2.1 Life in many rural areas is characterised by decreasing opportunities to earn a decent living in both the agricultural and non-agricultural sectors. This situation occurs for many reasons, and efforts to enhance the quality of rural life must combine improvements to agricultural production, employment, infrastructure, housing and the protection of natural resources. Such integrated rural development must take into account the land tenure structure which includes vast numbers of small and fragmented farms. This chapter illustrates why and how land consolidation can be an effective instrument in advancing rural development, and it highlights the need for countries to develop their own strategies for land consolidation.
2.2 Rural conditions throughout the region have deteriorated during the transition period. There is growing inequality between rural and urban areas, with most of the poor now living in rural areas. These areas are characterised by declining populations that are increasingly represented by women and the elderly. They have been affected by national population growth rates that have slowed and even turned negative, and as people have migrated to urban areas and other countries in search of employment. Migration has been a predominantly male phenomenon and women now make up a large percentage of the rural poor. Household members in rural areas are much older than those in urban areas and increasingly households are headed by the elderly and pensioners.
2.3 High unemployment is a common feature of rural areas. In most countries, the agriculture sector accounted for the greatest decline in employment. Rural villages suffered, particularly those where agricultural concerns and heavy industries, now obsolete, were the main employers.
2.4 Rural infrastructure has often deteriorated considerably and many rural roads, irrigation systems and erosion control measures are in poor condition. The roads and irrigation and drainage systems that were originally designed to suit the cultivation of large tracts of land have often not been reconstructed to suit the new smaller family farms. Power and water systems are prone to breakdown and other rural public and cultural facilities such as schools, libraries and community centres have also suffered from lack of attention.
2.5 Much of the environmental damage that occurred in rural areas during the socialist period has not been repaired. Large-scale cultivation destroyed field roads, water courses, vegetation belts and other landscape features suitable for individual farming. Production centres were often placed in the heart of villages with adverse ecological impacts. Environmental degradation has sometimes increased during the transition period, for example through the deforestation of valuable species, inappropriate tillage of soils and a failure to maintain a balance of nutrients in the topsoil.
2.6 One effect of land privatisation has been a shift from mechanised to non-mechanised production because new owners face great difficulties in getting access to machinery which was taken over by local monopolies or which remains state property. In some countries, a significant proportion of arable land is idle because of obstacles to cultivation and the absence of the present owners.
2.7 The agricultural structure comprises some very large farms and many millions of microfarms, with an almost complete absence of intermediate-sized competitive, commercial farms. The larger farms, sometimes covering thousands of hectares, are operated by the state, commercial companies, private associations or cooperatives. In contrast, farms of under five hectares account for 75 percent or more of the total number of farms in most countries. Many farms are even smaller: in Bulgaria, farms smaller than one hectare comprise 86 percent of individual farms and cover only 26 percent of the farming area. Most farms are subsistence farms that produce little for the market, but they are often an important source of income and food security for many rural residents. Daily food consumption is based to a large extent on a households own production. For many farmers, their strategy is one of trying to survive with no clear vision of how to advance.
2.8 In most transition countries the land tenure structure of many small farms, frequently divided into fragmented parcels that are often awkwardly shaped for agricultural purposes, is a legacy of the first phase of transition (see Box 1). In some cases, the principle of correcting property injustices resulted in the restitution of land to former owners. Land was usually restituted to the elderly, or in joint ownership to a group of heirs of an original owner. Restitution also established a large group of absentee owners residing in urban areas who have little or no involvement with farming or the rural economy. In other cases, the principle of equity applied in decollectivisation programs resulted in households receiving several parcels of different qualities of arable land, a portion of the vineyard, and of the orchard. In yet other cases, the pattern of small fragmented parcels is the perpetuation of centuries-old peasant holdings that survived limited socialist attempts to transform agrarian structures.
2.9 While good progress has been made in building new registration and cadastre systems to administer rights to land, at times such rights have not yet been clearly established. In some case, owners have not received legal title to the land they occupy. In other cases, many new parcels are created informally through the division of agricultural land among the heirs or other entitled persons. When there is considerable soil diversity within a small area, subdivision tends to produce a physical division of each individual parcel according to the number of heirs rather than the distribution of intact parcels. Such informal arrangements within families are often not registered.
2.10 Farmers wanting to enlarge their holdings face many difficulties. The main way in which land is transferred is through inheritance, and land markets are weak. People wanting to purchase land have great difficulty in determining what land might be available for sale, and they often face problems in identifying who holds rights to the land. Records may refer to the original, often deceased, owners and present heirs may be difficult to locate, especially if they are not local residents. Delays in clarifying ownership and issuing title after the privatisation programmes add to the problems. The joint ownership of land also impedes sales as all owners must agree and this can take time especially if some owners are outside the country. Few farmers can afford to pay cash for land, and access to credit in rural areas is limited because of high interest rates, lack of collateral and bank policies that do not favour lending to rural people. High transaction costs compared with the value of the land further discourage purchases.
2.11 Rural conditions do not encourage land owners to sell their land. Some owners have a strong emotional attachment to newly restituted land or to parcels that have been passed down through generations even during the socialist times. Rural land holdings are an important safety net providing economic independence especially for those with a decreased capacity for work. They also serve as a last resort for those owners in urban areas should they lose their employment. Because of the low market value, money raised by selling rural land is not sufficient to allow owners to explore other opportunities such as purchasing a house in an urban area or investing in business operations. Many people thus prefer to keep their land even if it is generating little or no income for them.
2.12 Leasing is the principle way in which farmers have been able to enlarge their holdings, allowing them to increase production for the market as well as for their own consumption. It is attractive to those wanting land because it has lower financial requirements, thus enabling farmers to invest their money in equipment and other inputs. Leasing also represents an alternative to many people, especially the large elderly population, who can no longer work the land themselves. Rents are usually arranged to meet the requirements of the owners: those living in villages often receive rent in kind (usually cereals for themselves or their livestock) while those residing in cities prefer to be paid in cash. While leasing is beneficial, it has proved to be only a partial solution. The small size of parcels in a holding and their distribution over a wide area make consolidation difficult. Assembling a holding suitable for commercially competitive operations can result in leasing agreements with many owners. Commercial operators who lease land often have contracts with over 100 owners and some manage over 1 000 contracts, and they must deal with the cumulative transactions costs implied by this.
2.13 An important part of European policy is to reduce disparities between urban and rural areas by improving the rural situation. Upgrading conditions in rural areas requires sustained programmes and projects that lead to the development of farms, villages and small towns, and the rural space in which they exist. Because rural communities have diverse needs, an integrated approach to rural development should include:
Improving the agricultural sector by enabling farms to become more efficient and competitive, and better integrated in agricultural chains.
Encouraging alternative ways of agricultural production such as the implementation of agri-environmental measures and good agricultural practices.
Strengthening the rural economy by promoting broad-based growth, including supporting non-farm activities and providing access to credit, markets and infrastructure support.
Improving social conditions by promoting employment opportunities and providing increased access to social services, water and sanitation.
Providing greater protection of natural resources and for their sustainable management.
Ensuring greater participation in the development process by those usually left out of it.
2.14 The success and sustainability of rural development programmes will depend to a large extent on how they address the vast numbers of small and fragmented parcels. Growing numbers of land owners are being forced to withdraw from agriculture because of age or illness. Many of their heirs have no interest in agriculture and are divorced from village life. Other land owners wish to consolidate and enlarge their holdings so that their farms are competitive with those in Western Europe. The present tenure structure arose in large part through the application of principles of justice and equity during the land reforms. Projects supporting agricultural development, natural resource management and broader aspects of rural development must address the consolidation and enlargement of holdings in ways that do not destroy gains made during the initial period of transition. Land consolidation can be used as a highly effective instrument in rural development, providing land owners with new opportunities to improve their situation. Box 2 provides some principles used in current approaches to land consolidation.
2.15 Land consolidation can lead to improvements in agriculture. Allowing farmers to acquire farms with fewer parcels that are larger and better shaped, and to expand the size of their holdings enables them to become more competitive. Improving the tenure structure can facilitate the adoption of new agricultural technologies leading to a more prosperous and efficient agricultural sector. Benefits from land consolidation in Western European countries include increases in gross income of farmers and a reduction in the working hours in the field.
2.16 Land consolidation can promote improved management of natural resources. Rationalising the tenure structure can facilitate environmental protection and can support better land use planning and land management. As a consequence of economic development, increasing amounts of agricultural land are identified for industrial and housing purposes, highways and other projects. Land consolidation can help in addressing potential conflicts over changes to the use of land. Projects can use land consolidation to provide alternative land as compensation to owners of agricultural land designated for other purposes. Improved planning of water and other resources often requires the readjustment of parcel boundaries. The structure of land can have a substantial influence on the geo-ecological and bio-ecological resources. The size and shape of parcels, the slope and type of land use can work to either cause or prevent the degradation of soils and landscapes. Increasing the size of micro-parcels can enable farmers to use less intensive methods and to decrease adverse environmental effects.
2.17 Land consolidation can play an important role in improving rural development. When applied as an instrument of rural development, land consolidation can improve the efficiency and cost-effectiveness of public and private investments in transportation and communication networks, utilities and irrigation systems. By facilitating renewal of communities, land consolidation can promote social stability. In Western Europe, many communities that have experienced land consolidation show increases in the number of new jobs created which in turn lead to increases in tax yields. Potential conflicts between the promotion of economic growth in the agricultural sector and the protection of the environment can be avoided through integrated local land planning and the effective coordination of all interests. Land consolidation projects can serve to provide the framework for implementing such integrating local land planning.
2.18 Land consolidation projects also serve to improve land administration systems as they provide an opportunity to clarify and update ownership records. The better quality of information on land rights in turn facilitates the development of land markets and the management of land conflicts.
2.19 Important structural changes to agriculture can occur effectively only if land consolidation is part of integrated rural development. Without a concerted effort, structural changes are likely to be limited in scope and to occur at a much reduced rate. Farmers recognise the problems of land fragmentation but the market and voluntary efforts to consolidate have not made significant impacts. A land consolidation strategy is needed to ensure that necessary resources and assistance can be provided to farmers and other rural residents in a coherent manner.
2.20 A land consolidation strategy should recognise that rural society is diverse. Non-agricultural interests must be considered along with those of agriculture. The farming sector itself comprises groups having very different interests and aspirations. Subsistence farmers very often have no other opportunities. Some owners use subsistence farming as a temporary coping strategy while for others it is a permanent condition: land consolidation cannot make them landless. Part-time farmers often maintain farms only as a sideline to supplement their incomes and do not necessarily want to expand their operations. Small family farms that wish to increase their production for the market, and larger-scale commercial farms, are usually interested in expanding their operations. The needs of farmers are also diverse. Some do not want changes. Others want to reduce problems of fragmentation and poorly shaped parcels, and yet others want also to increase their holding size. Some farmers need assistance with extension services, credit, machinery, processing facilities and marketing while others have addressed some or all of these problems. Land consolidation must be attractive not only to large-scale farmers; it must appeal to a broad cross-section of rural society.
2.21 The strategy should accept that not all fragmentation is a problem. In some cases fragmentation is beneficial as it reduces risk by giving farmers a greater variety of soils and growing conditions, especially in mountainous areas. Having fields at different elevations, or maintaining coastal and upland parcels, enables farmers to grow a wider variety of crops. Some fragmentation can be neutral. A concern of early land consolidation projects was the time taken to move between fields, and while this remains an important issue, it has become less of a concern as improved access to trucks and other motorised equipment has allowed farmers to travel more quickly and less expensively from one field to another. Fragmentation of holdings will and should occur as farmers respond to changing market conditions by periodically expanding and contracting their operations by leasing land in or leasing it out. It will not be possible or even desirable to eliminate land fragmentation entirely. Land consolidation must address cases where land fragmentation is a problem and not impose a solution where it is not needed.
2.22 The strategy should ensure that land consolidation protects and enhances the environment. Land consolidation is not automatically beneficial and the strategy should ensure that efforts do not make the situation worse. An over-reliance on certain technical aspects of consolidation in projects has resulted in degradation of nature and the landscape, and in over-production at the cost of the environment and bio-diversity. Poorly designed projects have resulted in land degradation by encouraging the use of unsuitable land for agricultural purposes and have caused the drying up of wetlands through the construction of inappropriate drainage systems. Rivers were canalised and hedges removed, resulting in soil erosion through unchecked rain runoff, and in damaged habitats of native plants and rare animals. A large focus of rural development in Western European countries is correcting the environmental damage done in earlier projects. Land consolidation should not cause environmental damage.
2.23 The strategy must recognise the need for diverse local solutions. Land consolidation must take into account local agricultural, economic, social and environmental characteristics, and must be based upon expectations and needs of the local rural populations. Consolidation projects in mountainous areas, or in forested ones, will be quite different from those on agricultural plains. The influences of environment and culture, along with financial constraints and other limitations, will make a range of consolidation approaches necessary.
2.24 At the same time, a land consolidation programme will have to accommodate national and sub-national priorities as well as local ones. The strategy should address:
Institutional issues: what tasks should be done at what level by which institution, and how will participatory, local level bottom-up involvement be implemented.
Financial issues: how will money to pay for land consolidation be sourced, and how can the process be made cost-effective.
Legal issues: what will be the legal basis for implementing land consolidation.
Capacity building: how can participants at all levels and in all sectors acquire the knowledge and skills they need to carry out their responsibilities.
International cooperation: how can countries gain access to the technical and financial resources of donors.
2.25 The strategy should look at a phased approach to land consolidation due to the complex nature of rural development. While the ultimate goal of a country may be a comprehensive land consolidation programme, it is may be necessary to proceed with a learning phase. This guide provides one approach to phasing by starting with the implementation of pilot projects (see chapter 4). Additional steps can be taken simultaneously to promote land consolidation in areas that fall outside the pilot project sites (see chapter 5). Both measures should provide experience and information on institutional, financial, legal and technical matters relevant for the design of the comprehensive programme (see chapter 6). Before addressing these elements, chapter 3 provides a further description of land consolidation itself.