Rationales Failures and New Formulations

Regardless of the approach taken, the rationale for land reform still exerts a compelling influence in some spheres. It is patently on the table in Eastern and Southern Africa, although Alden Wily points out that ' "political will" for reform often wavers, as has been the case so far in Uganda, Tanzania, Zimbabwe, South Africa, Malawi, Lesotho and Namibia'.120 From a World Bank perspective, Deininger and Binswanger have stated that two of the 'four key principles' in the 'broad consensus underlying current thinking about land issues' are:

• The desirability of owner-operated family farms on both efficiency and equity grounds.

• The positive impact of an egalitarian asset distribution and the scope for redistributive land reform where nonmarket forces have led to a highly dualistic ownership and operational distribution of land, that is, a distribution characterized by very large and very small holdings.121

They develop further the rationale for land reform in the following terms:

The practical difficulties associated with implementing land reform notwithstanding, the conceptual attractiveness of such a policy rests on three pillars: First, in situations where credit and product markets are incomplete, access to land can make a significant contribution to food security, households' nutritional well-

116. A. Herrera, J. Riddell and P. Toselli, 1997, pp. 53, 54 and 55.

118. Alain de Janvry, Nigel Key and Elisabeth Sadoulet, Agricultural and Rural Development in Latin America: New Directions and New Challenges', Working Paper No. 815, Department of Agricultural and Resource Economics, University of California at Berkeley, Berkeley, CA, USA, March 1997, p. 18.

119. H. P. Binswanger, K. Deininger and G. Feder, 1995, p. 2731.

121. K. Deininger and H. Binswanger, 1999, p. 248.

being, and their ability to withstand shocks. .. . Second, land ownership affects economic growth and poverty reduction through credit-financed investment.. . . And finally, several studies have argued that a more egalitarian distribution of assets (not necessarily land) would improved political stability.122

In its most condensed form, these authors present the argument for land reform in the following words:

Many of the impediments to a smooth functioning of land, labor and product markets date from the colonial era; because such longstanding barriers maintain a highly unequal distribution of land, large tracts of productive land lie idle, while peasants have to eke out a living on marginal and often environmentally fragile lands. In addition to reducing productivity, unequal land ownership is also linked to social unrest and violence.123

However, they add that most coercive land reforms undertaken during the last 20 to 30 years had political motivations and have fallen short of expectations.

Deininger and Binswanger attribute the lack of success of coercive land reforms to lack of government investment in complementary infrastructure, the tendency to group the reform beneficiaries into collective farms, the lack of entrepreneurial experience of beneficiaries, and their lack of start-up capital (lack of access to credit).

Herrera, Riddle and Toselli have drawn up the balance sheet on agrarian reform in the following words:

Even if we discount economic performance of the agrarian reform programs conceived during the 1960s, 1970s and 1980s as social welfare costs for the rural populations, they still have proved unsuccessful. Rather than reduce rural poverty, they generally resulted in shared rural poverty. Subsidized services and inputs that were part of agrarian reform programs far too seldom benefitted agrarian reform beneficiaries. Political support for land redistribution was seldom obtained. The economic costs of land distribution and land regularization were too high; and security of tenure was not provided owning to inadequate (or nonexistent) land cadastre and land registration programs.. . .124

Land reforms often have been followed by a reconcentration of landholdings that were redistributed and substantial amounts of redistributed lands left idle, especially in production cooperatives. For example, 'a recent census of Brazilian land reform settlements reported that only about 60 percent of land reform beneficiaries were actually tilling their land'.125

Although the failure to put in place complementary policy initiatives and programs is part of the explanation for these results, the failure of coercive land reform has deeper explanations. To assess the phenomenon properly, the broader reverberations of a land reform in the society and polity need to be recognized. It is not simply one economic policy tool among many. In normal circumstances, land reform cannot be conceived of as a policy instrument that governments would be able to select on purely technical grounds and implement rapidly on a significant scale. Land reform is inherently a political process and usually acquires momentum during crises of a socio-political nature, precisely at a time a government's technical capacity to implement it may be undermined. In the words of Alden Wily:

Without exception, political change underwrites and directs land reform. This has been signaled in a wave of new independence or political regimes in the last decade (Eritrea,

124. A. Herrera, J. Riddell and P. Toselli, 1997, p. 55.

125. K. Deininger and H. Binswanger, 1999, p. 266.

Ethiopia, Rwanda, Mozambique, Namibia, South Africa, Zambia, Malawi and Uganda). Or it may arise through shifting socio-political relations within society itself, being realized through 'multi-party-ism', strengthening of devolutionary strategies, and heightening popular voice and demand. The thoroughly political nature of land distribution and security means that 'reform' readily becomes a focus in times of political uncertainty. As the current crisis in Zimbabwe illustrates, it may be all too readily used as a tool to prompt or control rising political opposition.126

On the other hand, Binswanger et al. are more inclined to emphasize the risk that land conflict, and in some cases civil war, may arise from 'the perils of incomplete land reform'.127 Here, they are clearly treading in speculative territory, but whatever the cause-and-effect relationship, historical experience makes it clear that undertaking a coercive land reform is a path that often leads to, or is accompanied by, serious political unrest and even violence.

The implementation of land reform also faces formidable hurdles of a practical nature. In reviewing the experience of land reform in South Africa, Adams and Howell have pointed out that technical, administrative and economic barriers tend to make the process a slow one, regardless of whether land reform is market-assisted land reform or expropriative:

Redistribution for the rural poor has been limited largely because of the technical and economic problems in subdividing large livestock-based farms in semi-arid areas.. . . Pastoral settlement schemes in Africa suggest that neither the subdivision of commercial ranches into family livestock farms, nor group or cooperative ranching are viable options. The costs of settling families with small herds and flocks on individual farms, with reasonable standards of social and economic infrastruc ture, are very high and both economic returns and environmental effects almost certainly negative. . . .

Can land redistribution be achieved by encouraging landowners to offer farms for sale voluntarily, or should the government compulsorily acquire land for redistribution? Zimbabwe, Namibia and South Africa have adopted market-assisted land reform, although Zimbabwe now seems to have abandoned it____

In South Africa post-1994 the main aim was to contribute to the alleviation of poverty and injustices caused by previous apartheid policies. The redistributive content of the program was constrained by the government's grant conditions in the context of its willing-buyer policy. ... On average only two thirds of a R15-16000 grant was used for land purchase since it also had to cover capital investments necessary to make the land productive. Furthermore, since 1994 the Department of Land Affairs has consistently underspent its annual land reform capital allocation, largely because of inadequate administrative capacity. Even if the policy had been based on expropriation instead of market transactions, this would have been a binding constraint. Land redistribution through due legal process is slow and administratively binding. ... its complexity in a constitutional democracy tends to be greatly underestimated by those who have not tried it. A numerous and widely deployed army of well-trained field staff is essential to inform people of their entitlements and to facilitate the many and complex legal, financial and administrative tasks involved. .. . Adequate post-settlement support must also be provided if new farmers are to succeed. ... In both Namibia and South Africa there is an unbridgeable gap between the ambitious redistribution targets that have been announced and the financial and administrative resources for realizing them.128

127. H. P. Binswanger, K. Deininger and G. Feder, 1995, p. 2693.

128. M. Adams and J. Howell, 2001, pp. 2-3 [emphasis added].

The experience of Zimbabwe in the 1980s -when 3.3 million hectares were redistributed to 52000 families, with compensation of former owners - seems to contradict this pessimistic assessment for the scope of land reform. Both equity and efficiency improved in the areas affected. However, in the 1990s Zimbabwe also ran up against administrative and financial difficulties and consequently the pace of reform slowed drastically. A major legacy of recent attempts to accelerate the process is that 'the country's wider economic and social fabric has been severely damaged'.129

Heinz Klug has commented in the same vein on African experiences with land reform:

As in Latin America, it has been difficult to carry out [land] reform on a scale which fundamentally alters the structure of landholding. This has been due to a number of factors, including constitutional constraints, shortage of funds for land purchase, and shortage of funds, trained staff, etc. for resettlement.130

Similarly, in the Asian context Deininger, Pedro Olinto and Miet Maertens pointed out that financial restrictions have limited the pace of land reform in the Philippines. They commented that lack constitutes the single most important constraint to a faster and more wide-scale implementation of land reform.131

Implementation of the Nicaraguan land reform of the 1980s and 1990s reduced the government's institutional capacity to manage agricultural and rural development programs and generally weakened respect for law. A legacy of the expropriations conducted extra-legally was many thousands of unresolved conflicts over land rights and institutional overlap and ambiguity. As late as 2001, only 35% of the expropriated properties had been compensated and at least five kinds of land titles were being issued by different government agencies.132 In that country's legal framework, the new occupants of redistributed land cannot be provided with fee-simple titles until the previous owners are compensated for the confiscation. A similar conundrum has slowed the pace of land titling in Honduras. The possible consequence of negative effects on a country's institutional structure is not taken into account when

The positive historical record of the land reforms which established owner-operated farms should not obscure the enormous difficulties of undertaking a land reform. Schuh and Junguito point out the 'widespread tendency to romanticize about the Mexican Revolution, which many people believe alleviated rural poverty. It fails to recognize the political difficulties and fiscal costs of bringing off a successful land reform. It also fails to recognize the extent to which the Mexican land reform has institutionalized rural poverty. ... [and it] fails to recognize the extent to which the redistribution of land is a one-time gain, and the extent to which it fails to prepare the beneficiary for participation in a modern market economy. A key reason for the prevalence ofpoverty in Latin America is that governments in the region have grossly underinvested in the human capital of their rural populations'. (G. E. Schuh and R. Junguito, 'Trade and agricultural development in the 1980s and the challenges for the 1990s: Latin America', Agricultural Economics, 8(4), June, 1993, p. 398.)

130. Reproduced from Heinz Klug, 'Bedevilling Agrarian Reform: the Impact of Past, Present and Future Legal Frameworks', in J. van Zyl, J. Kirsten and H. Binswanger (Eds), Agricultural Land Reform in South Africa: Policies, Markets and Mechanisms, Oxford University Press, Cape Town, South Africa, 1996, p. 197, with permission of the Oxford University Press, Southern Africa.

131. Klaus Deininger, Pedro Olinto and Miet Maartens, 'Redistribution, investment and human capital accumulation: The case of Agrarian Reform in the Philippines', mimeo, The World Bank, Washington, DC, USA, 2000.

132. Unpublished data compiled by Gustavo Sequeira in Nicaragua (2001).

land reforms are contemplated, but frequently it is a by-product of their implementation. Once a nation's institutional integrity is degraded, restoring it is an arduous, long-term task.

A conclusion that emerges clearly from these experiences is that massive, coercive land reform cannot be expected to be implemented within the confines of a stable legal framework and polity. It is inherently disruptive and is favored by chaotic political circumstances. The land reforms of Japan, South Korea and Taiwan, considered as the most successful examples, were carried out in wartime or during a process of political collapse and reconstruction. As remarked by Binswanger et al. (1995, p. 2683):

Most large-scale land reforms were associated with revolts ... or the demise of colonial rule. .. . Attempts at land reform without massive political upheaval have rarely succeeded in transferring much of a country's land.

The alternative of market-assisted land reform also may be forced to move at a gradual pace because of implementation constraints. Referring to both kinds of land reform, Adams and Howell concluded that:

One lesson from attempts to transform land tenure in Africa over the last forty years is that wide departures from existing systems are rarely immediately feasible: evolutionary approaches are slow but, as Zimbabwe demonstrated in 2000, revolutionary approaches generate high social and economic costs.133

When land reform is carried out, some improvement of the economic status of the beneficiaries can be expected but it does not necessarily benefit the poorest rural families. The Philippine experience in land reform has elicited much review and commentary. Deininger, Olinto and Maertens analyzed the effects of land reform by carrying out a careful statistical com parison of the behavior of beneficiaries and non-beneficiaries for a small sample of farmers in Central Luzon province. Their principal findings included the following:

. .. from a point of view of static productivity gains, the case for land reform in the Philippines is much weaker than would be expected. ... we are unable to ascertain any significant relationship between tenure status and agricultural productivity.. . . [but] we find a stronger impact of asset ownership and land ownership status on income the educational advance of children affected by land reform was about 0.60 years higher than that of non-beneficiaries. ... in 1985-1998, beneficiaries' income grew at a faster rate than that of non-beneficiaries. The difference in income growth between beneficiaries and non-beneficiaries is estimated at US$86, almost half of the original level of income.134

However, Deininger et al. (2000, pp. 15 and 24) also found that:

land reform failed to benefit the landless but rather targeted share tenants and leaseholders. . .. government officials generally were not able to target the program to the poorest within the overall universe of agricultural cultivators. . .. To increase the supply of land, the government has prohibited share tenancy and imposed land ownership ceilings. These measures are not only costly to implement (and often circumvented by spurious subdivision) but also restrict access to land through the rental market and are likely to discourage land-related investment in labor intensive agro-export and plantation crops.

Yujiro Hayami found the Philippine reform to have serious flaws, including disincentives for existing producers and increasing rural inequality because of the lack of targeting of the poor

134. K. Deininger, P. Olinto and M. Maertens, 2000, pp. 11, 12, 17 and 18.

est families that was documented by Deininger et al.:

.. . land reform has been successful in transferring much of the economic return to land from absentee landlords to former sharecroppers. However, the reform has created serious income inequality within village communities.. . . [and] by limiting program application mainly to tenanted land, the reforms created a strong incentive for landlords to evict their tenants and cultivate their land directly. . .. Therefore, the exemption of land under direct administration of landlords had the effect of reducing labor input per hectare below an optimum level, thereby reducing the income of the laborers. .. . Significant negative effects of land reform on agricultural production efficiency also occurred outside the rice and corn sector. The cash crop sector has not been covered by reform programs. . . . However, plantation owners fear that their land will eventually be expropriated. It is only natural that they have stopped investing in improvements in their land infrastructure, including planting and replanting trees.135

Although it is too early to assess the new, market-oriented approaches to land reform, they were designed to be more successful than coercive reforms in assisting beneficiaries to improve their economic well-being and in avoiding the creation of disincentives for the rest of the sector and other costs to society.136 This expectation would be more realistic if they were complemented by appropriate policies on land rental and other tenure issues. In any case, the redistributive process appears destined to be a slow one unless governments place much greater emphasis on increasing administrative capacities for such programs at the local level. Colombia's recent experience with market-assisted land reform, in which a number of administrative complications brought the process to a halt, has not been encouraging.

Land reform is not the only way to promote better access to land by the rural poor. Tenure reforms themselves can be effective in this regard. In the context of South Asia, and concerning the policy framework for land tenancy in particular, Banerjee has pointed out that:

Unlike land reforms, tenancy reforms do not attempt to change the pattern of ownership of land. They simply give tenants additional rights on the land. .. . Tenancy reforms work by making tenants more expensive.. . . There is not enough evidence to conclude that tenancy reforms are an effective substitute for land reforms. If, however, increasing the cost of tenant labor can bring about better incentives, then a range of interventions - what elsewhere are called empowerment strategies . . . will become relevant.. . . Were implementation not a constraint, traditional (coercive) land reform would have a number of clear advantages over alternative types of land reform. .. . Implementation is a constraint, however, and may indeed be the binding constraint in many cases. In such cases, market-assisted reforms or tenancy reforms may provide better outcomes.137

The topic of tenure reforms is explored further in the following section, as well as other avenues for increasing access to land on the part of poor families.

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