The Alleged Death of Land Reform

1. Michael Lipton, Sussex University(based in part on Land Reform in Developing Countries: property rights and property wrongs, Taylor and Francis, July 2009) The Alleged Death of Land Reform (legislation intended and likely to directly redistribute ownership of, claims on, or rights to farmland, and thus to benefit the poor by raising their absolute and relative status, power, and income, compared with likely situations without the legislation)

2. Outline 1. Introduction 2. The ‘poverty' case for small-farm growth 3. Shift v agriculture; reversal? Land reform? 4. Alleged death of LR: ‘never happened’ 5. Alleged death of LR: ‘has stopped’ 6. Alleged death of LR: ‘should stop’

3. 1. Introduction • If most poor ag/rural, ag devel. best way to start cutting mass poverty; best with fairly equal land? • Do efficient growth, equality, equity point to (a) small-farm growth (b) land reform? • 3. Ag growth also can cut pov via (i) rural non-farm sector (ii) urban impact: better via small farms? • 4. LR and reversal of long shift of priorities against ag • 5. Arguments about farm science and farm size • 6. But micro & macro inverse relationships usual • So: is land reform dead or dying, and should it be?

4. 2. Anti-poverty & small-farm growth • For low-income land-constrained places with most poor ag/rural & capital constraint on workplace creation, employment-intensive ag devel remains best hope to cut poverty fast. This often needs more equal cropland • >70% of $1.25-poor rural; >50% in 2040 • Agriculture, land reform and RNFS • At $1.25 pov line >70% inc. spent on food • Poor's food entlment based on labr income

5. 3. Antipoverty & small-farm growth II 5. Land constraintssmall-farm emp-&-income growth must come from yield, price or LR 6. On small-farm inc growth depends other ex-tra emp: RNFS via more, nearby farm demand; urban via wage-goods & less ‘push‘ migration - 7. most pov reduction requires raising income where poor are, by extra assets or lab income 8.Raising yields harder (envir; GM?); food price rises help surplus farms; LR more salient?

6. 4. The long shift v. ag - reversal? LR? 1.Yield growth & its emp effect fell for main crops in SSA, Asia, LA 1975-2008; SSA ag output/head down. 2.Rural-urban gaps in mean inc, poverty, health, education remain big and have not been falling.  3.Yet real ag aid fell 2/3 1979-2006; on the turn (WB, US, UK)? SSA public ag inv. hardly rose, but progress on 2003 commitment to raise ag’s pub. exp. share 5%10% (<half S Asia pre-GR!). FDI reviving but the wrong way (oilisation of ag)? Research: SSA & LAC: less public AR than 1980s, so tech. progress less focused on small-farm needs. 4.Yet (Ag Cens: SSA, Asia 1970-2008) shift to small farm. LR (+ its incentive)? Small-farm advantages?  

7. 5.‘LR never happened/stopped’? I King Charles II had nothing on LR. Why? Narrow definitions e.g. ‘only classic LR’ (CLR) (some decoll and tenancy reform genuine LR) Extreme demands: post-reform services Glass fallacy: 40% target, 20% achieved.. ‘1m ha here, 1m ha there, soon you’re ..’ Expecting too much of LR alone Ignoring indirect/non-income LR effects

8. ‘LR never happened/stopped’? II • Past massive CLR, some long-term unplanned CLR. Incentive compatibility and CLR, collect-ivisation/reversal, tenancy reform, new-wave • Now S Africa, Zimbabwe, Nepal, Bolivia, Venezuela, Paraguay, Peru … and pending … • In micro-farm Asia, micro-reform: gardens? • Ideological denigration of achievements by LR opponents and supporters

9. 6. Never happened/stopped?:LA • Mexico 1915-68-?92: 65% 1961 land (mainly ejidos?) • Ecuador: 1964-83 9% land, 15% farm families • El Salv: post-80 ld23% rrl hhs, from <100ha fms • Peru: 1969-80 half farmland to 24% rural workforce • Chile: to 1973 35% of bih; 1986 – 57% small farm, 10% State; over half LR land survived Pinochet laws • Brazil: 19.4m ha 1985-2003, ‘< target’. Now NWLR+MSR+CLR. • Bolivia: by 1970 most land to ‘only’ 45% peasant hhs • Colombia, Panama, Domin Rep: 1/6-1/4 cropland expropriated; less in Costa Rica, Honduras, Uruguay

10. 7. Never happened/stopped? Transition • Communists did CLRanti-LR (collectivisn). c. 1970-1975: 350-400m ha, 1bn ag-ists in State/collec farms • Disaster (why?) Decoll near-complete; but some pseudo, andnew collectivisers (also SSA): why? • Some successors decollectivised to small fairly equal farms. Often ‘hh resp’ first (China, V’Nam). Land rights still incomplete (title desirable?) but huge pov reduc from vast natural experiment in detoured LR • Where decoll. into big farms, equalisn feasible LR in parts of CIS (missed chance?); usually not in CEE • Are SSA-LA semi-collectivisers captivated by big farms? Also privatisers (SSA oilisation v land reform)

11. 8. Never happened/stopped? Other Asia and SSA (includes patrialisation) • Zamindari aboln in India: ownership to 20m tillers, seldom poorest. ‘No second-stage reform’? ‘Only’ 3m ha; 2.2m5.7m hhs. Not ‘no’ CLR: WB, Kerala, Ass-am, AP. Incentive-compat: Evasion? Rent, sale help. Avoidance? Mala fide fails. Non-enforcement? Bare-foot law, invasn. Ceilings v evicn after tenant reform • CLR thrust to smallness helped emp (v. tncy rfm?) • Substantial LR in Philippines. Some in Pakistan. • W/Central SSA, most Asia: little land in huge holdings v. big LR; some CLR to home-gardens feasible • Ethiopia? S, E SSA? Falls in farm size and IR studies suggest efficiency gain from to continued CLR

12. 9.‘Ought to die’: land rights not so unequal? • If so, less to do but less spare land, & IR ‘does’ less • Big holdings support big hhs: minor if land very un= • Big holdings=worse land, water, mgmt? Ld/wtr: Asia yes, SSA no (irrign). Mgmt?! Jointly ‘explain’ c.40%IR • If smaller fms=better land (a) Natnl! But given local IR, effic case for local LR stays; equity caseregional redist (China). (b) Local: if endog (smallnessqual: L-esque I), extra case for LR. 30-40% local IR endog • Big holdings rent out more, v land-rights in=ity (poor get return to mgmt); so tncy reducn v poor via effic (IR), emp. Not registrn, (? restricn) but tncy rfm can’t replace CLR: rvse tncy; tncyadjusts space, time. V. tncy: landrules, lease mkt, tncy reform (shifted tnts).

13. 10. Ought to die? Urbanisation, RNFS • 82% $-poor rural 1993, 75% 2002, 58-69% 2030 • LR helps rrl andurb poor: ag, aglab inc, urb wage • Un= land has long in=ity ‘tail’ even after ag, rural, small %s GDP (LAC) (Eastwood-ML; de Janvry) • 2005: 51% S Asia (57% actives), 61% E Asia ex Japan, 65% SSA in hhs with ag main inc. source. Much larger % of poor (even in SA) • RNFS 30-50% rrl income; grows faster with D from growing, fairly = farms. Diverting from LR (or poor fmrs/fmworkers) to advance RNFS poor selfdefeats. CLR swells RNFS; may make it more pro-poor.

14. 11. Ought to die?: Efficiency impact • As fm area rises, unit prodn. cost (UPC) similar; transac cost (UTC) up in ‘South’. UTC less for sml to screen/seek/ spvse L; for big, to borrow/use K. So big use more K/ha, less L/ha. In S, where L/K high, big fms’ UTC+UPC more, Q/ha less (crop-mix, fallow > crop-spcfc yld); Q/L more; L/ha far less. If L scarce, K ample, big fms win in mkt; small svve by gdwill/subsidy. Not in South: L v K; sbstce v mktg; risk. • IR (inverse rlship size-GVA/ha) in developing ag. (a) Chicago: if small farms a better land use, why big survive? Won’t big owners sell/rent/manage out? Imperf mkts; 'power barriers'. (b) Converse Chicago: if small fms not a better land use, why do fms get smaller? Not due to impfc mkts, power, demog, tech. progress. In S, small=better ld use (not ‘user’!)

15. 12. Ought to die? Efficiency impact 2 • Post-harvest: processing, collection can show UTC fall with size. More important with liblsn/globlsn (supermar-kets; grades/standards; export horticulture). Threatens small-farm advantage only with intermediation failure. Often not (tea, sugar, cotton;plantation protec v small). Can follow supermkts (but Indonesia, China, Kenya). • Dynamics: middle farmers often innovate first (risk, access), but if new technique appropriate (lab-intensive), after 2-3 seasons small adopt more/more intensely, as IR, UTC economies reassert themselves. • System effects of asset in=ty: RNFS; village; growth.

16. 13. Ought to die? Macro-efficiency 1 1.In=ty needed for savings & result of industrlsn? 2.Later evidence: in developing countries high income inequality associated with slower growth later on. 3.Given asset dist. moderate differences in income distribution unlinked to differences in growth rates. 4. Better evidence that asset in=ty slows growth in developing (less clearly in developed) countries. 5. ? Because (a) chances to achieve in=ty by effort or skill help growth (b) ascribed in=ty taxes incentives,(c) most assets, esp. land, education, in developing countries ascribed, eg. inherited (inefficient v children of poor), often only by males (inefficient v women).

17. 14. Ought to die? Macro-efficiency 2 6. Countries with less-= education have (robustly) slower growth. Also largely ascribed, rural-urban inequality may harm growth. So does very un= intra-rural land inheritance. Efficiency/scale-economies tell against rural, but may require urban, in=ty. 7. Demographics may strengthen these reactions - inequality, high fertility and slow growth appear to be mutually reinforcing. Farm microstatics, cross-effects on rural non-farm sector, and macro-evidence all suggest efficiency gain from more equal land and school access in developing countries.

18. 15. Ought to die? Work/proles • Rising share of poor employees. LA: ‘proletariansn’ by 1981 (de Janvry). India: since 1985 poor hired L hhs increasingly > poor farm hhs (Sundaram/Tendulkar) • But due to land in=ity, not a case vs LR to reduce it! • CLR (or NWLR/decoll/.. if with same fm-size effect) • (a) raises D for ‘proletarian’ landless labour (egalitar-ian LR19-24% rise in D(farm L) in B’desh, Pakistan, Thailand, Indonesia c. 1980 (Booth and Sundrum); • (b) raises D for RNFS, and perhaps its L/Q; • (c) cuts supply of hired-labour-from-farm-h’seholds.

19. 16. Ought to die? Distributive impact on poor • Burgess-Besley: LR impactfaster pov fall • Non-incentive-compat. (non-)LR probably bad for poor • In LAC, worse-than-expected pov given GDP/head linked to high land Ginis – probably also S and E Africa • Small-farm ag g (via output or LR) may help poor more via extra emp income (and, where fd deficit or dear tpt, more/cheaper/securer food) than via direct land income • “Poor got ‘little’ land from LR X” ignores: this; land access changes absent LR X; village-system (power, credit, …) inc. tfr effects (Bardhan-Mookherjee).

20. 17. Ought to die? Science not reform? • Poverty fell in rrl Asia, some LA with GR & little LR • GR pov fall. North Arcot and landless labour. • Most in=ty now rgnl; much U-R [settlement record?] • In lagging regions ERR, pov impact of ag rsch can be more, but ‘shift from LR to science’ false dichotomy • Large majority of rural poor not in laggard regions • Poor as ready to use GR, but seldom lead (risk, access) • Indeed (Hossain on Bangladesh) IR strikingly reasserts itself 3-5 years after rapid GR advances • Absent LR, risk of big-farm land grab in once-laggard, now ‘science-developing’ regions (Amazonia, some SSA)

21. 18. ‘Dead to debate’: LR endogenous? • If structurally given, why analyse? • Still need to predict impact • Anyway, ‘structurally given’ is not fully plausible • In practice, endogenisers of LR – Marxist, NIE or NPE - analyse and advocate various forms of it • Isn’t analysis and advocacy, however determined, also determining? If not, why not shut up?

22. 19. ‘Dead to debate’: LR, or not, foreign-driven? • Cold War fixation and priority for LR abroad vastly overstated (Yugoslavia, Poland, Alliance for Progress non-interventions at least as typical as Arbenz, Allende interventions) • Then and now, continuing support for NWLR, complementing both CLR and peasant movements (Brazil, Philippines) • Lots of room for domestic agency in land reform, then and now