|
|
 |
 |
| Sunday, 8 August 2004 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
Dismantling tenancy arrangements is a pre-requisite for agricultural Development Prof. Jagath Wickramasinghe Professor of Economics University of Sri Jayewardenepura Prices of basic food commodities are unstable at the moment. The solution seems to be the rapid development in the agricultural sector. In fact, present UPFA government's main thrust in economic development is the revitalization of the rural economy. Agriculture is the dominant sector in the economy of Sri Lanka. At least 60% of the population is engaged in pursuits connected with agriculture and closer to a quarter of the national income is generated in that sector. The population density in the rural agricultural sector is quite high, land ownership and cultivation arrangements are rather complicated, and prevailing systems are owner cultivators and tenant cultivators. One way to release the rural agriculturalists from the clutches and develop food production is to dismantle the tenancy arrangements. A rapid transformation of the agricultural sector aimed at increasing productivity is a prerequisite, for rapid rural transformation and economic development in general, and particularly so in a developing country which cannot acquire sufficient foreign resources. The prevailing ownership patterns of agricultural land in developing countries, in particular, 'Ande' and absentee landownership, are believed, to be an important obstacle to the growth of agricultural productivity. {For instance, Banking Commission of 1931 and Das Gupta. According to Belassa the land reform related policies of Taiwan during 1949-53 resulted in the following; * Enabled multiple-cropping which led to rapid growth in productivity * land-lords were compensated and their income was invested in industries.30% of the value of land was given in stocks of public corporations * Land reform and the consequent expansion of agricultural output contributed to industrial growth in many ways * Land reforms not only helped to equalise the distribution of income within agriculture but also stimulated the demand for human capital. A number of authors have shown that output per acre is higher in small holdings than that in large farms; e.g. Bauer, Sen, Okahawa, ARTI. . Mackinen has shown that, "an economy of a developing country is fragmented in the sense that firms and households are so isolated that they face different effective prices for land, labour, capital and produced commodities.... Authorities then cannot presume that socially profitable investment opportunities will be taken up by the private sector.... Accumulation of capital per se means little in an underdeveloped economy.... ". One major cause of fragmentation of rural economy in Sri Lanka is the presence of "Ande" cultivation arrangements. In most cases land reforms have meant the compulsory transfer of the ownership of land from the present owner to some other person, invariably without compensation. However what is envisaged here is different. The rationale of our model is that the differences in the rates of return earned by different types of assets can be made use of, not only to minimise income distribution disparities and increase production, but also to generate large savings for rural development, without making parties suffer any financial losses. However, mere availability of land for the tiller would not by itself guarantee higher productivity unless the tiller is liberated from the other shackles as well. Liberation of the tillers from the landlord is only one major step foreword. There are many other obstacles, such as exploitation in particular, by moneylenders, produce traders and agricultural equipment owners. Adequate extension services have to be provided outside this exploitative network, if real liberation is to be effected. The resources required for the provision of extension services could be obtained from the capital accumulated from the reorganisation of ownership. An Initial attempt was made at tenure reform on paddy lands in 1953. The Paddy Land Act of 1953 included provisions for tenancy arrangements to be written and registered; to grant security of tenure for a five-year period. However, this piece of legislation was more a recognition that tenure problem existed rather than a serious attempt to remedy it. The main objective of the Paddy Land Act of 1958 was to provide security of tenure to tenant farmers and regulate tenancy rents. It did not however, attempt to give 'land to the tiller' or abolish tenancy in order to provide incentives for efficient cultivation. However, this law confers on tenants permanent, transferable and heritable tenancy rights subject to the payment of the prescribed rent. For the first time, share cropping was legally recognised, by fixing the maximum share of the landlord ie, 15 bushels of paddy or one fourth of the total output, whichever was lower, and the 'ande' cultivator was liberated to some extent by that act. Total cultivable land in 1982 was 3,547,326 acres, of which about 34%, was under paddy, which is the staple food. The total acreage under paddy according to 1982 Agricultural Census was 1,213,089 acres. The distribution of paddy land according to the ownership of land is presented in table 2. Nearly 28% of the paddy holding come under sharecropping or "Ande" cultivation practice in 1982 as against 24% in 1946. What is proposed is to transfer all "ande" paddy land to an institution called Agricultural Development Board and transfer to the tillers the blocks of about three acres, on condition that the tillers pay the value in instalments. Owners will be paid the value of the land by an annuity. The average productivity of paddy land in Sri Lanka in 2003 was 73 bushels per acre, per annum. That means 36 bushels, per acre, per annum could be obtained from the tillers if a viable plot of land is transferred to the actual cultivator. This does not mean that 36 bushels are extracted from all farmers. If the yield is lower the instalment gets reduced accordingly and vice versa. Although this looks a difficult task as it covers a significant portion of total output, in fact 50% of the output, the tillers are in a position to pay it now because, a. they now own larger holdings and their total net earnings are much higher than the previous income hence, the surplus is also higher, b. when the tiller becomes the de-facto owner he would aspire to become the (de-jure) legal owner. In order to do this he is bound to increase his income. He is motivated to work harder. Hence, there is a greater chance that the average productivity will improve and the percentage of the output that is paid by the tiller to the fund gets reduced. c. these instalments are paid only for a short period of time and the disutility is only for a short term whereas the utility improvements run for a much longer period. The above analysis brought to light the enormous resources that are locked up in the archaic tenure system in Sri Lanka. If the government has the political will to enucleate this latent capital, it could not only help to reduce mal-distribution of income, poverty, landlessness and economic insecurity but also to improve agricultural productivity and a large quantum of capital could be accumulated for economic development. This suggests that there is considerable unutilised potential in developing countries to the available domestic resources, including motivating human resources to improve productivity for economic development. However, certain safeguards have to be worked out by the Agricultural Development Board, such as to protect the tiller during a prolong drought which could result in a series of consecutive low or zero outputs. In such a situation the tiller might not be able to pay his due instalment in time. Unless the Bank extends a grace period in such an eventuality the whole purpose of the exercise will fail, as the tiller will lose the land he tilled for defaulting in his payments. Unless such fundamental structural reforms are brought in it would not be possible to achieve a rapid growth in food production and sustain a reasonably stable low prices of the food commodities. |
|
News | Business | Features
| Editorial | Security Produced by Lake House |
