Guiding Principles:
Land Tenure in Development Cooperation

Orientierungsrahmen:
Bodenrecht und Bodenordnung

Deutsche Gesellschaft
für Technische Zusammenarbeit
Abt. 45 / Div. 45

Land tenure influences agricultural and rural development in many and diverse ways. Its design affects the farm size, production structure, productivity, use of labor, capital formation as well as other sectors in rural areas.

Agricultural production per unit area is influenced by the farm size and its corresponding factors. Smallholders must use their land more efficiently to secure their living. They are limited by insufficient availability of technical innovation, lack of support institutions, agricultural policy measures and instruments, uncertain property and lease conditions and an unequal distribution of water. After land allocation, for example, following land reforms or resettlement, new farmers often experience a reduction in production. This is often due to friction stemming from transition that can be overcome by the respective incentives. A prerequisite for this are measures of land management reforms. This is currently especially true for transforming economies in Central and Eastern Europe and the former Soviet Union.

The farm size also influences what will be produced and how much will be sold at the market. Comparatively speaking, small farms keep more livestock, farm more for subsistence and are more likely to plant annual crops. Large farms' strength is in arable farming, cash crops and with perennial crops.

The rule that small farms have a higher productivity is being discussed anew time and time again (Binswanger et al. 1995). The rule is not always true. If a smallholder is forced to use the land intensively due to not having any alternative income sources, i.e. to subsist, then this rule is true. Here, an egalitarian, even distribution of land would especially support increases in productivity. The situation is different when interest in farming is lost due to alternative employment and migration. However, even in regions with strong technological improvements in agriculture, the small farms do not necessarily have the highest productivity. They cannot afford the required investments and cannot realize economies of scale adequately. In this situation, medium-sized farms integrated in the market have the highest productivity.

In view of the worldwide process in development (although very different), it is necessary to contemplate if and when it still makes sense to grant very small plots of land to the landless if they will not be able to build up a sustainable existence in the longterm. An alternative would be, therefore, to consider whether it would be worthwhile to enlarge the farm size of those farms which are too small. However, social and economic goals come into conflict in this situation. In the past, many countries have decided to increase the size of existing farms instead of distributing land amongst the landless. This decision was made because the state could not afford to pay for the necessary equipment such as draft power, machines, seed and support services with public funds.