Bust

But the optimism of the late 1960s vanished rapidly in the early 1970s as the vegetable industry suffered two destructive blows: the imposition of martial law in 1972, and the energy crisis of

1973. Soon after assuming dictatorial powers, Ferdinand Marcos attacked Benguet's political leaders and seized the local news media. When oil prices skyrocketed the following year, the Manila government used its new powers to "guide" the country's agriculture through the crisis. Unfortunately for Benguet, it considered vegetable growing an expendable luxury. Fertilizer was now scarce, and authorities earmarked the available supplies for lowland rice and corn, attempting even to prevent delivery to the highlands (Baguio Midland Courier Nov. 25, 1973). The official view was that the world now faced a food crisis, and that the Benguet people should respond by cultivating sweet potatoes and other staples (Baguio Midland Courier Sept. 29, 1974).

The Benguet farmers, of course, continued to grow vegetables. Desperate for fertilizer, they soon resorted to extralegal methods of procurement. The leaders of the Buguias Credit Union were at one point arrested after returning from the lowlands with a truckload of ammonium sulfate; political opponents of the co-op leaders had evidently informed the local military.

The vegetable industry languished through 1974 and 1975. The state eventually allowed fertilizer sales, but supplies remained inadequate. Moreover, fewer persons in the cash-strapped Philippines could now afford temperate produce. On November 2, 1975, the Baguio Midland Courier reported that massive quantities of Buguias vegetables were rotting in the fields. Although many farmers blamed the industry's middlemen, some community leaders began to attribute their dilemma to state policy and international oilmarket manipulations. Local government suffered too; by August 1975, the Benguet treasury had lost some 1,000,000 pesos of tax revenue (Baguio Midland Courier Aug. 29, 1975).

The vegetable industry also had to endure "crony capitalism," Marcos's practice of helping companies that supported his regime at the expense of businesses owned by individuals perceived as enemies. Thus the Philippine Planters Company, a quasicooperative that both manufactured and distributed agricultural inputs, nearly expired when it was ordered to deliver supplies below cost. The main beneficiary was the rival Philippine Phosphate Company, owned by a friend of the president.

The state did not entirely abandon the vegetable industry, however, and as the food scare abated it again devised new credit

schemes. Development authorities futilely attempted to revive the marketing cooperatives, but most farmers now regarded any government meddling with suspicion. Once again, economic planners looked to bank loans. In 1974 the Development Bank of the Philippines put forward a new scheme by which groups of five farm families could receive credit in common, each household acting as a guarantor for the others (Baguio Midland Courier Sept. 22, 1974). And in 1976, the same bank established a branch in Abatan, further facilitating credit procurement in Buguias (Baguio Midland Courier Nov. 30, 1976).

But all such loan programs eventually failed. Even after the vegetable industry partially recovered, few farmers could pay their interest charges. When the banks threatened foreclosures, gardeners lobbied successfully for easier terms (Baguio Midland Courier Aug. 2, 1976). But this only delayed the reckoning; by the late 1970s, some 59 percent of loans to Benguet farmers were delinquent (Buasen 1981:22).

Ultimately, the inability of the Benguet farmers to repay their loans proved disastrous only for the lending institutions. Despite their powers of foreclosure, the banks could not recoup their losses. For delinquent loans secured with titled property, a bank theoretically could sell the land after the borrower had failed for a given period to make payments. In the resulting auctions, however, no one would offer adequate bids; in essence, the growers maintained solidarity against the outside financiers. Land titles thus passed to the banks as "acquired assets," but as assets of no utility. The banks could only hope that the original owner would eventually want to regain the title, necessary if he or she were to sell the parcel legally. But even here the borrowers held the advantage, since the original loans had been greatly devalued by inflation. The banks lobbied for a retroactive inflation index, but with no success.

By the end of the 1970s, official lending institutions refused to extend new credit to the average Benguet farmer, a person now considered an unacceptable risk. Wealthy growers still managed to qualify, but sometimes even they would first have to bribe the responsible loan officer.

The other new font of capital, the local credit unions, have had mixed histories. A few co-ops, notably Bad-ayan's, have continued to thrive, helping local farmers expand their fields and weather un-

favorable markets. The Buguias Central Credit Union, however, crumbled in the mid-1970s. Some former members allege that its officials were too lax and disregarded loan regulations. By the 1980s, capital in Buguias was again scarce, and wealthy farmers and traders again reclaimed the financial structure of the local vegetable industry.