Énoncer des principes de bonne pratique pour les accords de location applicables au secteur privé dans le domaine agricole
Cet article, inspiré des travaux de la FAO, examine les éléments à la base des principes de bonne pratique applicables aux accords de location concernant les terres privées. L'article précise qu'il convient de considérer trois grands domaines d´activité lorsqu'on édicte de tels principes: le domaine des orientations, qui définit le cadre général des politiques; le domaine technique, dans lequel sont définis les principaux éléments des locations, les accords de métayage et d'autres accords; et le domaine opérationnel, dans le cadre duquel sont examinées les mesures nécessaires pour procéder à une réforme effective des régimes d'occupation. L'article conclut que si ces trois domaines revêtent une grande importance pour la réalisation complète et efficace de la réforme des régimes fonciers, des améliorations restent possibles dans chaque cas. De même, si les initiatives en matière d'orientation apparaissent comme une question de volonté, et si celles relevant du domaine technique sont considérées comme étant de type normatif, la mise en oeuvre dépend en dernier ressort du pragmatisme avec lequel sont adoptées les mesures dans le domaine opérationnel.
Formulación de directrices prácticas para el arrendamiento agrícola en el sector privado
Este artículo se basa en unos trabajos realizados para la FAO, y en él se analizan los elementos constitutivos de las buenas orientaciones prácticas para arrendamientos de tierras privadas. Hay tres sectores principales de actividad que hay que tener en cuenta cuando se formulan las directrices: el plano político, que establece el marco macropolítico; el plano técnico, que contiene los elementos esenciales de los arriendos, de los acuerdos de aparcería y otros arreglos, y el plano operativo, que es el ámbito en que se decide la realización eficaz de la tenencia. Aunque los tres planos son importantes para la ejecución de una reforma de la tenencia, las mejoras en cada uno de ellos pueden incrementar los resultados globales. Si bien las iniciativas que se desarrollan en el plano político se contemplen como el objetivo al cual se aspira, y las del plano técnico se consideren de carácter normativo, la ejecución depende en última instancia del pragmatismo con que se tomen las medidas en el plano operativo.
N. Ravenscroft and S. Lastarria-Cornhiel
Neil
Ravenscroft is at the University of Surrey, the United Kingdom, and Susana
Lastarria-Cornhiel is at the University of Wisconsin-Madison, the United
States
This article is based on work undertaken for FAO and considers the constituent elements of good practice guidance for leasing arrangements on private land. The article suggests that there are three principal areas of activity that need to be considered when promulgating such guidance: the policy arena, in which the macroscale policy framework is established and maintained; the technical arena, in which the essential elements of leases, share-farming agreements and other arrangements are set out; and the operational arena, in which the necessary steps for the effective realization of tenancy reform are discussed. The article concludes that, while all three arenas are significant for the full and effective realization of tenancy reform, improvements in each can be incremental. Equally, while initiatives within the policy arena are seen to be aspirational in nature and those in the technical arena are viewed as normative, implementation is ultimately dependent on the pragmatism with which steps are taken within the operational arena.
The leasing of private land is a significant element of
the environment in which farming operates throughout the world (Lerman, Brooks
and Csaki, 1994; FAO, 1997a). A recent renewal of interest in land leasing is
part of a wider movement towards the recognition of property interests,
characterized by a widely held desire to progress from waged labour
relationships towards leasing and other forms of delegation (Waedekin, 1992;
Cruz and Munoz, 1997). At present, however, this growth of interest has not been
accompanied by an increase in the knowledge available about leasing,
particularly where it involves private land (UN, 1996).
There is a relative
lack of knowledge about both the general policy perspective, related to the
types of conditions under which leases may be appropriate, and the practical
perspective, related to the types of issues that need to be addressed in drawing
up a lease. In both cases, the lack of knowledge has led to significant mistakes
being made, and wider opportunities being missed. This has had a number of
impacts, particularly related to undermining economic and social development and
maintaining outmoded farming systems (CEC, 1982).
This article reports on a
recent project funded by FAO, which considered both the dimensions of
agricultural leasing and the principal constituent elements of good practice in
drawing up leasing arrangements. Good practice, as it is promulgated in this
article, is essentially about providing information to those who require it. It
is, thus, about identifying the key issues facing those involved in lease
arrangements, as well as examining the ways in which these issues have been
addressed in other contexts. The output of the work done for FAO is the
production of guidelines that provide information about, and examples of, the
steps that can be taken to make lasting improvements to the agricultural sector.
Such improvements are achieved, principally, by facilitating access to land for
land-poor farmers and by improving both the productivity and the sustainability
of farming systems.
Following sections on the principal issues to be
considered in reviewing tenancy arrangements, the article addresses three
substantive areas of reform, all of which frame the successful implementation of
private sector tenancy agreements: the policy arena; the technical arena; and
the operational arena. Regarding the first of these, the policy arena, the
article considers the type of policy framework that is necessary to promote and underpin tenancy arrangements. This section includes issues related to the institutional arrangements necessary to enforce tenancy laws, together with a discussion on what the general parameters of these laws should be. The following section, on the technical arena, outlines the principal elements that should be included in lease and share-farming agreements. Finally, attention is given to the operational arena, on the basis that the effective realization of reform is highly significant, no matter how good the institutional framework and the technical excellence of tenancy agreements.
The two fundamental issues relating to all tenancy arrangements are security for the tenant and flexibility for the landowner. A sustainable balance between these competing claims needs to be achieved (Ravenscroft, 1988; Gibbard and Ravenscroft, 1997). When leases become highly formal, regulated and protected, they are generally unpopular with landowners, who perceive that their own power and flexibility are being circumscribed by the state. When informal or underregulated, however, tenancies are seen to deny the security desired by tenants. It is also argued that informal and underregulated arrangements compromise the ability of either landowner or tenant to husband the land in full accordance with the requirements of beneficial occupancy clauses (Winter, et al., 1990). In all scenarios, such
tenancies are seen to be prejudicial to the land-poor.
It must be recognized,
however, that an overtly market-oriented perspective, in which there is seen to
be the possibility of a trade-off between landowner and tenant, ignores the
relative power imbalances between them (Cheung, 1969; Anderson, 1995; FAO,
1997a; Melmed-Sanjak and Lastarria-Cornhiel, 1998). At the extreme, such
imbalances can render irrelevant the very idea of choice and of trade-off
between the positive and negative aspects of lease duration and level of
formality. While recognizing the relative isolation and poor bargaining position
of many tenants (Lastarria-Cornhiel and Melmed-Sanjak, 1999), governments should
seek to establish a better balance of power, which allows both parties to achieve objectives that are acceptable (if not ideal) to themselves.
The terms "lease" and "tenancy" are often used generically to denote the relationship between landowner and tenant. However, it should be recognized that there is a range of agreements from basic personal contracts, where the expectation is that all major decisions will be taken by the landowner, to complex exchanges of property rights, where the expectation is that the tenant will assume overall responsibility for the farming operations taking place on the land (Ravenscroft, 1988; Brooks, 1993; Melmed-Sanjak and Lastarria-Cornhiel, 1998). Although constructed as a continuum, the reality - certainly in legal terms - is more a series of individual arrangements that include the following:
At the core of the lease arrangement is a tripartite relationship among landowners, tenants and the state (CEC, 1982; Klare, 1985; Ravenscroft, 1988; Dulley and Santos de Souza, 1991; Kern, 1992). This relationship is essentially one of mutual responsibility, in which each party has certain duties to perform. The most fundamental of these duties fall on the state, in creating an appropriate framework within which the landowner and tenant can operate. Existing practice suggests that this framework comprises the following three elements, or arenas of activity:
Central to the operation of the framework is the recognition (by the landowner and tenant) and enforcement (by the state) of mutual responsibilities. These features relate both to the ways in which the parties are expected to conduct their relationship (fairness and the balancing of power, for example) and to the ways in which they are expected to manage the land (sustainability). A recognition of this type of mutuality is already contained in many laws and policy documents relating to leasing arrangements.
At the core of the policy arena is the legal system,
with its set of principles and rules for observing all aspects of leases,
including the nature and legality of lease terms, the structure of landownership
and leasing and the environment necessary for the efficient utilization of land
(Brooks, 1993; UN, 1996). While the terms "law" and "legal system" suggest the
existence of widely accepted, universal codes, the reality is rather different.
There are a multitude of legal systems currently operating throughout the world.
In all cases it is recognized that there is a general need for a system of laws,
and that progress is achieved when rules based on arbitrary dictate (as in many
colonial and racist regimes) are replaced by a more universal rule of law
(Sachs, 1992).
While there are differences in legal codes, over the last
three decades there has certainly been the growth of an increasingly universal
legal culture. Although driven predominantly by widely held principles of
justice relating to human rights, this universalization can be identified in
many areas of law, including that relating to contract (Sachs, 1992).
As recent work published by FAO (FAO, 1997a) has illustrated, the development of a comprehensive institutional framework that ensures land rights and security of tenure is at the core of a democratic legal system. In examining the dimensions of this framework, the United Nations Economic Commission for Europe (UN, 1996) suggests that it needs to:
Underlying this set of prerequisites are three
fundamental propositions about the nature and power of the institutional
framework: that there is an agreed definition or understanding of tenure; that
this understanding allows for security of tenure to be asserted and protected
(thus demonstrating certainty in the legal status of land); and that formal
rights are enshrined in the tenure structure (Sachs, 1992). In a number of
respects these are highly demanding criteria for many countries, particularly in
ensuring that rights cannot only be claimed, but also asserted.
In
reflecting the need to find a balance between the benefits and costs of long and
short lease terms, lease renewal becomes a significant element of policy in many
regions, as well as a test of the operation of the rule of law. There are many
examples of statutory controls to regulate minimum term lengths (Lorvellec,
1992; Winkler, 1992; Wulff, 1992), while in other cases a strong customary
tradition has been established (Mugerwa, 1973). However, there is little
apparent consistency over what represents good practice.
Where term lengths
are imposed, as in much of northern Europe for example, they tend to reflect
minimum terms that can be both extended to longer periods and renewed prior to
termination. In all these cases, the minimum terms are long (in the order of ten
years), while agreed terms of 18 to 25 years are not uncommon (Grossman and
Brussaard, 1992). In most of these cases, renewal of the tenancy is automatic,
unless either of the parties seeks termination, according to certain predefined
terms.
Although not wholly related to term length, there are also important
issues related to tenants and succession. Where succession provisions operate,
rights are generally limited to those living and working on the land and are not
usually transferable to a third party (Mugerwa, 1973). However, in cases where
succession provisions do not operate, there are concerns that the death of the
tenant can lead to the eviction of all surviving family members, even if all or
some of them were working the land and are competent farmers in their own right.
This raises questions of public policy about the extent to which tenants and
their families should receive statutory protection from eviction and over what
period of time. Following the death of the tenant, there is a widely shared
concern that the tenant's family should be allowed to remain on the land, at
least during the remainder of the tenancy or until more permanent arrangements
can be made. In many cases, however, this is not likely to be a long
period.
The third element of the policy arena is to consider examples of the
ways in which different countries establish and maintain the efficient use of
their land resource. In most countries, this issue is essentially about ensuring
that potential tenants have adequate access to land and a stable environment in
which to operate; ensuring that the maximum amount of land is available to farm
and is of an appropriate size and scale for farming; and ensuring that dispute
resolution procedures are available should the landowner-tenant relationship
break down.
While most of these requirements extend beyond the influence of
agricultural leasing, a number of issues are of direct relevance. One of these
is a need to reduce or eliminate the impact of non-agricultural speculation in
land. Examples can be found of a number of measures designed to achieve this,
relating to controlling the disposal of land by prohibitions on sales, limiting
the sale price of agricultural land - thus reducing its non-agricultural worth
(Winkler, 1992; Weiers, 1997) - or restricting its conversion to
non-agricultural uses (Grossman, 1992).
Ensuring that all land is in active production, and that it is available to farmers in appropriate sizes, is a function of the following four principal areas of activity:
One of the cornerstones necessary for the effective
utilization of land is a robust dispute resolution procedure that has the
support of both landowners and tenants. Good practice is achieved by ensuring
maximum transparency in the operation of the dispute resolution machinery. In
the main, this is achieved by a combination of officials who are seen to be
impartial and are informed by experts reflecting the interests of both
landowners and tenants. In addition, the actual procedure of dispute resolution
has to be set on a quasi-judicial footing. This not only ensures transparency
and consistency of operations, but also affords recourse to the courts if either
landowner or tenant feels that their case has not been handled legally or
appropriately (Densham and Evans, 1997).
While dispute resolution procedures
can be kept simple to deal with the bulk of technical issues that arise both during and at the end of tenancies, it should be recognized that, in some cases, the issues are complex and quasi-legal. One such example might involve the question of whether or not a tenancy can be renewed. Rather than the technical, factual basis of the dispute related to rent, a dispute about lease renewal will probably involve detailed legal argument about the intent of the parties and the nature of the agreement they have reached. It would not be appropriate for this type of dispute to be resolved in the same way as a matter of difference in valuation. In some dispute resolution codes, a distinction is therefore made between technical and legal matters, and each is treated separately.
In reflecting the continuum of tenancy arrangements that was set out earlier, it is apparent that a distinction must be drawn between agreements that involve the transfer of property rights - leases - and those that involve personal contracts - generically referred to as licences. It is commonly accepted that all lease agreements should contain specific reference to the following essential elements (Gibbard and Long, 1995; UN, 1996):
Some of these elements, such as the names of the
parties, are clearly pertinent to the creation of a lease, particularly if it is
to be referred to at a later date. Equally, the need for an agreed date of
commencement ensures that both landowner and tenant know when the responsibility
for the property shifts from one to the other. At commencement, it is also
important to agree the length of the agreement. This can be a fixed term (e.g.
one year), with or without an option to renew, or it can be periodic (e.g.
monthly or yearly), often subject to a minimum initial term.
While the
length of a lease can be subject to statutory intervention, it is generally good
practice to match it to the predictable outcomes required from the agreement.
These outcomes could be related to the type of crops to be grown. Whereas the
complete cycle for some vegetable crops can be two to three months, for example,
a lease to grow coconut trees would need to be at least 50 years in duration.
Equally, the length of the agreement may be related to family requirements, such
as the length of time needed for the next generation of the landowner's family
to be ready to farm.
In all cases, it is desirable that the property to be
leased should be clearly and unambiguously described. In the case of a small
parcel of land to be leased for grazing on an annual basis, a verbal agreement
will be sufficient, particularly if reference is made to how the extent of the
land has been determined. For larger parcels, or for land and buildings, a plan
and schedule - or narrative description - are preferable. Not only will these
documents set out what is, and what is not, included in the agreement, but they
can also form the basis of further agreements and covenants.
Although
contracts for the occupation of property can be - and often are - verbal, it is
good practice to ensure that longer-term agreements are recorded in writing. In
Denmark, for example, all agricultural tenancies have to be in writing, making
specific reference to the rent and the length of term of the agreement (Wulff,
1992). In the case of longer agreements (two years or more, for example), it may
be desirable to have compulsory registration of the lease.
The degree to
which tenants are granted exclusivity of possession is one of the key defining
elements of tenancies and licences (Densham and Evans, 1997). For a full
tenancy, the expectation is that it will be granted with full and exclusive
possession. This right means that, in law, the landowner may only enter the
property for agreed purposes (such as periodic inspection) and that the tenant
has the right to exclude others, as if the property were in full ownership.
Quite apart from passing occupational responsibility from landowner to tenant,
this clause gives the tenant maximum freedom (Berry, no date), including the
right to determine cropping patterns (Raymond, 1986).
Regardless of the type
of lease, it is always important to establish the basis on which the agreement
is made, as set out in a series of covenants (legal agreements). Although the
list of possible covenants relating to tenancies is long, the usual ones would
include covenants relating to the upkeep of the land, including ensuring that
the land is returned in a similar condition at the end of the term, arrangements
for undertaking improvements, and covenants against assigning or subletting the
land or property without the landowner's permission.
While there may be a
covenant or other form of agreement to keep the land or property in good
condition, good practice would also include a full allocation of the maintenance
and repair obligations between landowner and tenant. The details of this
allocation will depend on the length and other terms of the lease, with longer
terms tending to be associated with a greater obligation on the part of the
tenant. These types of covenant should be included even if the agreement relates
only to a small parcel of land, for even in these cases drainage channels and
boundaries can still require attention.
Regardless of the division of
maintenance responsibilities between landowner and tenant, all leases should
include a covenant by the tenant to return the land in good condition. It should
be noted that this type of covenant refers to "good condition", rather than to
"similar condition" to when it was leased. This is on the basis that, under many
legal jurisdictions, covenants to keep in good condition also include first
putting the land into good condition. In addition to establishing respective
responsibilities for maintenance and repair, it is good practice to ensure that
no alterations or changes of use are undertaken by the tenant without the
landowner's express consent. There may need to be exceptions to this, for
example to create stock-proof boundaries around a parcel of land.
It is
essential that the tenant pay a rent or other consideration (such as a share of
the crop or other output) to the landowner. While the actual value of the
consideration may not be known at the start of the agreement (as would be the
case with a share of the output under a share-farming agreement), the lease
should specify clearly how the consideration will be calculated and when it is
due to be paid. The overriding factor to be borne in mind when establishing the
consideration is, therefore, that it should be specified and certain. This does
not preclude "non-paid" elements, such as existing customary "mutual help"
arrangements, which are common practice in many countries. What it would
exclude, however, are the exploitive arrangements whereby tenants and their
families are expected to provide unspecified elements of rent, such as unpaid
labour.
In addition to establishing the value of the consideration and the
dates on which it is to be paid, it may also be necessary to reserve the right
to review it at one or more of a series of specified dates in the future. Review
clauses are more likely to be found (and are more necessary) in full long-term
leases, where the tenant usually pays a cash rent. In cases where the real value
of the rental level will decline in accordance with inflation and the relative
value of agricultural products may change over time, periodic reviews will
protect the landowner's financial interest in the property.
While many
agreements do not address issues of compensation, it can be particularly
important with respect to farming. This is because there is often a need, or a
requirement, for improvements or alterations to be made to the land, to make it
suitable for a specific use. In some cases, these improvements will incur costs
that cannot be recouped at the end of the lease yet may add value to the land.
In these cases, the tenant should be able to claim compensation for the increase
in value. Conversely, the alterations may damage the land, thus reducing its
value. In this case it would be the landowner wishing to claim compensation for
the loss in value (Klare, 1985; Hagedorn and Klare, 1986).
Finally, provision should be made for resolving disputes, should they arise. Such provision should cover both general disputes between the parties as well as specific disputes relating to issues such as rent reviews, maintenance obligations and requests to undertake improvements. As important as dispute resolution is dispute avoidance. In all cases, therefore, agreements should attempt to anticipate where disputes are likely to occur, so that avoidance measures can be taken.
While this article has generally referred to the
position regarding tenancies, it is recognized that many landowner-tenant
relationships are more properly viewed, in legal terms, as licences, or personal
agreements to use land. Indeed, the ubiquity of the share-farming agreement
throughout much of Africa, Asia and South America indicates that it continues to
be the dominant form of leasing in agriculture (Lastarria-Cornhiel and
Melmed-Sanjak, 1999). While having the effect of dividing the responsibility for
farming between the landowner and the tenant, in much the same way as a tenancy,
share-farming and other licence agreements have a different legal status and
impact (Stratton, Gregory and Williams, 1983).
The principal difference
between a tenancy and a share-farming or other licence agreement is the
complexity of the legal relationship. In a tenancy, the tenant assumes the role
of custodian, usually gaining complete responsibility throughout the duration of
the agreement. In other cases, the agreement is limited to specified actions -
usually farming operations. While the share-farmer or licensee may live on the
land for the duration of the agreement, there should be no suggestion in law
that they are gaining any form of occupational rights. However, in many regions
claims are made for occupational rights, regardless of the precise legal status
(Melmed-Sanjak and Lastarria-Cornhiel, 1998).
As in a tenancy, in which there
is one individual leasing the land of another, a share-farming or other licence
agreement effectively involves two individuals. One of these individuals, the
share-farmer or licensee, will have very much the same role that they would have
had under a tenancy; it is essentially a farming interest. In law, the landowner
should be more actively involved in the farming of the land under a licence
arrangement. However, in many regions, particularly where there are large
landholdings, owners are seldom actively involved in farming and there is no
practical sense in which the "shared" purpose of sharecropping exists
(Lastarria-Cornhiel and Melmed-Sanjak, 1999).
As the legal estate being
passed from landowner to share-farmer or licensee may be less under a licence
than a tenancy, it does not necessarily follow that the share-farming or licence
agreement can be less comprehensive than the tenancy agreement. Indeed, ensuring
that a share-farming or licence agreement is internally consistent with the
notion of shared inputs and outputs can make it just as complex as a tenancy
agreement, although in different ways.
In practice (and in common with
tenancies), there are a number of essential provisions that should be addressed
in all licence and share-farming agreements. Many of these, such as the names of
the parties, description of the land and commencement, duration and termination
dates, are similar to the provisions in leases discussed above. There are,
however, additional provisions that should be referred to when agreeing licence
arrangements, including a specific agreement to share the land, an arrangement
about the agreed share of inputs and outputs, and specific arrangements relating
to dispute resolution and avoidance.
The significance of agreeing to share
the land lies in setting out the reason for the agreement being reached. Not
only does this establish the basis of the relationship between landowner and
farmer, but it also clarifies why a lease is not being created. Having agreed to
share the land for the purpose specified in the arrangement, it is also
necessary to refer to which of the individuals is responsible for supplying
which of the inputs to be used.
While, in practice, both parties usually
supply inputs, the agreement could range from a simple division between all
fixed and variable capital (landowner) and labour (farmer), to a highly complex
arrangement. Complex arrangements do exist, such as those covering share-milking
in northern Europe where, among other provisions, tradable production quotas
have to be considered as inputs (Gibbard and Long, 1995; Ravenscroft, Gibbard
and Markwell, 1998). Most arrangements are, however, rather simpler. In these
cases it is usual for the landowner to provide most of the inputs, although the
share-farmer may provide seed in addition to labour.
Rather than the
consideration that is agreed under a tenancy arrangement, a share-farming
agreement should refer to division of the gross physical output of the land.
This could be a straightforward division according to the share of inputs agreed
between the parties. Alternatively, a more complex division can be used,
reflecting not just the relative share of inputs, but also how these inputs have
an impact on output. An example of this would be a first slice of the output -
usually up to an agreed limit - being divided according to the strict value of
the inputs, followed by the remainder of the output (the "top slice") being
allocated according to managerial input. Given the value of the land, the
landowner is likely to gain a larger share of the initial output, while the
greater labour input of the farmer should warrant a larger share of the top
slice of output.
Although disputes could arise from any aspect of the
agreement, the most common are those relating to the respective shares of
output. These disputes commonly arise from a lack of trust between the landowner and the farmer. It is often the case, for example, that the landowner believes that total gross output is greater than the farmer claims, implying that the farmer has taken a greater share than was originally agreed. While dispute resolution procedures similar to those used in tenancies should be specified for such cases, good practice would be to avoid this type of dispute arising at all. This can be achieved by making it a condition of the agreement that the farmer must inform the landowner when the harvest will take place. This will give the landowner the opportunity to verify the gross output.
This final section focuses on the need to ensure that
agricultural tenancies can be implemented effectively. While being dependent on
the creation and maintenance of a suitable policy arena in which to operate,
developing an effective mechanism for realizing improvements in agricultural
lease arrangements is fundamental to achieving good practice. In this respect, a
distinction can be made between technical factors, which relate directly to
lease relations, and contextual factors, which relate to the environment in
which leases operate. This section will address each of these in turn.
In
putting forward a series of "signposts" to good practice in the operational
arena, it is recognized that the implementation of these must reflect an acute
awareness of the delicate balance involved (Anderson, 1995). For, while the
factors outlined must be implemented if a cohesive and functional operational
arena is to be created, it has to be recognized that many of them involve a
redistribution of power, from the landowner to the tenant. If the scale of this
redistribution of power is seen to be too great, or the resulting
responsibilities too onerous, landowners may stop leasing out their land
(Gibbard and Ravenscroft, 1997). Alternatively, they may begin to consider new
modes of leasing out which avoid these regulatory liabilities (Ravenscroft,
1988). Neither of these eventualities would promote the cause of private sector
leasing in the longer term. In all cases, therefore, implementation of the
operational framework should reflect a balance between the needs and wishes of
the landowner and tenant.
While recognizing the need for caution, the operational arena is fundamentally about instigating achievable actions. Unlike the aspirational nature of the policy arena, or the normative assumptions of the technical arena, action in the operational arena should be entirely pragmatic. Progress in achieving goals thus requires monitoring and review.
One of the most significant elements in improving the
effective realization of agricultural tenancies would be the promulgation of
model leases. These are already available in a number of countries, drafted by
government as officially recognized forms of agreement, or by landowners' or
farmers' groups as services to their members (e.g. Gibbard and Long, 1995, with
respect to England and Wales in the United Kingdom). They are also often
available from lawyers and others involved in drafting lease agreements. While
being necessarily general in nature, such an approach ensures that all critical
issues are addressed when the agreement is drawn up, even if it is decided to
vary or ignore them later.
The development of a model lease may appear to
deny the flexibility often demanded in landowner-tenant relationships. However,
this need not be the case. Using the essential elements of a lease, as outlined
in this article (and in the FAO guidelines), the simplest form of contract may
be short, dealing only with the fundamental factors of the parties, the land,
the commencement and termination dates and the consideration. For more complex
agreements, particularly for share arrangements or the lease of a complete farm,
additional clauses could be added, covering the other elements that need to be
addressed. In this way, a model lease could comprise a variable number of
standard elements, depending on the complexity of the agreement and the wishes
of the parties. Provision should also be made for registering longer-term lease
agreements, usually in a local government office.
There is much evidence to
suggest that formal dispute resolution procedures, which effectively guard the
rights of the weaker party to any lease arrangement, are critical to the
development of a vibrant agricultural lease sector. At the core of the procedure
are two key elements: a formal set of rules governing dispute resolution and an
independent, or impartial, arbitration committee to administer those rules. The
types of rules needed to govern dispute resolution are those relating to any
form of good practice. Most importantly, they need to be simple, cost-effective
and transparent, to encourage both the use of such procedures and, equally
significantly, adherence to the findings. Evidence from systems already in
operation suggests that they also need to minimize the explicit role of the
state, while both underpinning and preserving the existing legal interests in
the property.
While the rules governing dispute resolution procedures may be
important, they also require implementation through a means that has the
confidence of all parties to the dispute. In many cases, confidence is ensured
through the inclusion of both landowners' and farmers' interests on arbitration
committees. However, perhaps more important than this is the need to develop a
locally based system to ensure that the arbitrators know the local conditions,
as well as often being known by the parties to the dispute. This can build both
trust and responsibility, as well as avoid unnecessary and often unwanted
external interference.
One of the principal factors inhibiting the development of leasing arrangements in all parts of the world is a lack of appropriate information on current lease practices and trends (CEC, 1982, 1987, 1991). The development of a simple recording system for rents, fees and input/output shares, for example, can put tenants into a much stronger position in negotiating a lease. Similarly, such a system will also inform landowners as to whether or not they are gaining appropriate returns from their land. Given the range of variables that can effect rents and other payments, such systems are usually best collated at the local level and could be combined with the function of registering lease agreement documentation.
Perhaps the single most significant improvement within
the context in which leases operate is to improve the democracy of the legal
process. While addressing the operation of the rule of law is a major
undertaking, it should be recognized that improvements can be both small and
incremental (Sachs, 1992). Thus, for example, underwriting the authority of
registered lease agreements, to the extent that landowners are disempowered from
taking arbitrary decisions about the future security of their tenants, is a
major improvement in the leasing environment. Allied to this is the need to
create viable institutions and institutional processes for drawing up,
implementing and enforcing legislation (Aglionby, 1999). Indeed, in many regions
it is not so much that the rule of law is inoperable, but that it is currently
incapable of full implementation and enforcement.
It is clear that, in many
regions, tenancy arrangements are wholly tied to the source of credit available
to the tenant. This source is either the landowner or a local moneylender, both
of whom may require unreasonably high levels of interest on borrowings. Access
to independent credit is, therefore, highly important, both in allowing tenants
to invest their money in farming, rather than loan charges, and in giving them a
measure of independence when negotiating lease arrangements. However, it should
be recognized that such schemes are unlikely to be popular with landowners, as
one of their established sources of income declines. Supreme care must therefore
be taken to ensure that the financial hold over tenants is not simply replaced
by some other form of control, and that the landowner will still continue to
lease out land, even if the possibility of tying it to credit no longer
applies.
Apart from freeing tenants from onerous credit agreements, checks
should also be established to ensure that they do not borrow more than they can
afford. There are a number of ways in which such checks could be achieved, most
of which will involve some form of registration of borrowings linked to agreed
credit ceilings set in advance of the agreement.
Although most land markets
are subject to inefficiencies, particularly relating to a relative lack of
reported activity, there are a number of areas in which improvements can be
implemented. At a simple level, better systems of information about rents and
prices can improve the operation of the market, while credit availability is
also important. Beyond these types of factors, however, are cadastral issues
such as improving the precision with which landholdings are identified and legal
issues relating to the ease with which transactions can take place. In both
cases, small and incremental improvements can have a positive impact on the
relative efficiency of the market.
It remains the case that most tenants have learned most of their farming skills from members of their own families who are involved in farming. While this type of training is invaluable to the young farmer, it still requires supplementation, particularly in new and innovative farming methods. Failure to learn these new methods will leave tenants at a disadvantage when trying to lease land. While there are a number of ways in which training can be arranged through non-governmental organizations (NGOs) or the public sector, one of the most effective ways is through the organization of a tenants' association. While acting as a voice for tenants, particularly with regard to negotiating changes in law and practice, such an association can act as an advocate for, and provider of, suitable training for both existing and potential tenants.
There is little doubt that reform of leasing
arrangements deserves to be high on the agendas of all those seeking to address
issues related to the future of landless and land-poor peasants. It is also
clear that in regions where state institutions are weak and unable to protect
such people, land concentration leads to high levels of inequality (George,
1984; Bellos, 1999). Not only does this condemn the land-poor to remain poor, it
also prevents the development of sustainable - largely subsistence -
agriculture, in favour of systems based predominantly on the production of
export crops.
Of course, tenancy reform alone will not guarantee the types of
improvements sought. Indeed, tenancy arrangements, particularly those related to
labour tenancy and share-farming, have often been used in an exploitive manner,
with the tenants gaining few rights or other benefits, and such arrangements
continue to exist, even where they have been outlawed on equity grounds. This is
because there is really very little choice but to continue such practices, on
the basis that solving the imbalance between landownership, labour and food
requirements is a long-term, if not an intractable, issue.
While they can be
exploitive, or at least allow those in power to exploit those without such
power, tenancies need not be understood in this way. Indeed, as a form of
capitalist accumulation they are - in theory - no more or less exploitive than
any other organizational form (Cheung, 1969). Indeed, it is certainly not always
the landowner who holds the power to exploit. There are many examples of
small-scale landowners, without sufficient land to farm on their own account,
who have to accept "reverse" relationships in which they lease out their land to
larger farmers or cooperatives. In such cases, the power to exploit lies with
the tenant rather than the landowner (Brooks, 1993; Lastarria-Cornhiel and
Melmed-Sanjak, 1999).
While inevitably drawing examples from regions in
which state institutions are strong enough to underwrite effective tenancy
legislation, this article makes the point that reform is not predicated only on
large-scale formal solutions. Rather, tenancy relationships are, by their
nature, predominantly small-scale, and thus require small-scale, often informal,
arrangements. The essence of reform is about incremental, achievable progress
towards realistic targets. Such progress can relate directly to tenancy
agreements, in the technical sense, or it can relate to improvements in the
policy and operational frameworks within which tenancies are arranged.
For
most countries, tenancy reform is likely to involve a pluralist approach, based
on the strengthening of state institutions alongside the development of
technical innovations in lease arrangements. In terms of the former, the
principal concern will be to establish a clear, defensible operational framework
within which the role and purpose of the tenancy can be delineated. Although
there cannot be any universal prescription for achieving this, success rests on
being able to offer an improved balance of power between the parties. Since this
will usually involve the landowner in apparently ceding power to the tenant,
policies must be oriented towards offering benefits in exchange.
Benefits
can be in a number of forms, ranging from improvements in the administrative
operations of tenancy arrangements to financial and fiscal incentives to lease
out land. While all of these are important in underwriting confidence in tenancy
arrangements, there is an argument that providing greater certainty in the
operation of tenancies is highly important. This would, for example, involve
protecting termination rights and ensuring that residual rights (such as the
land being returned to the landowner in good condition) are upheld. It would
also ensure that an independent and effective means of dispute resolution would
be available to both parties when there is a problem. Once these conditions have
been met, there is certainly a greater incentive for both landowners and tenants
to undertake leasing arrangements, with benefits for all.
While the goal of
incremental improvement may be sufficient in many cases, momentum may be better
maintained if there is an ability to monitor and report on such improvement.
Although there cannot be a prescribed pattern of progress towards attaining
operational goals, there can be clearly identified performance targets for each
of the components. These will vary according to the situation, but the types of
measures which might be appropriate in any particular case include: counts of
what information or model forms are available; counts of what is being used, in
terms of access to information or purchase of model lease forms; trends in both
the actual numbers and types of leases being registered; and trends in the
principal terms and conditions being agreed in leases.
In all cases, care
must be taken in implementing any package of reform measures. This is
principally to avoid a situation in which one of the parties (usually the
landowner) sees such disadvantage that he or she discontinues the leasing arrangements (Land Reform Policy Group of Scotland, 1998). When this happens, the result is not so much that land ceases to become available for rent, but that alternative arrangements are found to circumvent the onerous legal obligations. Given that these alternatives are undoubtedly going to favour the landowner in ways that the tenancy reform was seeking to avoid, the outcome - certainly for the tenant - is unlikely to be significantly better than the previous arrangement. Indeed, in seeking to improve tenants' rights, poorly constructed reforms may unwittingly achieve the opposite.
1 This article is based on work undertaken for the Land Tenure Division of FAO, by researchers based at the School of Management Studies for the Service Sector, University of Surrey, the United Kingdom, and the Land Tenure Center, University of Wisconsin, the United States. The authors gratefully acknowledge the input provided by Simon Keith of the Land Tenure Division of FAO; the work owes much to his vision and guidance. The authors also wish to acknowledge the input of other FAO officers, particularly Jon Lindsay and David Palmer, as well as members of the project steering group.
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