1. Land and Labor Dr. George Norton Agricultural and Applied Economics Virginia Tech Copyright 2009 AAEC 3204

2. Objectives Discuss meaning of land tenure and land reform Consider why land reform is: Often necessary for agricultural development Difficult to achieve Discuss nature of land and labor markets in developing countries

3. What is land tenure? Rights and patterns of control over the land resource

4. Control over land influences ability of farmers to shape other aspects of development policy The level of income in agriculture and its distribution are affected by land tenure

5. Evolution of land tenure systems reflect: Adaptation to:  History  Environment  Policy  Technology Over time systems change as they experience:  Changing relative prices of inputs and outputs  Policy changes

6. In some cases, system does not adjust Why? Transactions costs and collective action allow groups in power to maintain status quo

7. How might transactions costs influence farm size?

8. Farms are also organized in many ways Small family farms Large commercial farms Corporate farms State farms Group farms

9. And, there are many types of tenancy arrangements Owner-operator Customary land rights Fixed wage Share lease Cash lease (fixed amount) These types differ in incentives, risk, and transactions costs for owner and tenant

10. Determinants of Tenure Changes “Natural determinants” Population pressures New technologies Market prices Increased communications & lower transactions costs Political determinants Change in tenure regimes can be subtle and incremental or abrupt

11. What pressures might population growth and new technologies place on existing land tenure arrangements? Both can raise the value of land which creates pressures to change ownership patterns

12. What is land reform? Attempt by the government through public policies to change the agrarian structure It can change the mode of production, class structure, and pattern of land tenure

13. Why may land reform be necessary from an employment standpoint? Small holdings may mean marginal product of labor near zero Large holdings often not farmed intensively Why is land reform so difficult to achieve?

14. Why are large holdings in densely populated countries a concern? Land may be under-utilized Lack of supervision of labor Incentive problem for workers Too capital-intensive given the resource base Landowners will not tax themselves

15. Average farm size RegionAverage holding size (hectares) Sub-Saharan Africa5.2 East and Southeast Asia1.2 Latin America19.1 Near East ana North Africa 9.3

16. Should there be land reform if: Land distribution is very unequal, large farms are not farmed intensively, and many small farms have a marginal product of labor near zero? Many large farms were purchased by the current land owners and they do not want to sell? Large farms were taken from indigenous people generations ago and they have been passed down through many generations since then? Land reform will cause a decrease in marketed surplus in the short run?

17. What are the major types of land reform 1. Semi-feudalism capitalist or socialist farms 2. Capitalist farms with skewed land distribution and socialist farms more evenly distributed farms with private incentives

18. Examples of land reforms China Russia/Eastern Europe Peru Tanzania Zimbabwe Colombia Philippines Ethiopia Some have involved huge upheaval, others have been more subtle

19. What are measures of a successful land reform? Incentives created for capital investment Growth of peasant associations Agricultural productivity change? Marketed surplus change?

20. Requisites of a successful land reform Government commitment, power, and administrative organization Land records Clear and simple criteria for acquiring land Quick-taking procedures compensation

21. Requisites (continued) Former owners not allowed to re-buy land Disseminate skills and new technologies Payments by new owners must be modest Services: credit, marketing, input, etc.

22. Agricultural Labor Agricultural labor markets balance out differences in land and labor endowments Why are there both casual and permanent labor markets? What might be the role of government in labor markets? Labor markets are critically important to the poor, often landless, rural families

23. Conclusion Land reform is difficult, but in some cases a necessary (but seldom a sufficient) condition for agricultural development Land rental market changes will also occur with development and are key to balancing land with labor markets