Agricultural Land Relations in the Developing World

Literature › Works

Hans P. Binswanger; Klaus Deininger; Gershon Feder (1993). Agricultural Land Relations in the Developing World. American Journal of Agricultural Economics, Vol. 75, No. 5 (Proceedings Issue). Oxford University Press for the Agricultural & Applied Economics Association.

Type	journal article
Scope	Comparative and methods
Method	synthesis review
Period studied	antiquity–1993
Regions	developing countries, Latin America, Asia, Sub-Saharan Africa, Southern Africa, Kenya, Zimbabwe, South Africa, Prussia/Germany
Themes	agriculture land, comparative theory, business and state, origins segregation
Citation key	binswanger1993

Argument

The paper argues that neoclassical and agency-theory models (levels A-D) cannot fully explain the dualistic land ownership structures of developing countries. A fuller account must add rent seeking, coalition building and coercive state power (level E). Large farms arose through extraeconomic coercion and policy distortions, and their continued competitiveness depends on subsidies that undermine smallholders and impose large social costs. South Africa appears only in passing, as one case of trade barriers and mechanization subsidies that turned Junker-type estates into mechanized commercial farms. The paper argues through a layered theoretical framework, a schematic historical typology (figure 1), and a review of empirical studies, and it ends with policy implications for titling, tenancy regulation and land reform.

Evidence and method

Secondary literature and theoretical models (Roemer, Dasgupta and Ray, Binswanger and Rosenzweig, Otsuka and Hayami, Bell, Shaban, Cain), cross-country historical illustrations (Mozambique prazos, Kenya coffee, Zimbabwe and Malawi tobacco, Prussia, Chile, Brazil) and the authors' own Handbook of Development Economics chapter. No primary data or South African archival or statistical sources are used in this paper.

Findings

• Large farms arose through coercion and distortions and survive on subsidies, at great social cost. (p. 4)

  establishment of large farms was due to extraeconomic coercion and distortions; (ii) continued existence of these farms depended on subsidies which at the same time undermined smallholders' competitiveness

• Four types of state distortions were used across cultures to force peasants onto manorial estates, which points to material conditions and rent seeking rather than culture as the cause. (p. 6)

  This suggests that material conditions of production and rent seeking, rather than culture, have led to the distortions.

• Landowners facing tenancy restrictions or land reform evicted tenants and reverted to home-farm cultivation, including in Southern Africa in the 20th century. (p. 6)

  landowners, faced with tenancy restrictions or seeking to escape pending land reform legislation, evicted tenants on a large scale, reverting to own-cultivation of the home farm

• Trade barriers protected inefficient large farms, with South Africa listed among the cases. (p. 7)

  Trade barriers, which protected inefficient large farms from international competition and forced consumers to subsidize Junker estates, were erected in Germany and Chile at the end of the nineteenth century and in Kenya, Zimbabwe, and South Africa.

• Mechanization subsidies, including in South Africa, converted estates into mechanized farms and displaced labour. (p. 7)

  Mechanization subsidies in Kenya, South Africa, Zimbabwe, and virtually all of South America, transformed nearly all Junker estates into mechanized commercial farms (arrow 11).

• Mechanization eliminated the demand for hired labour and caused evictions, even where labour was cheap. (p. 7)

  Mechanization eliminated the need for hired labor and resulted in widespread tenant evictions, even in countries with cheap labor.

• Restricting peasants' land and market access, and favouring rulers' farms with public goods, raised the profitability of large farms; examples include Kenya and the Central African tobacco monopolies. (p. 6)

  In Kenya, coffee production by Africans was prohibited outright until the 1950s.

• A negative farm size-productivity relationship persists in LDCs even after methodological corrections. (p. 3)

  A negative size- productivity relationship still persists in LDCs even if such adjustments are made

• Distress sales explain land transfers and the accumulation of large holdings under imperfect credit and insurance markets. (p. 3)

  Land transfers, then, would be expected to occur mainly in the form of distress sales, in which, having experienced a negative shock, farmers have to liquidate productive assets.

• Dynamic efficiency losses from distortions may exceed static ones, and the resources dissipated in rent seeking add to the cost. (p. 7)

  dynamic efficiency losses through low profitability of smallholder cultivation and reduced incentives for physical and human capital investment may be quantitatively more important