Land Conversion: An Economic Boon or Bane in Central Luzon's Agricultural Sector

Urbanization has proven to be a vital tool for ensuring a healthy economy in every country (Pradhan et al., 2021). In a study by Magazzino and Mele (2021), improving transportation by putting road-building projects across western counties in more than 15 areas is one strategy to support economic growth in China. However, Shaban et al. (2022) assert that the impact on economic growth may differ depending on the degree of urbanization and economic development of a particular nation. The possible causes of urbanization include a natural increase in the man-land ratio, which refers to the number of farmers who have lost their jobs due to land conversion, rural-to-urban migration, which affects the employment and income opportunities of the people, and the productivity of the land that determines the capability of the farmland to be transformed. Because there is a hope of having abetter standard of living in the urban areas, people are starting to migrate, causing a continuous increase in the population.

As a result, it is necessary to meet the needs of the people in terms of housing, work, and educational prospects, in addition to providing easier access to social services and more chances for social and cultural activities (OLCreate, n.d.). However, while civilization causes towns and cities to thrive, it also has negative implications regarding agriculture since it affects the lands, particularly in the rural areas, through land conversion. For this to occur, urbanization considers the farmland values and their determinants, such as location, distance, travel time, size, farm income, soil productivity, and the like (Tavares et al., 2022). Transforming agricultural lands into non-agricultural or manufacturing ones is considered as industrialization. According to Harini et al. (2018), demand for land rises along with population growth and socioeconomic activity. Without keeping pace with land supply, agricultural land will decline, leading to decreased agricultural production in an area. Hence, it is evident how it typically occurs in less-developed countries such as the Philippines since there is a need for commercial, residential, and industrial development, especially in the country'srural areas (Fulgar, 2023). However, it also mentioned how it affected the food security and livelihoods of the people relying on the agricultural sector. In a study by Bravo (2017), significant land conversion brought about by urbanization and industrialization altered the agricultural environment of the Metropolitan Manila area. It substantially decreased the amount of land used for crop production. Additionally, it put pressure on the periphery of cities, which made land use conversion in cities inevitable.

According to a study by Dait (2023), because rice, or palay, has always been at the core of Philippine agricultural policy, it is regarded as a highly political commodity in the nation. The country'srice basket, which is located in Region III, or Central Luzon, and is made up of the provinces of Aurora, Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, and Zambales, is often the site of farmland conversion because it is a thoroughfare and a popular destination for real estate developers seeking more reasonably priced housing outside of Metro Manila (Fair Finance Asia, 2021). Based on the report of the Department of Agriculture (DA), from several years ago up to now, Central Luzon is classified as the top producer of palay in the Philippines, specifically in Nueva Ecija. The province is known as the “Rice Granary of the Philippines” since it is the country'snumber one producer of palay, producing 13,499.54 thousand metric tons from 4006.4 in 2003 (Santos et al., 2018). Also, in an article by Tecson (2023), the region has been a consistent top producer during recent years by producing 867,084 metric tons of palay, contributing 18.1 percent to the country’sagricultural output. However, since farm inputs are continuously increasing in price, farmers tend to use chemical fertilizers and pesticides and, worse, sell their lands to commercial developers, which are privately owned, just like in Candaba Swamp in Pampanga, leading to a threat to biodiversity and food security (Costamero, 2023). In an article written by Navales in 2019, he said land use conversion projects such as roads and industrialized areas have been covering productive lands in the region, threatening the livelihood of the farmers, food security, and self-sufficiency of the people in the area. Moreover, the presence of the North Expressway during 1981 was very noticeable in that it transformed 9.07 hectares of land into asphalted or cemented streets. In 1991, an average often percent (10%) of agricultural land in Plaridel, Bulacan, was converted to residential, commercial, or institutional areas per year, covering 361.27 hectares of total land area to roads and built-up areas (Nantes, 2011). Large national real estate firms have developed and are currently developing several housing developments and subdivisions in Bulacan, including three San Jose del Monte subdivisions and a 300-hectare residential property in Malolos (Arceo-Dumlao et al., 2021).

Therefore, it will be difficult for recognized beneficiaries of land-use conversion to get a statewide ban on it in order to conserve the rice fields of Central Luzon. An act from the Office of the Secretary of the DA (2019), regarding land conversion in the country, the “2002 Comprehensive Rules on Land Use Conversion,” states that conversion of agricultural land to non-agricultural uses shall be strictly regulated and may be allowed only when certain conditions are met. As approved by the Department of Agrarian Reform (DAR), land use conversion alludes to the actor process for converting apiece of agricultural land from its existing physical use—such as cultivating soil, planting crops, or growing trees—to another usage or for an agricultural purpose other than farming and reaping its produce.

Cobb and Douglas’ (1928) production theory shall serve as a foundation for this study. It states that there is a relationship between the units of factors of production and the units of output of goods and services. It also demonstrated that if the number of inputs used changes, the units of output produced will likewise change. In this research, it explores how the independent variables will cause a change in the dependent variable.

Several studies have been conducted regarding the relationship of several factors of the agricultural sector such as arable land, employment opportunities, and man-land ratio on how it influences rice output. Most of these studies are focused primarily on the national level, with a few focusing on Central Luzon. In addition, only a limited number of studies have concentrated on whether the agricultural sector, through rice production, is beneficial to the economy.

This study will benefit society and agricultural communities since they will know whether land conversion boosts economic growth and productivity. Moreover, the current undertaking hopes to contribute to the existing knowledge in the academe pertinent to the effects of land conversion on agricultural production and consequently to people, specifically to the farmers’ average income. As a business economics student, this research will allow the researcher to apply the principles and theories learned inside the classroom and apply them on a vital sector of the economy that significantly impacts the nation as a whole. Lastly, this will benefit municipal and national policymakers as they will have information intended for the agricultural sector in the region. The researcher will further explore the relationship between the variables involved in this study. Hence, this educational endeavor hopes to provide an extensive and exhaustive perspective on the effects of land conversion in the agricultural sector in Region III. This research aims to identify and explore the presence of Cobb-Douglas production theory in the Philippines, specifically in Central Luzon’sagricultural sector. It investigates the effects of (IV1) quantity of arable land available, (IV2) employment rate, and (IV3) man-land ratio to (DV1) rice output and (DV2) average income earned. Specifically, this study seeks: To determine how the quantity of arable land, employment ratio, and man-land ratio affect rice output in Central Luzon; To determine whether the changes in the level of rice output is a boon or bane in Central Luzon as measured by the average income earned by the farmers. This data analysis will be carried out across all the provinces in the region to ensure thorough analysis and conclusion.

This study limits itself to the Philippines, particularly Central Luzon (Aurora, Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, and Zambales), as the country'snotable palay producer. Data will come from secondary sources and publicly available statistics. This study will only validate the impact or relationship between the three (3) independent variables, quantity of arable land, employment rate, and man-land ratio on rice output. The effects or consequences of these independent factors will not be covered. The question of whether or not land conversion benefits the local economy, based on its agricultural sector, will also be covered. Furthermore, the data covered in this study spans 41 time periods, commencing from 1981 to 2021. Hence, the study’sfindings might only partially reflect the present situation or effectively anticipate future trends.