharing arrangement,

which is consistent with the community norm.

Gama was a traditional practice in small paddy plots scattered in the coconut-

growing areas in the highlands surrounding Mount Banahaw. With population pressure

and lack of comparable technological advance in coconut production, labor was forced to

migrate from the highland coconut area to the lowland rice belt. These migrant workers

introduced gama to rice farmers in the lowland at the time when the national irrigation

system was developed and weeding become profitable in rice farming.

Naturally, the farmer-employer accepted gama because it is a strategy to bring

down the wage rates in harvesting to the level of market rate, which is consistent with the

time-honored sharing rate of one-sixth. The gama workers in the community accepted the

contract because they perceived that free labor in weeding is a way to show their

gratitude to the farmer-employer. The shift from hunusan to gama shows that labor

contracts can change in order to equalize the marginal product of labor to the existing

market wage rates in the face of disequilibrium in labor payments resulting from a

technological change and population pressure. This shift is well-accepted by villagers

because it is profitable to both the employer and laborer and is consistent with the

traditional community norm of work ethics and income sharing.

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Gama declined while a new form of hunusan with reduced sharing rates of up to

one-tenth came forth in the 1980s and 1990s. The old hunusan is a community-based

contract because everybody in the village can participate in harvesting and receive one-

sixth of the output. In contrast, in the new hunusan, only the laborers who receive

specific invitation from the farmer-employer are allowed to participate in harvesting. In

this way, the new hunusan resembles the piece rate contract that is prevalent in market

economies. The spread of the new hunusan was facilitated by the introduction of portable

threshing machine and expansion of the nonfarm employment opportunities that resulted

in higher wage rates.

The shift from gama to new hunusan with reduced sharing rate was socially

acceptable as the rate purely represents payment to labor in harvesting. Threshing service

was contracted out separately on a custom basis when portable threshing machine was

introduced. Meanwhile, the availability of job opportunities with higher remuneration

rates in the nonfarm sector broke down the traditional patron-client relationship between

the farmer-employer and gama workers. Farmer-employers were not satisfied with the

weeding service performance of gama workers, thereby pushing them to contract out

weeding services to daily wage workers. Thus, the reduced sharing rate under the new

hunusan was accepted by gama workers because of the reduction in their work

assignment under the new contract and in the face of increasing work opportunities in the

nonfarm sector.

We found that the shift from hunusan to gama to new hunusan with reduced

sharing rates was consistent with the community principle of mutual help and income

sharing and with market efficiency that dictates that wages are equal to the value of the

21

workers’ contribution to output. And despite the disequilibrium in the labor market

brought about by new rice technology and population pressure, the shift in the labor

contract did not produce excess “profits” that give undue advantage to one party.

Considering that neither the farmer-employer nor the workers became the “winner,” the

shift in labor contract may well be consistent with equity.

Coping with risks

In the face of negative shocks to income and assets, households, especially the poor, had

to adopt a wide variety of formal and informal forms of self- and mutual insurance

mechanisms in order to maintain the same level of livelihood or consumption (Walker

and Jodha, 1986; Alderman and Paxson; 1992, Besley, 1995; Morduch, 1995; Fafchamps,

2003; Dercon, 2005).6 The risk-coping means may be specific to the characteristics of

the household and the nature of the loss caused by income and/or asset shocks. Here we

summarize the many and different ways through which households are able to cope with

risks.

First, it is possible for a household to maintain total nutritional intake while it

reduces food purchases and other expenditures. This is accomplished by changing the

quality and composition of food expenditures or by reducing nonfood expenditures such

as those for luxuries (Frankenberg, Smith, and Thomas, 2003; McKenzie, 2006; Strauss

et al., 2004; Kang and Sawada, 2008).

6 Also, there are few studies that examine the role of positive shocks on household behavior (Yang, 2006).

22

Second, in facing an income decline, households can use credit to smooth

consumption by reallocating future resources to current consumption. The lack of

consumption insurance can be compensated for by having access to a credit market

(Eswaran and Kotwal, 1989; Besley, 1995; Glewwe and Hall, 1998). Yet, poor

households have only a limited access to credit markets and are constrained from

borrowing for a variety of reasons such as high information cost and lack of assets for

collateral or policy-induced financial repression (Fafchamps, 2003). The existence of

credit constraints has an important negative impact on risk-coping abilities of the poor

and vulnerable households.

Third, households can utilize self-insurance by accumulating financial and

physical assets as a precautionary device. Forms of precautionary savings in developing

countries include grain storage (Townsend, 1995; Park, 2006), cash holdings (Townsend,

1995), and liquidation of livestock (Rosenzweig and Wolpin, 1993; Fafchamps, Czukas,

and Udry, 1997).

Fourth, households can use returns to human assets to cope with the negative

shocks. This is done by increasing the number of workers, extending labor hours, or

migrating to places where there are jobs (Kochar, 1999; Walker and Ryan, 1990, pp.87-

88; Rose, 2000; Smith, et al., 2004).7

Fifth, and finally, informal assistance from family members and friends as well as

insurance payments based on formal insurance contracts or aid from the government can

play an important role. There are a number of empirical studies on informal risk sharing

7 Child labor income, which requires dropping out of education, is used as a coping device against parental income shortfalls (Jacoby and Skoufias, 1997; Sawada and Lokshin, 2009).

23

within communities (Townsend, 1994; Udry, 1994; Dercon and Krishnan, 2000; Dubois,

et al., 2008; Ligon, 2008). Informal state-contingent transfers and gifts among relatives,

friends, and neighbors can be based on altruism (Cox, Eser, and Jimenez, 1998; Lucas

and Stark, 1985) or mutual-reciprocal insurance schemes for self-interested risk-coping

purposes (Coate and Ravallion, 1993). 8 In more realistic setting, Murgai, Winters,

Sadoulet, and de Janvry (2002) found that the configuration of insurance clusters and the

intensity of exchanges within insurance clusters vary with two types of transaction costs:

“association” costs in establishing links with insurance partners and “extraction” costs in

using these links to implement insurance transfers.

Here we discuss how the community in Hayami village was able to help

households to cope in the aftermath of a super typhoon Milenyo (with international code

name of Xangsane) that hit the Philippines (directly hitting Laguna, where Hayami’s

village is located) on September 28, 2006. Sawada et al. (2009) conducted a survey

barely 3 months after the occurrence of Milenyo from January 20 to February 15, 2007 to

assess the typhoon damage and identify the risk-coping strategies of households and the

various ways by which the community and state responded to the calamity.

There was a wide degree of heterogeneity in damages caused by Milenyo, even

within the same village. As to human losses, there were no reported dead or seriously

injured household members. A total of 108 households (27%) encountered serious

damage to their house, typically either the roofing was completely or partially destroyed.

Including the cases of multiple damages, 54% among the farmers and 27% among the

8 It is also important to note that self-enforcement mechanisms of informal mutual insurance schemes can be sustained as sub-game perfect Nash equilibria in an infinitely repeated game framework (Coate and Ravallion, 1993).

24

landless reported having had the experience of a decline in income, especially because of

damage to the standing rice crop. Income decline was combined with other damages such

as damage to houses, productive assets, and standing crops. Interestingly, damage to

crops, which was severe among fruit crops, appears to be common, even among the

nonagricultural households.

Paddy harvest in the village as a whole declined by 71,806 kg (i.e., 32% decline

from the normal harvest), whereas paddy price declined from the expected price of

PHP8.89 per kg to PHP7.44 per kg (i.e., 16% reduction from the normal price). The loss

in paddy production was, on the average, PHP260 per household, which is almost

equivalent to the minimum wage rate of PHP277 per day (equivalent to US$5.29 at

US$1=PHP52.35). In contrast, the total lost in standing mango tree was PHP680 per

household, which is 2.72 times the minimum wage rate per day. Clearly, there was

heterogeneity in Milenyo damages, depending on the ownership of fruit trees and paddy

fields.

Households in the village were able to cope with Milenyo by adopting 6 important

strategies out of 10 possibilities, that is, by (1) reducing their food consumption, i.e.,

reducing protein intake and food taken outside; (2) switching consumption from

purchased food to own produce; (3) obtaining emergency loans from relatives and village

moneylenders; (4) receiving remittances; (5) receiving aid from local government and

private individuals; and (6) engaging in nonfarm employment.

A larger proportion (76%) of the landless households compared with farmer

(27%) and nonagricultural households (47%) reported to have decreased their food

purchases. Because prices of fish went down sharply, many households shift to

25

consumption of own fish catch (or given by relatives) to fill up their daily protein

requirements. Borrowing from close relatives is one of the more important coping

strategies during disaster time (Glewwe and Hall, 1998; Sawada and Shimizutani, 2008).

Interestingly, moneylenders, who are community members, played an important role as

sources of emergency funds. For the landless, the nearby sari-sari (village variety) stores

provided either on credit or cash purchase the most basic needs such as rice, canned

goods, candles, and kerosene, evidence that village stores do not hoard basic goods

during calamity perhaps because of intricate close associations among the village people

that prohibit opportunistic behavior.

As reported in earlier studies (Otsuka, Estudillo and Sawada, 2009), remittances

have become an important source of income in rural Philippines because of the rise in the

number of overseas Filipino workers (OFWs). There were 31 OFWs in Hayami’s village

as of the 2007 survey. Twenty-five percent of the farmer households, 16% of the landless

households, and 21% of the nonagricultural households reported having received

remittances after Milenyo. In brief, the availability of emergency borrowing and

remittances indicate the importance of personal networks in surviving a crisis.

The local government through the village officials played a particularly important

and effective role during the disaster by (1) immediately opening the village meeting hall

as a temporary shelter to households that lost their roofs or were affected by flash floods,

(2) distributing grocery bags containing the most basic food items valued at about US$2

per household, (3) providing galvanized iron sheets to 16 households whose houses lost

their roofs, and (4) giving cash gifts amounting to about US$50 to eight households.

There was also strict food price and supply monitoring undertaken by the local

26

government in the local public market in order to avoid unnecessary price hikes and

disruption of local food supply maneuvered by opportunistic businessmen. Overall, the

disaster management was effective because there was no substantial information

asymmetry between the donor and the recipient of aid owing to the village officials’

many years of association with the community.

Nonfarm employment served an important role in consumption smoothing in the

face of a disaster, which is consistent with past studies in India (Walker and Ryan, 1990;

Kochar, 1999) and Indonesia (Frankenberg, Smith, and Thomas, 2003). We cannot

identify major changes in the primary occupation after Milenyo, which indicates that it is

the long-term employment in the nonfarm sector that enabled the households to insure

against the disaster. The number of unemployedi.e., those workers who reported “none”

in the primary occupationrose from 57 to 67 people, indicating an increase in

unemployment rate by 18%.

Household responses to smaller typhoons that occurred in 1994–2003 and

demographic shocks such as death or illness of household members included receiving

“help” from relatives, which, of course, include cash assistance and remittances (Fuwa et

al., 2006). Such response was also evident during Milenyo, which clearly shows that the

community can play the role of an effective insurance mechanism against various forms

and intensity of shocks. The role of government was highlighted during a disaster when

only the state can effectively undertake a larger scale of relief operation.

Social capital9

9 This section draws from Hayami (2009) and Kajisa (2007).

27

It is widely recognized that social relationships, which are shaped through trust, norms,

and networks, play important roles in economic transactions. Such social relationships

have been recognized as the third kind of capital named “social capital” (Coleman, 1990;

and Putnam, 1993), which is akin to physical and human capital. Hayami (2009)

proposed the following narrow definition. “Social capital is defined as the structure of

informal social relationships conducive to developing cooperation among economic

actors aimed at increasing social product, which is expected to accrue to the group of

people embedded in those social relationships.”

Words in italics are clarified as follows. First, the term “informal” excludes the

relations to be enforced by the state’s apparatus or to be realized as the result of market

transactions. Second, the function of social capital is limited to the facilitation of

cooperation or collective action as Coleman (1990) and Putnam (1993) originally

intended. Third, since the benefits of social capital accrue mainly to the group of people

embedded in the specific social relationship that carries out the collective action, the

positive externality is largely limited within a specific group. Therefore, social capital has

the attribute of local public goods and a community is the central organization to produce

it.

There are two kinds of social capital classified by function: bonding and bridging

social capital (Gittell and Vidal, 1998; Woolcock and Narayan, 2000). Bonding capital

strengthens the sense of loyalty, solidarity, and trust within the community, while the

bridging capital enhances collaboration with organizations outside of the community. The

community has the advantage of providing and maintaining bonding social capital

28

because of little asymmetric information among its members due to repeated and intense

social interactions. The presence of bonding social capital is evident in the efficient

management of common pool property such as irrigation water (Ostrom et al, 1990;

Fujiie et al., 2005; Kajisa et al., 2007) and forest resources (Tachibana, Nguyen and

Tachibana, 2001). Social capital is also effective in preventing labor shirking in share

tenancy contract (Hayami and Otsuka, 1993; de Janvry et al., 1997) and in smoothing

consumption pattern in the face of shocks (Fafchamps and Lund, 2003; Sawada et al.,

2008).

The presence of strong bonding capital, however, may limit the scope of

cooperation among communities, resulting in a less desirable resource allocation outcome.

According to Hayami (2009), such situation can be overcome by exposing the

community people to new ideas and opportunities by expanding the scope of

intercommunity interactions through bridging. To move toward this direction, the

community, which is the central organization to produce social capital, must be

complemented by a competitive market, which in turn is supported by the state’s judicial

apparatus. Putnam’s (1993) comparative study between North and South Italy revealed

that the exposure to competitive markets enables the community to seriously recognize

the opportunity cost of maintaining the status quo and thus motivates it to increase social

capability in bridging across communities. Needless to say, the role of the state is also

important because market competition must be facilitated by formal institutions.

Therefore, Hayami (2009) emphasizes the importance of seeking the best mix of these

three entities.

29

Using a sample set of residents and emigrants from Hayami’s village, Kajisa

(2007) finds that bonding social capital has been instrumental in the efficient functioning

of the labor market for small businesses located within and around the community. At the

same time, however, the paper finds that villagers are paid less in the nonfarm small

businesses distant from the community, unless they acquired the jobs through family or

relative networks and that not many villagers possess such nascent networks. In this

manner, Hayami’s village has shown the limitation of the bonding social capital and the

increasing importance of bridging social capital in the course of economic development.

Development of the rural nonfarm sector

Household survey data reveal that nonfarm incomes typically account for 30–50% of

rural household incomes in developing countries (Haggblade et al. forthcoming; Davis et

al., 2007, Lanjouw and Lanjouw, 2001). Within the rural nonfarm sectors, manufacturing

sectors appear to account for relatively small portions and larger income shares are

occupied by service sectors. According to Haggblade et al. (forthcoming), manufacturing

typically accounts for 20–25% of rural nonfarm employment, whereas services (such as

trade, transport, and construction) account for 75–80%.

While a focus on rural nonfarm sectors is not new in the economics literature (e.g.,

Hymer and Rescnick 1969), the relatively more recent resurgence in the interest in rural

nonfarm sectors centers around its (potential) role as a driver of rural poverty reduction.

Employment in rural nonfarm sectors can create additional economic opportunities for

the underutilized labor force (e.g., during agricultural slack season and for women),

30

indirectly raise the agricultural labor wage, and provide a means for spreading risk

through diversification (Lanjouw and Lanjouw 2001).

The main driver of rural poverty reduction has increasingly shifted from

agricultural growth to expansion of nonagricultural income opportunities in many parts of

the developing world (Lanjouw and Lanjouw 2001, de Janvry and Sadoulet 2001, de

Janvry, Sadouet and Zhu 2005). Correspondingly, the relative importance of access to

human capital increased vis-à-vis that of land in rural areas (Estudillo and Otsuka, 1998;

Fuwa 2007). In the context of rural Philippines and other Asian and African countries,

such a shift in relative returns has been found to be a direct consequence of the green

revolution; the increase in agricultural productivity due to the green revolution led to an

increase in rural farm incomes, and a major portion of such income gains was

subsequently invested in their children’s human capital (Otsuka, Estudillo and Sawada,

2009).

In contrast, however, in areas with stagnant agricultural growth, the growing land

scarcity due to population pressure leads to an expansion of landlessness, which, in turn,

tends to push labor force increments into low-return and labor-intensive nonfarm

activities (the Z goods of the Hymer and Resnick [1969] paradigm). The type of nonfarm

activities absorbing such labor force tends to be of low-return and labor-intensive, such as

basket making, gathering, pottery, weaving, embroidery, and mat making (Haggables et

al, forthcoming). The kind of growth linkages observed in areas with rapid agricultural

growth is weaker, and the poverty reduction potentials arising from rural nonfarm growth

with stagnant agricultural growth are likely to be smaller. Thus, growth in agricultural

31

productivity is closely related to the extent to which rural nonfarm growth can contribute

to rural poverty reduction.

In the context of the recent surge in the interest in rural nonfarm sectors, little

attention is typically paid to the relationship between rural nonfarm sector development,

on one hand, and the role played by rural communities and local institutions, on the other

hand. A series of work by Hayami and his collaborators, however, is a major exception.

As noted above, one way rural nonfarm sectors can contribute to rural poverty reduction

is by creating employment opportunities during slack agricultural seasons, thereby

allowing farm households and agricultural laborer households to smooth their income

flows. The low opportunity costs of rural labor force can be a major advantage for rural-

based entrepreneurs engaged in small-scale manufacturing and commerce, vis-à-vis their

counterparts (possibly operating with larger scales) based in urbanized locations.

Hayami (1997) advocates ‘rural-based’ industrialization that hinges on the

development of rural nonfarm sectors through ‘relational contracting,’ which is a

substitute to vertical market integration. He argues that local community and informal

institutions can be the key elements for the success of rural industrialization. The

informational advantages of the local entrepreneurs provide them with competitive

advantages (vis-à-vis their urban-based counterparts) in effectively utilizing low-

opportunity cost rural labor force, while reducing the potential scopes for moral hazard,

thereby, ensuring necessary product quality and timely delivery. In the system of

vertically integrated ‘relational contracting,’ the rural-based traders and manufacturers

can function as effective intermediaries between the rural labor force and urban-based

traders, retailers, or exporters, who, in turn, can bring in market information (e.g.,

32

required product quality, shifting consumer preferences, etc.), technology, capital, brand

recognition, etc.

Based on this view, local communities with well-established informal local

institutions for risk sharing, credit transactions, and community enforcement mechanisms

can facilitate the development of rural nonfarm sectors. Examples of ‘relational

contracting’ can be found in Japan’s modern industrial sector and contemporary

developing world (Hayami and Kawagoe, 1993), as well as in Japan’s historical

processes (Hayami, 1997). A prime example of the former is the subcontracting

arrangement practiced by Toyota Motor Company (Wada 1997).

Subcontracting in Hayami’s village came in with the establishment of seven

metalcraft factories during the period of 1991–95 (Hayami, Kikuchi, and Marciano,

1998).10 During this period, there was a diversion of foreign demand for labor-intensive

products away from Taiwan, Korea, and Hongkong to Southeast Asian countries,

including the Philippines. These rural factories produced Christmas ornamentals and

other crafts from tin plate based on orders from exporters operating in Metro Manila.

Subcontracting connects Hayami’s village with the global market through a system of

customary trade practices and informal contracts between the village entrepreneurs and

the exporters. Subcontracting embodies market efficiency as it is able to exploit the

capabilities of rural self-employed informal entrepreneurs who are efficient in utilizing

scarce capital and management input while employing cheap labor. Subcontracting is also

10Industrial development in the country has continued to be concentrated in Luzon and increasingly in the Southern Tagalog region where Hayami’s village is located (Estudillo, Sonobe and Otsuka, 2007).

33

consistent with equity because the production process in metalcraft is extremely labor-

intensive, utilizing labor of landless workers with low opportunity cost.

IV. SUMMARY AND CONCLUSIONS

There is a common belief that the community is the yoke of underdevelopment because it

strictly obeys traditional institutions and norms that are slow to respond to economic

changes. This chapter reviews the literature on the multifaceted roles of rural

communities in irrigation management, land and labor relations, risks coping, social

capital, and development of rural nonfarm sector. As an example of a typical rural

community, this chapter explores the community mechanisms in Hayami’s village in the

Philippines.

Irrigation water has the attributes of a common pool resource, which can be used

by farmers in the locality but is exhaustible if overexploited. In Hayami’s village, there

was a premature turnover of the irrigation system’s management to the community at a

time when the community had not yet fully developed a strong organizational capacity to

control free riding problems. As a result, the farmers were dissatisfied with the system’s

performance, inducing them to adopt the more expensive pump irrigation system. Clearly,

the government needs to assume a facilitating role to help communities develop their own

capabilities first to manage their local commons before turning the system’s management

to them.

Sub-tenancy emerged as a common form of land tenure contract that is able to

avoid the institutional rigidity of the land reform laws. Sub-tenancy is consistent with

34

market efficiency because it enables the beneficiary of land reform (former share tenants)

to exploit the “excess profits” that were created when the land reform law set the land

rent over and above the normal market rate. It is also consistent with equity because it

opens up opportunities for the noncultivating households to have an access to land in the

midst of institutional constraints imposed by the land reform laws. While the land reform

laws prescribe sub-tenancy as illegal, it works smoothly because it is transacted within

close circle of friends and relatives belonging to same community.

Hunusan is a labor contract in rice harvesting where every villager can participate

in harvesting and receive one-sixth of the gross harvest. Gama restricts employment in

harvesting to workers who participate in weeding without receiving compensation. The

shift from hunusan to gama was an innovation in labor relations that is consistent with

market efficiency in which adjustments in labor market conditions took place so as to

bring down wages in response to an increase in labor supply. The shift is also consistent

with equity because it does not violate the traditional community norm of mutual help

and income sharing.

The community can play the role of an effective insurance mechanism against

various forms and intensity of shocks. When super typhoon Milenyo struck Hayami’s

village, the affected community constituents identify state-contingent transfers and

emergency loans from relatives, friends, neighbors, and moneylenders as one of their

most important coping mechanisms. Joint effort undertaken by the local government and

private individuals was the key in effectively managing a large-scale relief operation in

the aftermath of a disastrous typhoon.

35

Social capital (personal network) is instrumental in the efficient functioning of the

labor market in the early stages of its development. It decreases the search costs for both

the workers and employers and correct asymmetric information between the two parties.

The presence of network premium as exemplified in higher probability of obtaining a job

and higher initial wages is consistent with equity as the premium is more important for

unskilled workers employed in small enterprises far from the village.

Prof. Hayami argues that the key to development is the self-employed informal

agents who devise efficient ways to utilize scarce capital and management input and to

mobilize cheap labor. A metalcraft industry was established in Hayami’s village through

a subcontracting arrangement between the villagers and exporters operating in Metro

Manila. Subcontracting is made possible when both parties are duty bound by community

rules to obey the customary trade practices and informal trade institutions.

Overall, our literature review shows that rural communities are far from static but

respond systematically and dynamically to changes in technology, resource endowments,

and market conditions. In the course of the development of Hayami’s village, we found

that the community principle of mutual help and income sharing is consistent with the

market principle of profit seeking. The state works effectively if it is in close

collaboration with community members as in the case of an efficient management of

relief operation in the aftermath of Milenyo. In a way, the most appropriate economic

system that promotes economic development seems to be the right combination of

community, market, and state.

36

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Table 1

Number of households in Hayami’s village in the Philippines, 1966-2006

Year Farmers Agricultural

laborers Nonfarm workers Total

1966 46 20 0 66 (70)1 (30) (0) (100) 1976 54 55 0 109 (50) (50) (0) (100) 1987 53 98 7 158 (34) (62) (4) (100) 1995 51 150 41 242 (21) (62) (17) (100) 2006 36 138 254 428 (9) (32) (59) (100)

1Numbers in parentheses are percentages. Note: Data in 1966, 1976, 1987 and 1995 were drawn from Hayami and Kikuchi (2000, Table 3.3, p.54), while data in 2006 were drawn from the database of Y. Sawada.

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Table 2

Adoption of modern rice varieties and yield in Hayami’s village, 1966-2006

Year and season MV adoption

(% of farmer adopters) Yield

(tons per ha) 1966 Wet TV1 100 1.9 MV2 0 na3 1976 Wet TV 3 1.1 MV 97 2.8 1976 Dry TV 2 2.0 MV 98 3.2 1987 Wet TV 0 na MV 100 4.0 1987 Dry TV 2 4.6 MV 98 4.7 1996 Wet TV 0 na MV 100 4.0 1996 Dry TV 0 na MV 100 5.3 2006 Wet TV 0 na MV 100 4.4 2007 Dry TV 0 na MV 100 4.9

1Traditional variety of rice. 2Modern variety of rice. 3Means not available. Note: Data in 1966, 1976, 1987 and 1995 were drawn from Hayami and Kikuchi (2000, Table 5.1, p.107), while data in 2006 were calculated from the database of Y. Sawada.

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Table 3

Tenure distribution of plots in Hayami’s village in the Philippines, 1966-2006

Year Tenure Plot Area No % ha % 1966 Owned1 2 3 1.3 1 Leasehold 12 19 29.9 29 Share 44 70 66.1 63 Sublet 5 8 6.9 7 Pawning arrangement 1 0.5 Sharecrop arrangement 4 6.4 Total 63 100 104.2 100 1976 Owned 3 3 1.7 2 Leasehold 44 48 67.7 63 Share 30 32 29.7 27 Sublet 16 17 9.1 8 Pawning arrangement 5 1.5 Leasehold arrangement 2 0.8 Sharecrop arrangement 9 6.8 Total 93 100 108.2 100 1987 Owned 14 17 11.6 13 Leasehold 39 46 46.1 52 Share 21 25 21.9 25 Sublet 10 12 9.0 10 Pawning arrangement 3 1.4 Leasehold arrangement 3 1.8 Sharecrop arrangement 4 5.8 Total 84 100 88.6 100 1995 Owned 25 31 28.0 29 Pawning of ownership 2 2 0.8 1 Leasehold 37 46 47.7 49 Share 13 16 14.6 15 Sublet 4 5 5.9 6 Pawning arrangement 2 3.5 Sharecrop arrangement 2 2.4 Total 91 97.0 100 2006 Owned 15 31 14.53 25 Leasehold 25 51 36.93 62 Share 5 10 3.80 6 Sublet 4 8 4.24 7 Pawning arrangement 4 4.24 Sharecrop arrangement 0 0.00 Total 49 100 59.50 100

1Includes land under Certificate of Land Transfer and Emancipation Patent. Note: Data in 1966, 1976, 1987 and 1995 were drawn from Hayami and Kikuchi (2000, Table 4.4, p.87); data in 2006 were calculated from the database of Y. Sawada.

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Table 4

Sources of household income in Hayami’s village in the Philippines, 1966-2006

Year Total1 Farm origin Nonfarm origin 1974/76 58(100)2 50(87) 8(3) 1980/83 53(100) 33(62) 20(38) 1995/96 56(100) 20(36) 36(64) 2006/07 76(100) 24(32) 52(68) 1Deflated by the CPI Outside Metro Manila (1995=100). 2Numbers in parentheses are percentages. Note: Data in 1966, 1976, 1987 and 1995 were drawn from Hayami and Kikuchi (2000, Table 10.3, p.235); data in 2006 were calculated from the database of Y. Sawada.