The State as Landowner

In almost all countries, the State is owner of significant amounts of rural lands, whether they be nature reserves, zones of commercial forestry, common grazing lands or agricultural lands. The worldwide trend, though, is for the State to reduce its holdings of agricultural lands. In most Asian countries, there has been a long tradition of private ownership of agricultural land. Latin America, except Cuba, emerged from an era of State ownership of land with a decisive shift in policies toward private ownership, although there are still residual State agricultural lands in some countries. Africa and the former Soviet Union are the principal regions in which State lands still play a reasonably prominent role.101 As commented by Zvi Lerman:

private ownership of land is not recognized in the Central Asian States (Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan; in Turkmenistan private ownership of land is purely notional, without any rights of transfer), in Belarus (except for small household plots), and in a number of autonomous republics within the Russian Federation.102

Alden Wily has commented on the pervasiveness of State ownership of agricultural lands in Eastern and Southern Africa, and the problems that may be associated with that form of tenure:

... all but one State (Uganda) has firmly entrenched primary ownership of land ... in the hands of the State (or president), leaving to citizens only the right to own 'interests' in that land. From this proceeds power to designate, regulate, intervene and appropriate land at will - a facility used with unusual frequency, dubious purpose, and lack of accountability by many governments in the region in recent decades and one that, arguably, has promoted rent-seeking landlordism.103

In many cases, customary landholdings in Africa have passed into the hands of the State, including in Mauritania, Nigeria and Senegal, in

100. R. Watts, 'Zambia's Experience of Agricultural Restructuring', in Csaba Csaki, Theodor Dams, Diethelm Metzger and Johan van Zyl (Eds), Agricultural Restructuring in Southern Africa, International Association of Agricultural Economists in association with the Association of Agricultural Economists in Namibia, Windhoek, Namibia, 1992, pp. 373-374.

101. However, 'A high percentage of land in Sri Lanka is State land. A significant amount of this land is occupied by private persons through permitting, grant and leasing schemes. Unauthorized occupation of State land [is] a significant problem . . .' (Land Tenure Service, FAO, 2001, p. 49).

102. Zvi Lerman, Agriculture in ECE and CIS: From Common Heritage to Divergence', The Hebrew University, Rehovot, Israel, and The World Bank, Washington, DC, USA, January 1999, p. 3; available at [www.worldbank.org/landpolicy].

addition to the countries in the Eastern and Southern part of the continent. This shift parallels historical experiences, especially in Europe and Latin America, noted in Section 5.4, in which customary lands became the property of large landlord estates or haciendas. In Senegal, in principle the National Land Law provided that allocations of land to cultivators, and termination of use rights, were to be managed by village councils, as they had been under the traditional systems.104 In practice, the law proved to be vague in important respects, and its intended principles were not always followed.

In modern times, the reasons why the State has become an owner of agricultural lands are diverse, but for the most part they fall into five categories:

• historical reasons, e.g. that a colonial power's lands passed to the government after independence, and sometimes the colonial regime itself was statist in its economic policies;

• an a priori ideological or political conviction that basic resources such as water and farmland are too important to society to be controlled by individuals;105

• a concern that privatization of land may lead to concentration of landholdings in relatively few hands, thus exacerbating problems of rural poverty;

• a concern that private ownership will encourage speculative holding of land, with the consequence of leaving idle land that could be productive;

• a concern to assure that sustainable resource management practices are followed, as in the case of State lands with timber concessions.

In light of the frank appraisals of authors such as Platteau, Ntangsi and Alden Wily, it should be added that the possibilities of patronage may also have encouraged some governments to hold onto lands that they might otherwise have divested to the private sector. In these cases, lack of political will to privatize land is a major obstacle to change. On the other hand, in Estonia and other countries of the former Soviet Union, the State became a major landowner by default, since the process of privatizing farmland has been slower than anticipated and has not yet been completed.

The ideological position cannot be countered on technical economic grounds. After all, no country in the world permits individual citizens to own natural sources of water, but rather they may possess only rights to use it. Proponents of State ownership of land ask: is farmland fundamentally different in this regard? Each country has to develop its own answer to this question. In part the answer depends on the prevailing conception of the role of agricultural production in the economy and society. If it is regarded mainly as a source of income for producers, then policy is likely to treat land as any other productive resource, albeit always with some special restrictions, as noted previously. If, on the other hand, it is felt that agriculture must serve broader objectives such as socio-economic equity and food security, then sometimes private property will be assigned a more restricted role, with State ownership of land assuming a correspondingly more important role - although there exist alternative policy instruments for promoting those goals.

In reviewing issues associated with State lands, it is critical to bear in mind the distinction between ownership and usufruct rights. As in other activities involving productive resources, the State generally has not proven to be a capable manager of agricultural lands. As noted in the cases of the collective farms, or production cooperatives, State land ownership usually means that those who are making decisions at the farm level are deprived of important economic options that private farmers have: renting in or out, buying and selling, and mortgaging. In land tenure regimes in which the State rents out its land to cultivators, a common problem is that the rental rates may bear little relation to (annualized) market values of land, as has been the case

105. In some countries of Central Asia, there is a constitutional prohibition against private property.

in Guyana.106 When the administratively determined rental rates are lower than market rates, queuing for access to State lands results, and illegal sub-letting of the land at market rates usually occurs as well (thus promoting 'rentseeking landlordism', in Alden Wily's phrase). Those who are favored with initial access to the land perceive windfall gains, and the temptations for rent-seeking behavior leading to political manipulation of the process of land allocation are obvious.

When usufruct rights of individuals and communities on State lands are not clarified, confusion can result from the conflict with traditional forms of tenure rights, as has been the case in Mali:

For land and natural resources, State property is the rule. Individual property is the exception. In this context, as legislation does not fit the norms and values of the local population, there are many cases of evasion, misinterpretation and misuse accompanied by another major problem, the one dealing with the superposition of multiple rights to land, woodlots, grazing lands and watersheds.107

Another problem is insufficient tenure security for those who farm State lands. Rental contracts often are not long enough to encourage farmers to invest in improvements in the land, or to protect its soil quality, and they cannot be used for collateral. For State lands in Namibia, it has been observed that 'The tenure security of settlers is weak. Settlers may have a right to use and occupy the land, but not to sell or bequeath residential and/or arable land, nor exclude others'.108

Because of these kinds of problems, the Government of Guyana is implementing the option of creating the legal formula of long-term tradable and renewable leases for plots on State lands.109 The Government of Trinidad and Tobago initiated such a system in 1995. A variant of the lease option as promulgated in Guyana, and in Estonia as well, would allow leaseholds to be converted to freeholds (with or without a requirement of additional payments), after the cultivator has worked a plot for a given number of years. A similar approach was implemented in Zambia where, when all land was nationalized in 1975, most freehold titles were converted to 99-year leases.110 Under the Ethiopian system of leases on State lands, landholders are permitted to sub-lease the land, sell or otherwise transfer the lease, and then the lease can serve as collateral.111

Thus, in light of international experience, the presumed benefits of State ownership and management of land are overshadowed by the disadvantages in terms of reduced levels of production and investment, and increased degradation of land. If the government retains ownership of agricultural land, the only way to avoid these negative consequences is to remove the State from the realm of direct land management itself. One option is to provide farmers with permanent, tradable rights of usufruct, through long-term, freely trans-ferrable leases. The other principal option is to leave the management of State lands at the local level, through customary rights regimes, as suggested by Nadia Forni (2000) above.

In order to maintain transparency, i.e. to avoid bias in the initial allocation of land under such government leases, one approach is for the plots in newly available land areas be auctioned off locally to producers who live in the correspond

106. Harold Lemel, 'Patterns of Tenure Insecurity in Guyana', Working Paper No. 43, Land Tenure Center, University of Wisconsin-Madison, Madison, WI, USA, April 2001, p. 7.

107. Land Tenure Service, Food and Agriculture Organization of the United Nations, 2001, p. 45.

108. Martin Adams and John Howell, 'Redistributive land reform in Southern Africa', ODI Natural Resource Perspectives, No. 64, Overseas Development Institute, London, January 2001, p. 5.

109. Ministry of Finance, Government of Guyana, National Development Strategy: Shared Development through a Participatory Economy, Government of Guyana, Georgetown, Guyana, draft, 1996, Chapter 29.

111. Land Tenure Service, Food and Agriculture Organization of the United Nations, 2001, p. 40.

ing areas, with a ceiling on the size of the plots to be auctioned. Another approach is to post lists of those eligible for leases with explanations of the criteria for selection. A third option is to select lessees by lottery among those who meet the eligibility requirements. For existing agricultural land, preference in issuing the leases normally is given to the families who have been tilling their plots for a given number of years without interruption (again subject to an upper limit on the size of plots leased out).

In all cases, it is vital that lease fees be set at market levels, to provide incentives for productive use of the land and to avoid creating incentives for 'landlordism' - rent-seeking behavior in the form of attempting to gain access to leases only for the purpose of sub-letting at a profit. As previously commented, this problem has been very widespread in Guyana. Another example of this phenomenon prevailed in Zambia, where lease fees on State lands have been very low: 'Leasehold land has been found to be considerably underutilized. Leaseholds are granted free of charge at a minimal ground rent, which is inadequate incentive to encourage optimal use of land' (Chinene et al, 1998, p. 95).

In Taiwan, where the agrarian reform reinforced private ownership, State-owned lands were adjudicated in an equitable manner, in small plots (Platteau, 1992, p. 227). In the production conditions of Taiwanese agriculture, the small plots proved to be efficient as well as conducive to equity in the land distribution. This example illustrates the point that the manner of disposing of State lands is quite important.

Land reform in Honduras in the 1970s provided an example of State-owned lands that were not managed in a transparent way. About a third of all agricultural lands were owned by national and local governments, and after the passage of agrarian reform legislation they continued to be occupied by squatters without formal title, sometimes in plots that contained several hundred hectares of land. Under a different approach, the agrarian reform could have placed a ceiling on the size of these plots, insisted that their occupants pay for them (over time), and distributed the excess land above the ceilings to landless families.

Instead, the landless were tacitly encouraged to invade existing private lands, which then were expropriated after the fact, often on dubious legal grounds. Thus, the agrarian reform channeled the quest for access to land into the most conflictive channels, and created substantial uncertainty of tenure for private farmers, instead of using State lands to provide access to land for the rural poor.

As will be discussed in a subsequent section of this chapter, there are indirect policy instruments which can be deployed to discourage a concentration of landholdings and also to minimize the practice of leaving productive land idle. Once a strategy is defined for creating access to land for the rural poor, and adequate agricultural incentives, if such policies are implemented, then much of the economic justification for State land ownership and management weakens.

On the other hand, the role of the State is exceedingly important in defining land tenure policy, specifying its detailed regulations and instruments of implementation, and monitoring its functioning. A clear and effective land tenure regime is one of the most important prerequisites for sustainable agricultural development. Usually, it is more productive to orient the State's management capabilities in that direction rather than toward direct administration of land.

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