Seminar week 7 : Land ReformEmile ELIE
- Prospects and strategies
A) Advantage of being small
-Small farms in developing countries tend to be more productive than larger larger due to dreceasing returns to scale.
-Family labor is very effective (no supervision needed, the family members want the best for their family) whereas the big farmer would need to hire some labor who would be less productive than some members of the family
B) Advantage of being big
-Easy access to farm machinery
-Possibility of marketing
-Easy access to credits and other inputs in general
C) Solutions
-Rental market of farm machinery for small farmer that have too little land to be able to fully use their machinery if they could invest in it.
-Cooperatives that would do marketing for the small farmers
Why land reform is necessary:
1-distributing wealth create efficiency: when the poor have more assets they will be able to get more credit and better insurance which in turn will help them to invest more effectively.
2-Political agrument for redistribution: if the poor have too little at stake they can impose inefficient taxes on the rest of the economy ( crime , riots etc..)
3-Is land redistributing the best way to reduce inequalities ? Some opportunity costs exist, at some point the poor would get more utility if the state invest in education and/or health instead of providing more land
For a successful land reform:
Redistributed land should not be saleable because we want a long term effect on the poverty
We should impose a land ceiling, but what should be the targeted land to be redistributed ?
The less productive farmer who also have more land than the land ceiling allow them, by this way we won't restrain the best farmer who really diserve to have a lot of land because they use it the best way possible. Above the land ceiling it should ones should be able to buy some more land ( at a higher price of course ) , though in order not to discourage talented people the gouvernment should give some discounts based on output
We should compensate the landlord for giving away some land. We cannot underestimate the power of resistance they can have.
We should ban eviction, it will make impossible to use eviction has a threat , so it will reduce productivity .Though on the other hand it will give the tenant a long-term stake in the land.
2. Land reform, poverty reduction and growth evidence from India.
There are many ways to reduce inequalities, in this text we will see the diferent strategies that can be used concerning land reform as a redistributive policy and what were the results in India.
The main goal is to improve the terms on which the poor have access to land.
1-Tenancy reform
-Improving tenurial security by banning eviction.
-Diminishing tenancy by transfering ownership to them.
2- Abolishing intermediaries
-Reducing the power of absentee landlords and intermediaries
This gives the tenants better returns from their work in the farm. But had limited effects in redistributing land toward the poor.
Tenancy reform and intermediaries abolition are driving the main effect on poverty reuction. Wereas the 2 others have negligible impacts.
3- Legislated ceiling on landholding
Results of the land ceiling legislation was a failure since the landowners manage to avoid expropriation thanks to some loopholes. Also it encourages to evict the tenants and to separate their holdings into smaller propietary units among family members.
4- Land consolidation
This means the consolidation of disparate landholdings thanks to the reallocation of parcels to remove effects of fragmentation and also landscape development and protection
The agriculture has decreasing retrun to scale, and breaking the big farm holders into small family farms is efficient, it led to productivity gains, and therefore raised agricultural wages.
During the period 1958 to 1992 rural poverty gap has fallen from 19 percent to 10 percent.
As a conclusion redistribution creates some economic growth so everybody will get better-off in long-term.