1.2 Farm Tenancy
An increasing population, while at the same time the job opportunities outside the agricultural sector develop only slowly, has forced a growing number of people to look for land that they can rent from someone for their usage for a period of time. In densely settled countries with private land ownership, in some cases more than half of the land is cropped today by tenants. One can differentiate between various forms of renting the land according to the type of payment that is demanded.
Occupational tenancy: in way of payment, the tenant works for a specific number of days on the landlord's farm in order to pay for the land he rents. In some cases, he uses his own draught animals and implements. This form is particularly found in Latin America where it is called a colonate . Until a few years ago, it also existed in Westphalia , Germany , 'under the name Heuerling.
In the case of cash tenancy, the tenant pays a fixed rent for the land he rents and, thus, bears the full cropping and marketing risk himself; however, he also receives all the proceeds growing out of his labours. This form demands the ability to face a risk and is, thus, found in the case of tenants who are economically sound.
Rent in kind is a form of tenancy in which the tenant pays a fixed quantity of produce and, therefore, does not have to take the marketing risk himself. This form is found especially among landowners who rent out small parcels of land and who consume the rent in their own household.
Share tenancy is a specific form of rent in kind. It is widely spread, particularly in the developing countries. In this case, the gross output is divided between the landlord and tenant. While the original size of the share was determined by the reciprocal obligations and the productivity of the land, the great demand for land has led increasingly to shares equaling 50/50. Under these conditions, each side receives only half of any proceeds resulting from additional inputs. There is little incentive, therefore, to increase productivity by means of working harder or making larger investments. Moreover, the contract is often drawn up for only one year. Even though it is often prolonged by tacit agreement, it leads to insecurity and a state of dependence. This has, along with the normally extremely small size of the plots under tenancy, resulted in many farmers being indebted and living in very poor economic and social conditions.
Although tenancy can fundamentally bring about flexibility in the structure of land ownership and allows making adaptations to changing economic and social (family) conditions, under the circumstances in the developing. countries (with a one-sided advantageous position on the market for land available for tenancy in favour of the landlords), tenancy leads to stagnating agricultural production, dependence, and an economically poor situation for the tenants and their families.