Frithjof Kuhnen (1996):
Synthesis of Current State of and Trends in Land Tenure and Land Policy in Asia

3.2.4 Tenancy

The lessee's and the tenant's different circumstances gave rise to various forms of tenancy which differentiate themselves according to the type of rent which is paid. In general, tenancy has been declining as a result of legislation and technological development.

3.2.4.1 Cash Tenancy

In the case of cash tenancy, which is also called fixed money rent, the tenant pays a pre-stipulated amount of money per year or per season for a certain area. He pays all costs of production, except the land tax, perhaps. He bears the full risks of the yield but has the opportunity of earning a high income if the harvest is above average. This form of cash tenancy requires full monetization and market integration. Cash crops are usually cultivated.

The high risk involved makes this form of cash tenancy possible only for potent tenants who are also entrepreneurs, so to say the cream of tenants. Landowners prefer this form when they have neglected land and rented out for a period of six years approximately to a tenant who is known for his farming abilities. The landowners expect to get the land back in an improved condition.

As modernization has been increasing in recent years, cash tenancy, which is considered the fairest form, is becoming more prevalent.

3.2.4.2 Rent in Kind

This type is similar to cash rent, the only difference being that the rent is stipulated in quantities of product. As in the case of cash rent, the tenant receives the whole harvest beyond the amount foreseen as rent. He bears the full risks, but reaps all the results of the extra work or investment.

This form is not very widespread. It exists in two situations: if a peasant dies at an early age or becomes disabled, the farm is often rented out under that system. The rent in kind is used to feed the family. It helps to save the trade margin which would be necessary if the products were first sold and the lessee were to use the money to again buy staples. Another incidence are cases of severe inflation when rent in kind helps to maintain the value of the rent because the products can be stocked and sold at a later date.

3.2.4.3 Labour Rent (Colonat)

In this case, the landowner leases land against labour which is to be applied in his fields. Labour rent saves cash for the cultivation of the landowner's fields and is a form which is current in regions that have little monetization. There are no incentives either for hard work or for investment, and this applies to both parties. It is not frequent in Asia and is usually a disguise for tenancy in countries where renting has been declared illegal. It can easily pass for a labour contract involving a share of the products as wage.

3.2.4.4 Share Rent

Within the framework of this arrangement, which is sometimes also called share tenancy or sharecropping, the tenant gives to the landowner a certain percentage of the gross yield as rent. He has to supply labour and draught power, while other inputs are paid for by the landlord. However, there are exceptions, for instance, to compensate for varying soil qualities and water availability. The share varied originally according to the inputs paid by each party. However, in view of the one-sided tenancy market, a share of 50 % of the crop, sometimes of the staple crops only, has become customary. The earnings the tenant achieves when he sells milk and meat are usually his income. In theory, at least, this arrangement provides no incentives for hard work, investment, land improvement, etc. to both sides since each will reap only 50 % of the result of any extra effort. In practice, however, in view of the small area allotted to each tenant, this share of 50 % may provide to the tenant enough incentive to work hard and improve his family's standard of living. By and large, the landlord exercises strict supervision to enforce hard work, often through representatives. To facilitate this task, he prescribes the cultivation of crops that are easy to supervise such as grains, sugar-cane, etc., while vegetables, chilies, etc. are forbidden. These would assure the tenant a better income, but the theft of even a small amount of these crops is worthwhile and can hardly be prevented. Otherwise, the landowner exercises little influence on the type of cultivation or its improvement. His strategy for earning a high income concentrates on a strict supervision of his share, especially at the time of harvest.

This system, together with the custom of renting small plots of land to tenants only leads to poverty and dependence. Often, the tenant is indebted to his landlord, and this increases his dependence upon the latter. Moreover, for poor cultivators, this system involving risk sharing is often the only possible arrangement for gaining access to land since other forms involve greater risks which the tenant could not bear.

The negative aspects are not so much components of this rent system but rather of the small acreage and high rent. Share tenancy, if combined with a division of the yield according to the contribution made by both partners, can be a means of encouraging financially weak cultivators to engage in agriculture and eventually to succeed in climbing the ladder.