Le cadre actuel de la croissance économique et du développement inclut une tendance générale vers la privatisation des droits fonciers, l'effondrement des structures collectives en agriculture, ainsi qu'une dépendance des marchés fonciers comme moyen pour les agriculteurs de participer au processus de développement. Malgré la disparition de la réforme foncière de l'ordre du jour politique, il est clair que les situations qui ont conduit dans le passé à la mise en place de réformes foncières n'ont pas disparu. Cet article discute la pertinence de prendre en compte les structures foncières dans le cadre de l'évaluation des politiques macroéconomiques qui ont une incidence sur l'agriculture. Sont également abordés: les liens entre la sécurité de la tenure foncière et l'accès au revenu et aux ressources; la nature et la performance du marché foncier en ce qui concerne la participation des populations rurales pauvres; et finalement le lien entre les structures agraires et le revenu non agricole. La conclusion tirée est que la réduction de la pauvreté rurale requiert des actions à facettes multiples, qui reconnaissent les liens entre les possibilités d'accès aux ressources des ménages, les stratégies de revenu des ménages et les changements macroéconomiques et structurels.
El actual marco de crecimiento económico y desarrollo incluye una tendencia general hacia la privatización de los derechos sobre la tierra y el colapso de las estructuras colectivas en la agricultura, así como una perspectiva hacia los mercados como vías para que los campesinos accedan a participar en el proceso de desarrollo. No obstante la eliminación de la reforma agraria como parte explícita de la agenda política, es claro que las situaciones que llevaron a la activación de las reformas del régimen de tenencia de tierras en décadas pasadas no han desaparecido. Este artículo analiza la relevancia del análisis de los sistemas de tenencia de la tierra cuando se evalúan políticas macroeconómicas que afectan a la agricultura. También se discuten los vínculos entre seguridad en la tenencia de la tierra y acceso a ingresos y otros activos; la naturaleza y el desempeño de los mercados de tierra en relación con la participación de los pobres rurales y, finalmente, la relación entre estructuras organizacionales agrarias e ingresos extraprediales. Se concluye que la reducción de la pobreza rural requiere esfuerzos de políticas múltiples, que reconozcan los vínculos existentes entre las opciones de acceso a activos por parte de las unidades domésticas, las estrategias de ingreso que realizan esas unidades, y los cambios macroestructurales.
Jolyne Melmed-Sanjak
Susana Lastarria-Cornhiel
The current framework of economic growth and development includes a general trend towards the privatization of land rights and a collapse of collective structures in agriculture as well as a move towards reliance on land markets as the means of peasant access to participation in the development process. Despite the removal of land reform as an explicit part of the policy agenda, it is clear that the situations which led to the activation of land reforms in past decades are still in place. This article discusses the relevance of looking at land tenure systems when evaluating macroeconomic policies that affect agriculture. Also discussed are the link between land tenure security and access to income and assets; the nature and performance of land markets with regard to the participation of the rural poor; and the link between agrarian organizational structures and off-farm income. The conclusion reached is that rural poverty reduction requires multifaceted policy efforts that recognize the linkages among household asset access portfolios, household income strategies and macrostructural changes.
Understanding the linkages between access to land (size
and ownership structures) and access to other sources of income and capital is
an essential element in the policy dialogue about food security and poverty
reduction. The current framework of economic growth and development includes a
general trend towards the privatization of land rights and a collapse of
collective structures in agriculture as well as a move towards reliance on land
markets as the means of peasant access to participation in the development
process. Despite the removal of land reform as an explicit part of the policy
agenda, it is clear that the situations which led to the activation of land
reforms in past decades are still in place. It is still very important,
therefore, for these issues to be addressed, albeit following a
"market-oriented" approach (Shearer, Lastarria-Cornhiel and Mesbah,
1991).
There is ample evidence of continued pervasive rural poverty and
hunger, starting at little changed and low-productivity agrarian structures. The
underutilization of land resources by some and the intensive, degrading use of
marginal lands by multitudes of land-poor peasant farmers still characterize
contemporary agrarian structures (Kay, 1994; de Janvry and Sadoulet, 1989a;
Thiesenhusen and Melmed-Sanjak, 1990; Thiesenhusen, 1991; Salgado, 1994;
Melmed-Sanjak, 1992; Binswanger and Elgin, 1990; Lopez and Romano, 1995). Thus,
de Janvry and Sadoulet (1989a) say "the leading cause of rural poverty is the
lack of sufficient access to land and low-productivity of land".
Yet,
implicit in the policy regimes of market liberalization (structural adjustment)
is the fact that there is no need for action other than removing
government-imposed constraints on the operation of markets because - as it is said - when markets are allowed to work, growth will occur and all will benefit. Several authors have questioned the exclusionary/inclusionary nature of contemporary macroeconomic growth strategies (Kay, 1994; Carter and Mesbah, 1993; Stonich, 1992; de Janvry, Sadoulet and Davis, 1995; Melmed-Sanjak, 1992) when discussing directly the implications for food security. A fair conclusion that receives much support in the empirical literature is that, while the modus of land reform in the past needed to be structurally adjusted, today's structural adjustment policies need to encompass some forms of land reform (e.g. land market development policies that explicitly address the ability of the poor rural strata to participate as well as issues of land tenure insecurity). In particular, two key differences in present-day land policy are:
Furthermore, concern about problems of environmental
degradation and long-term survival increasingly focuses on problems of peasants'
access to and use of land resources (Thiesenhusen, 1991). In this vein, Reardon
and Vosti (1995) offer a "new conceptual framework to explore the
poverty-environment links" asserting that "the range of types of poverty is the
range of lack of various assets (and income flows derived from them ...)". Their
call for the application of household economics and for the analysis of income
strategies to be "brought to bear on understanding the environment-poverty
links" is already being pursued and increasingly recognized (Larson and Bromley,
1990; Perrings, 1989).
In the light of the above, to rationalize the
persistence of rural poverty and hunger, the entitlements failure approach
proposed by Sen (1981) for explaining famine seems very relevant. Sen's approach
strongly suggests that food supply is not a problem of hunger but rather that
hunger is a problem of access to the available supply as determined by
entitlements. Entitlements vary across groups within social systems and across
social systems. It is clear to us that around the rural areas of the globe,
access to food is determined at least partly by a person's access to various
types of capital (e.g. land, physical non-land, human and financial).
Thus,
Sen's approach points out the usefulness of the current conceptual frameworks
for classifying groups according to asset typologies that are being presented in
discussions on various aspects of rural poverty (de Janvry, Sadoulet, and Davis,
1995; Reardon and Vosti, 1995; Carter and Kalfayan, 1989). Of particular
importance is the issue of how agrarian structure (landownership structures and
farm-size distributions) is or is not a key to defining these typologies. This
is a primary focus of the present article, in which evidence is presented in
favour of an approach to food security that promotes off-farm income generation
and land access enhancement as complementary parts of a policy regime.
This conclusion is reached through a synopsis of various strands of relevant literature. First, there is a general discussion of the relevance of looking at land tenure systems when evaluating macroeconomic policies that affect agriculture. This is followed by a more detailed discussion of the link between land tenure security and access to income and assets, the nature and performance of land markets with regard to the participation of the rural poor and, finally, the link between agrarian structures and off-farm income. In the concluding section, these three pieces are brought together in a macropicture and brief discussion of policy.
Agrarian structure, access to capital and the implications of agricultural sector policy for the rural poor
As mentioned in the introduction, there
is discordance between contemporary macropolicy initiatives and the
microfoundations through which they operate. A key conclusion from analysing the
impacts of macropolicy through the lens of microeconomic decision-making models
is that access to various forms of capital is pivotal in determining household
income strategies and, therefore, in determining the likely change in household
behaviours and well-being when faced with macropolicy changes. Mention of two
such modelling exercises, which also offer empirical insights, should suffice to
demonstrate this important revelation.
First, Carter and Mesbah (1993)
conduct a simulation analysis of how various strata of the Chilean peasantry
will fare in the land market during a period of rapid agricultural export-led
growth. Their exercise is based on the theoretical model of household
behavioural strategies developed in Carter and Kalfayan (1989). A key factor in
this model, and hence in defining the differentiated behaviours of various
classes of rural households, is that households are stratified according to
resource endowments (or asset typologies) which imply different behavioural
strategies. Each stratum is differently constrained by its relative need for and
ability to participate in size-sensitive rural factor markets. A typology of
rural households is defined, including proletarian, semi-proletarian, peasant
and capitalist family farms and hierarchical capitalist farms. These farms
differ in particular in their capacity to increase access to landholdings and
financial capital and decrease reliance on off-farm employment for survival. The
latter three forms of farming differ significantly also with regard to the types
of labour employed on their farms. The implications of this typology for
participation in the land market are striking and are discussed under Land
markets as a means of access for the rural poor, p. 60.
Put simply, these authors amply demonstrate a problem with policy models which, as de Janvry, Sadoulet and Davis (1995) say, "... generally abstract from these features [market failures, transactions costs, etc.] and postulate instead the existence of perfect markets with exceptions such as surplus labour, price regulation ...". The authors make this statement in the context of showing how consideration of microeconomic features, such as whether or not a household is a net buyer or net seller of a farm commodity, matters for the distribution of the benefits and costs of the North American Free Trade Agreement [NAFTA]. (Similar results were demonstrated by de Janvry and Sadoulet (1989b) in the context of Ecuador.) Their conceptual framework
relies on a typology of rural households which stresses "differential income
strategies based on access to land per adult member ...". Their typology focused
on how different forms of capital determine earnings level.
Carter and Weibe (1990) look at the "evolution of landownership structure itself". Their model and data postulate that working capital constraints (ex ante capital) combined with consumption credit constraints (ex post capital) lead the poor to the adoption of
safety-first strategies entailing the growing of basic foods (food security).
This is a consequence of size-sensitive access to capital. Thus, smallholders
systematically opt away from high-profit commercial crop production which then
stifles their ability to accumulate land over time. Larger farms, which do not
face such constraints on capital, are thus advantaged in short-term income
distribution and in long-term capacity of land accumulation via the
market.
Within a similar framework, Carter (1994) reviews the issues of class
basis and bias of agrarian growth in Paraguay. He demonstrates again the
short-term effects on small farm participation and net employment effects which
take place given a static distribution of land. More important, he draws
attention to how resulting differences in economic returns across variously
sized farms might cause a structural change in the ownership distribution of
land via the operation of imperfect land markets that favour medium-sized to big
farms. Furthermore, caution Reardon and Vosti (1995), "... in the long run, if a
household is investment-poor [asset-constrained] but not welfare-poor [absolute
income standard], it may lead to natural resource degradation that eventually
causes the household to become welfare-poor ...".
In summary, it can be said
that asset typologies define rural classes according to asset portfolios which
tend to stratify according to farm size groups. Therefore, different farm size
groups will be observed to use different behavioural strategies (income
strategies). These differences will affect the outcomes of macroeconomic policy
decisions and, hence, must be recognized and taken into consideration at the
point of policy design.
Land titling tenure security and
investment in agriculture
Increasing attention has been given since the
early 1980s to land titling as a means of increasing tenure security. The
titling of land (and the registration of titles in a public registry) is
considered to be the best way to protect ownership rights to land, in other
words, the best form of tenure security. Land titling and registration is the
highest level of formalization of ownership rights in private property tenure
systems. Where private property as a tenure form is not dominant, however, land
titling has little consequence or utility because land- holders acquire tenure
security through other mechanisms (e.g. membership in a group or family). This
explains why titling programmes in some areas either have little impact,
unintended effects, or quickly become outdated (for example, title documents are
not kept up to date when property is transferred). It also explains the low
participation rates in some supply-driven titling efforts, e.g.
Honduras.
Greater tenure security, theoretically, has two impacts: increased agricultural productivity and more dynamic land markets. Titling is expected to facilitate land transfers, stimulate the land market and increase the supply of land on the market; thus, it can be a mechanism for redistributing land and making land more accessible to landless and land-poor farmers. Feder et al. (1988) argued that land titles reduce the
uncertainty over the entitlement of owners to maintain or transfer land rights
and, in turn, affect the price and scope of land transactions. They hypothesize
that greater security of ownership raises farm productivity and, as a result,
the market value of land is higher for titled land than for an identical parcel
that is not titled. The most commonly recognized benefit from the titling and
registration of land, besides the tenure security bestowed on the property
owner, is the use of those secure ownership rights as collateral to solicit
credit. Formal lending agencies, such as banks, often require not only that
property being used as collateral be titled, but that the title be registered.
In fact, the rationalization for the cost of titling and registration programmes
is that they put capital into the hands of people with little wealth and a low
income, leading to increased investment and productivity by these
families.
Titling and/or registration of ownership rights to land, it has
been argued, increases the productivity of land because:
The impact of titling and tenure security on credit
availability and agricultural productivity can be broken down into supply and
demand effects. Demand effects occur when the acquisition of a land title
increases the farmer's security and certainty that he or she will be able to
maintain possession of the land and benefit from investments that improve its
productive capacity. Increased security is hypothesized to enhance investment
incentives and increase the demand for capital and variable inputs complementary
to capital and, thereby, raise agricultural productivity. Supply effects result
when the provision of a secure and legal land title improves a farmer's access
to cheaper and longer-term institutional credit because the land can be pledged
as collateral for loans. Output on securely owned (i.e. titled) parcels is
consequently expected to be greater than on untitled parcels because of a
greater use of inputs of capital and other variable production factors and
potential shifts to more capital-intensive corps. Thus, the combined demand and
supply effects, it is hypothesized, cause higher farm productivity on titled
land and also raise the price that titled land can command in the land
market.
The rationale provided by Feder et al. (1988) for land titling, however, ignores a number of other factors which
shape farm productivity and may affect the desired outcomes of titling
programmes. Stanfield (1985) argues that, in addition to ownership security,
farmers' investment decisions are affected by a number of factors such as
alternative investment opportunities, accessibility of production inputs, the
farmer's present debt structure and overall profitability of farming and the
availability of investment capital. These factors are dependent on agricultural
and macroeconomic policies. Moreover, the assumption that credit is available
must be seriously questioned. In an environment of imperfect capital markets,
small farmers' access to credit is rationed and a title to land may not overcome
the obstacles to obtaining access to institutional credit.
Further, under
some conditions, the provision of land titles may work to the disadvantage of
smallholders. As Carter (1994) points out: "If titled land operates as
collateral ... then foreclosure and land loss is a real possibility. The threat
of land loss is of course supposed to mitigate moral hazard problems associated
with credit contracts. But in a stochastic agricultural environment which lacks
insurance markets, the farmer faces a genuine erogenous probability of loss of
titled and mortgaged parcels."
Under these circumstances, the impact of land
titles on individual investment incentives and productivity is likely to be
greater for wealthier farmers whose land size and wealth (access to other
assets) leave them favourably situated with respect to capital and insurance
markets. For smallholder farmers, potential benefits of land titles may be
overwhelmed by market access problems, leaving little incentive for title
acquisition.
While definitive and conclusive studies on the long-term effects of land titling on the agrarian structure still need to be undertaken, assessments and studies undertaken in the last decade seem to indicate that titling, in and of itself, does not increase credit transactions, improve production levels on titled land or increase the number of land transactions (Seligson and Nesman, 1989; Boster et al., 1989; Stanfield et al.,
1986; Larson, 1995). A preliminary report by Lopez and Romano (1995) indicates
some positive differences in investment and credit for titled farmers over
non-titled farmers. However, this study examines the same sample of farmers from
Honduras that Larson (1995) uses in her analysis. Lopez and Romano's data were
collected one year later and include an additional sample from another region in
Honduras. The fact that their results are inconsistent means that more attention
is needed in evaluating their data as well as their competing methodologies and
the differences between the two regions in Honduras. Finally, despite a lack of
evidence of productivity effects, there is evidence of a significant impact of
titling on the market price of land (Salgado, 1994; Larson, 1995; Carter, Luz
and Galeano, 1992). This could reflect the capitalized value of the costs of
acquiring a land title as well as perceived implications of title for tenure
security and access to credit. Such perceptions are witnessed by Larson
(1995).
An assessment of titling programmes in Latin America (Stanfield, 1990) reached the following conclusions:
Studies of titling and registration programmes in Africa
appear to arrive at similar and even stronger conclusions. Atwood (1990), in his
comprehensive article on the formalization of land rights in Africa, cautioned
against assuming positive results from land titling. Atwood reviewed three
claims attributed to land titling: increased productivity through improved
factor mobility (land transfers), increased access to agricultural credit and
increased on-farm investment. He found that results of titling in Africa are
mixed at best. The same conclusion is reached by Gavian and Fafchamps
(1996).
First of all, land registration may reduce risks and transaction
costs for some landowners but, for certain large sectors, particularly small
landholders who formerly depended on customary tenure mechanisms, risk and
transaction costs actually increase. For example, in Kenya transaction costs are
sufficiently high to discourage registration of land transfers. And, as
mentioned before, titled land may have a higher risk of being lost than
customarily held land. Second, with regard to credit access, financial markets
in Africa are generally not available for small farmers, even if they hold
titled land. This is mainly because transaction costs for small farmers are
prohibitively high and because bank credit going to agriculture is determined by
factors other than profitability. In other words, the credit for agriculture is
not available in any case. In addition, land as collateral is not that
attractive or useful in Africa since, because of cultural norms and
administrative problems, financial institutions are loath to foreclose on landed
property.
Finally, Atwood found that substantial investments in land
improvements and in new technology have taken place in Africa, whether ownership
has been formalized or not. Most African farmers are secure in their holdings at
present, and their decision to invest and increase productivity is based on
other factors, suggesting that indigenous tenure systems, in spite of offering
limited individualized land rights, have not had a negative impact on
agricultural productivity. Larson and Bromley (1990) reach a similar conclusion
about the role of private versus communal ownership forms in promoting
environmental conservation.
Barrows and Roth (1989), after reviewing evidence
from numerous regions in Africa, conclude that land registration has had very
little effect on investment demand. It appears that, while titles increase
lenders' security, financial markets in Africa have not substantially increased
the credit supply. Thus, a title to land appears to be less important in
determining farm productivity than other factors such as market (capital and
factor) access.
In addition, the formalization of ownership rights is not unbiased. Titling seems to be self-selective in that landowners who already have tenure security are more likely to seek a title (Carter, Weibe and Blarel, 1991). These owners tend to have larger landholdings, be better educated and grow cash crops. Some studies have also found that titling programmes are often utilized by people who, because of their position, education or personal contacts, are able to acquire a title to land that actually belongs to someone else.
Land markets as a means of
access for the rural poor
In the past, arguments for progressive land
reforms were often supported with both equity and productivity arguments. The
widely accepted observation of an inverse relationship between farm size and
output per unit of land was a basis for the productivity argument. In the
current environment of reliance on private property and market allocations, the
inverse relationship yields the expectation that competitive land markets would
reallocate land towards the smaller end of the agrarian structure. The next
sections briefly review the evidence on the inverse relationship and then focus
on research efforts that demonstrate the limitations to the assumption that land
markets, as currently constituted, will generate redistributive outcomes.
The inverse farm size-productivity relationship. A comprehensive review of
the literature that provides worldwide evidence of an inverse farm
size-productivity relationship, as related to the rationale for land
redistribution, is found in Domer (1992). The basic explanation is found in
differences in resource endowments which lead small farms to allocate more
labour per unit of land, thus cultivating the land more intensively than larger
farms. Kevane (1996) reviews the literature, including the works of Carter and
Weibe (1990), Eswaran and Kotwal (1986) and Feder (1985), which sugges that the
nature of markets provides incentives for large farms to cultivate extensively
and small farms to cultivate intensively, causing land redistribution being
viewed as a win-win process of efficiency and equity.
More recent papers that
address the relationship between farm size, resource allocation and productivity
in the context of size-sensitive markets provide some evidence of innuendoes
which suggest a competitiveness gap for small farms in contrast to a strictly
inverse relationship. Carter and Weibe (1990), for example, report on farm data
from Kenya which indicate a U-shaped relationship (which is at first inverse but
quickly becomes positive). This pattern, they argue, is explained easily using
the Carter-Kalfayan theory of farm size-rationed access to working capital,
which favours larger farms combined with imperfect labour markets that
facilitate small farm family activities based on an intensive use of family
labour. The labour advantage of the very small landholder is eventually
overridden by capital constraints.
Kevane (1996) provides another example. He argues that earlier discussions of the inverse relationship overlook the roles of wealth and the ability to bear risk in determining behavioural strategies. His analysis is of data from the Sudan, where land is not the main constraint. Similar to Carter and Kalfayan (1989), Kevane builds a decision model of optimal labour-land ratios under different "regimes of market imperfections", and this confirms the explanations given above. This model shows three regimes under which the relationship between farm size and land productivity becomes positive. These are empirically supported with data from the western Sudan.
The nature of land markets: structure and function. In view of the
discussion of the discordance between the assumptions often implicit in
macropolicy initiatives and household-level decisions, the first question to
address is: "Are land markets perfect, competitive markets?" Various authors
delineate the conditions for a land market to be characterized as competitive
(Salgado, 1994; Munoz, 1993; Carter and Mesbah, 1993): homogeneity of the good
(i.e. consistent quality and measure of each unit); freedom of entry (i.e. entry
is not exclusive as a result of high transaction costs or institutionalized
constraints such as laws preventing purchase beyond a certain size); a large
number of agents; and uniform access to information. All of the authors cited
assess extant land markets in various Latin American countries and clearly
conclude that land markets are imperfect.
Markets tend to be very local and
informal (in terms of documentation of transactions and property rights and of
information dissemination). Land is obviously not a homogeneous commodity and in
many places its quality varies even within microregions. Transaction costs are
often very high, creating barriers to entry by the poor and disincentives for
participation on the part of holders of large tracts of land. In many
circumstances, until recently, government rules restricted or even prohibited
various forms of land transactions. In these circumstances, much informal
activity continued but it was largely unrecorded and often only use rights were
transacted. Finally, informality results in very uneven access to information.
Availability of land is often announced only through kinship and friendship
networks, for example.
Other authors (Land Tenure Center, 1996; Wunderlich, 1995; Csaba, 1995) note that, in Eastern Europe, imperfections are such that land markets have not existed and therefore need to be developed. This must occur amid confusion over allocation rules for the privatization of state farms and a fear of further proliferation of tiny, fragmented farms. Given that access to capital is also possible in markets that are far from being competitive and developed and where the institutions that allow for markets to function competitively (e.g. registry systems) are not sufficiently established, it is fair to say that the lessons from the Latin American context are relevant.
What kind of participation and access do land markets offer the rural poor? First, it is important to mention that, even if land markets were
competitive, it is unlikely that land would shift to the landless or land-poor.
Binswanger (cited in Carter and Mesbah, 1993) identifies the "fundamental
financing problem of the poor" as the culprit. The basic argument is that, in
order to finance a land purchase in competitive capital markets, the poor would
have to dig into current consumption, which they cannot afford to do.
If the
existence of biases in access to finance is added to the list of land market
imperfections, a situation of severely segmented land markets emerges. In this
case, segmentation means that there are systematic forces that limit the
fluidity of land transfers from the large-farm strata to the small-farm strata.
Segmentation is also reflected in the fact that land price per unit is
systematically and significantly higher for small parcels than for large
parcels. Most sales occur between farms of similar sizes and, hence, a "barrier
to accumulation" can be observed (Carter and Mesbah, 1993; Salgado,
1994).
Carter and Mesbah (1993) illustrate more specifically the relationship
between agrarian structure, access to capital and the dynamics of land markets.
First, the notion of landholding as a poverty refuge is borne out in their
theory of land market dynamics; the smallest will express very high reservation
prices and hold on to land. Second, slightly bigger semi-proletarian farms are
capital-constrained and therefore unable to bid for land; they are more likely
to shrink to "poverty refuge" size. Third, the "capitalized family farm" - a
label introduced by Lehmann (1982) to refer to a medium-sized farm that
maintains the family labour advantages of peasant farm units yet is able to
acquire capital and compete in markets with commercial farm units - is in a
strongly competitive position to buy land. It is between these latter two
categories that a "barrier to accumulation is observed" in their simulation
analysis. It is important to note that these results are not defined by
productivity differentials but rather stem strictly from a person's position in
the agrarian structure and the according biases in rural factor
markets.
Segmentation thus results from both the demand side (constrained
access to long-term and working capital) and the supply side (transaction costs
and informational constraints to making small parcel sizes available on the
market). Salgado (1994), Larson (1995), PRODEPAH (1994), Domer and Saliba
(1981), Carter (1994) and Carter, Luz and Galeano (1992) provide ample
documentation of such segmentation of land markets.
Given that the main topic
of this article is the role of land policy in current food security policy, it
is useful to mention several papers that address land market dynamics and access
of rural poor in the context of agricultural export-led growth. Carter and
Mesbah (1993) ask whether land market reform will lead to more inclusionary
growth than prior bouts of growth based on agricultural exports. Unfortunately,
they conclude that action is necessary in both land market and rural capital
market reform if inclusionary growth is desired. Carter, Luz and Galeano (1992)
show that, in Paraguay's agro-export zones where land is relatively scarce,
growth is exclusionary - the extant land market does not provide access for the
rural poor. On the other hand, in the land-abundant frontier zone, smallholders
do have expansion possibilities via land accumulation. However, these zones are
also likely to be environmentally sensitive areas.
Childress (1995) similarly shows that "In El Salvador, a macroeconomic pattern of spending fuelled by a foreign exchange boom ... is closing off the land purchase market to small farmers." Perhaps most interesting is the evaluation by Barhan, Carter and Sigelko (1995) of small farmers' participation in
the production of non-traditional agricultural export crops in Guatemala. They
address two questions: who adopts such crops and what are the consequences for
the evolution of agrarian structure via land markets? They conclude that
adoption is positively linked to farm size (because of scale effects in
production and scale bias in credit access and risk), although all but the
tiniest farms are likely to allocate some land to non-traditional crops, unlike
earlier export periods. This difference is attributed to the labour-intensive
nature of the kinds of vegetable (broccoli and snow peas) being grown. However,
these small-farm adopters are shown to face an "adoption ceiling" owing to
credit constraints.
With regard to the land market participation question,
Barhan, Carter and Sigelko (1995) show that the adopters do have better, albeit
still limited, accumulation possibilities while non-adopters find that their
traditional "life cycle" patterns are interrupted.
Finally, the works of
Domer and Saliba (1981), Carter (1994), Carter and Mesbah (1993), Carter, Luz
and Galeano (1992) and PRODEPAH (1994) call attention to appropriate policy
design to allow land markets to work better, i.e. have more of an impact on
increasing agricultural productivity and alleviating rural poverty. Land
taxation, mortgage banks and land banks as well as land titling and registration
efforts are evaluated as means of land market reform. Land banks are likely to
have the biggest impact for the rural poor. However, they note the very modest
success of some early attempts to establish land banks in the context of
least-developed countries, for example the Penny Foundation in Guatemala and the
programmes of the United States Agency for International Development in
Honduras.
PRODEPAH argues that these programmes have had limited success,
primarily owing to their design. These design problems include: not addressing
the lack of land available for supply; not recognizing the important role of
access to short-term working capital; being too reliant on donor funds and bureaucratic administration rather than being constituted as for-profit, regulated institutions; failing to address issues of land titling and registration simultaneously; and limited committal of funds. All of these reports consider land market development policy as a needed tool but stress the need for a combined package of policy initiatives tailored to the specific nature of markets and institutions in a locality.
Off-farm income, agrarian
structure and the dynamics of accumulation
0ff-farm income and agrarian structure. While there
is much reference in the literature to off-farm income and the size distribution
of farms, this relationship has not been a focus of much systematic analysis. It
usually forms part of a broader focus on characterizing agrarian systems or
structures. Even more absent from the literature is analysis that systematically
explores the relationship between off-farm income and patterns of ownership
(tenure) and accumulation. Therefore, this section of the article draws together
bits and pieces of evidence about these relationships and their relevance in the
context of the policy dialogue of rural poverty reduction.
Stamoulis (1996)
notes two forces leading farm families to engage in off-farm employment
activities: push factors (risk and land shortage) and pull factors (increased
opportunity). The former would suggest a negative relationship of off-farm
earnings to farm size while the latter might suggest a positive relationship.
Stamoulis observes that empirical evidence has been found to support both. The
bulk of the literature, however, has focused on push factors and off-farm income
being a necessary part of the survival strategy of poor, land-constrained farm
families. This is particularly characteristic of the theoretical literature
which follows structuralist and Marxian perspectives to analyse the
transformation of peasantries in the advent of modern economic growth
(capitalism).
Reviews of the literature on the transformation of peasant
populations are found in Kay (1994), Carter and Mesbah (1993), Hanson (1996),
Stonich (1991), Barhan, Carter and Sigelko (1995) and de Janvry (1981). These
authors point to a persistence and proliferation of a peasantry which is
transformed into a mass of subfamily-sized farms dependent on wage labour for
subsistence. A smaller group of peasant farmers are able to move up the agrarian
structure towards commercial enterprise stature (Lehmann, 1982). Some of the
authors focus strictly on the dynamics of rural factor markets as an explanation
for the proliferation and persistence of a rural land-poor class. Others, most
notably de Janvry (1981), merge this picture with the dynamics of industrial
development, noting that it is in the interest of cheap wages and foods to
maintain such a wage-dependent peasantry.
Hanson (1996) provides a very
comprehensive review of the empirical literature on part-time farming. His
review encompasses research on the United States, Europe and Latin America and
points out how approaches to the issue of part-time farming and the conclusions
reached differ across these regions. In the United States, the evidence shows no
systematic relationship between farm size and the amount of off-farm income
earned. In the European and Latin American contexts, on the other hand,
historical patterns of landholding (e.g. feudalism and systems of partial
inheritance) have created a context in which the need for off-farm income to
supplement consumption is a basic characteristic of a vast number of households
who access only very small farms. Not surprisingly, the incidence of part-time
farming is strongly correlated with historical developments of a particular
area; for example, some authors showed that, in areas without systems of partial
inheritance, there is much less part-time farming.
Various other authors also
demonstrate an inverse relationship between reliance on off-farm income and farm
size (Reardon and Vosti, 1995; Lopez and Whittington, 1996; Stonich, 1991; de
Janvry, Sadoulet and Davis, 1995; de Janvry and Sadoulet, 1989b; Domer 1992).
These authors suggest that the importance of off-farm income varies by location
and relative isolation (supply of jobs and land). Stonich (1991) also asks
whether tenure matters (ownership versus rental) and finds that, in one study
community in Honduras, there is no particular relationship while, in another,
renters are more likely to migrate for earnings.
The use of off-farm income for investment and accumulation. It seems then that off-farm income can be viewed as positive in the sense of allowing a reprieve of destitution (consumption smoothing) but that this positive view is limited by the fact that it offers little in the way of accumulation and upward mobility. A more positive view of off-farm income-based strategies for poverty alleviation could be garnered by evidence that the rural poor use off-farm earnings for investment and accumulation of land and/or non-land assets which would lead them out of poverty. Unfortunately, the evidence about such behavioural links between earnings and investment is extremely scant. Following is a list of pieces of evidence that we were able to find:
These authors offer some positive evidence. However, it is important to recall that access to off-farm earnings themselves is quite varied with location as are opportunities to participate in investments. For example, informal discussions about the problem of land access in Honduras and El Salvador revealed to that, in El Salvador, most families have some link to migrant sources of income (remittances) and that this allows many at least to put a down payment for a loan for the purchase of land. In Honduras, however, several survey regions indicated a high degree of isolation from migrant income streams and a notable lack of ability to finance even down payments for land purchase. In these communities, those who bought land did so with earnings achieved in fortuitous years of high crop profitability or by selling some livestock. With regard to access to opportunities to invest, Reardon and Vosti (1995) astutely note that "where markets are absent or underdeveloped, or where there are constraints to market access (tied to resource endowments), one asset market or holding can be isolated from another".
For example, one cannot necessarily use earnings
to buy land if supply-side bottlenecks are present. Clearly, it is imperative to
generate more and better evidence which presents systematically the relationship
between off-farm income, farm size and access to other assets.
It is clear that rural poverty reduction requires multifaceted policy efforts that recognize the linkages among household asset access portfolios, household income strategies and macrostructural changes. In particular, initiatives to promote access to off-farm earning opportunities together with reforms aimed at promoting access to land via the land market are called for. In our own observation, in the context of Central America and also of Eastern Europe, the scenarios are such that it will be nearly impossible for enough jobs to be created or for each small farmer to gain access to adequate amounts of land. In Honduras, for example, there are more than 150 000 landless poor and approximately 90 percent of the farm population holds less than 1 ha of land. Much of the remaining land is underutilized by extensive cattle ranching and speculative landholders. At the same time, the maquiladora industry has been an attractive source of
wage increase for many rural persons, but its potential for creating so many
jobs has been questioned, as has the unstable and limited income from
it.
Speaking more generally of Latin America, authors such as Kay (1994) and de Janvry and Sadoulet (1989a) note the proliferation of very small farms with a falling average farm size and the lack of ability of
employment opportunities to meet the needs of this growing population. Stonich
(1992) similarly states: "The emergent semi-proletarianized peasantry had
neither access to sufficient land nor to employment opportunities to reduce
poverty." In reference to those who disfavour active land policy, Domer (1992)
says: "In other words, there is an implicit notion that there are easier, less
controversial and quicker ways to benefit the rural poor ... people cannot
simply be `placed on hold' until they are needed by industry."
Stamoulis (1996) and other authors suggest that using off-farm income for investment in agriculture may induce productivity and agricultural employment effects, thereby generating a "virtuous circle" which can be "important for long-term food security and alleviation of rural poverty". We agree but argue that, for such a virtuous circle to function, it is necessary to develop rural land and credit markets to facilitate better access to land and non-land capital, at least for those small farmers who are poised to participate. If "anti-peasant" biases in policy and in the functioning of key rural markets are removed, there is a group of small farmers that could be highly competitive and productive - as is shown by a number of authors such as de Janvry and Sadoulet (1989a), Carter and Mesbah (1993), Barhan, Carter and Sigelko (1995) and Lehmann (1982). Thus, a virtuous circle might be set in action.
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