III. Re-appraisal of Agrarian Reform in the Light of Today's
Priorities in Rural Development
From the preceding discussion the following conclusions
may be drawn:
- Asian agriculture is hindered by serious defects in land
tenure and agrarian structure;
- the reforms of the last twenty years have only brought
very limited improvements;
- the recent technological changes in agriculture have
not solved the problems of land tenure and agrarian structure
but made reforms even more pressing.
Contrary to the opinion sometimes advanced that the Green
Revolution by its inherent force can solve the problems of
agricultural production without necessitating any changes
in land tenure, the issue of agrarian reform today is as topical
as ever.
In the following section an attempt will be made to appraise
agrarian reform and its possibilities to help in solving the
current issues of rural development. It is not intended to
make a complete list of all the factors involved, but rather
to limit attention to some aspects which seem to be of special
significance. This does not exclude the existence of other
aspects which may be equally important. The idea is to cast
doubt on some widely held opinions by formulating some provocative
theses.
To name priorities in rural development is a matter of judgment.
Without denying other important aspects, in the author's opinion,
three tasks are of top priority in Asian rural 'development
today.
— Increase of Agricultural Production
Many Asian countries have a history of food shortage which
not only hindered the development process but brought grief
to millions of human beings. Today, because of the Green Revolution,
the food crisis has been relieved, although not all over Asia.
Besides, the rapid population growth and increasing income
raised the demand for food and a well balanced diet, calling
for diversification of cultivation, so that crops other than
staple food grain are being produced.
— Better Utilization of Rural Labour Force
The Green Revolution has shown that higher production is
not enough. It brought food on the market but not necessarily
to the homes of the hungry who lack purchasing power. The
cause for their poverty is lack of employment. In view of
the increasing number of un- and underemployed, the rapid
growth of population and the slow development of non-agricultural
sector, most of them can only find employment in the agricultural
sector. Agriculture has the difficult task of absorbing the
masses who cannot find employment elsewhere and provide them
with the basis for livelihood.
— More Social and Economic Equality for the
Rural Population
The tension amongst the rural population in many countries
has reached the level where a higher degree of social and
economic equality becomes a precondition for economic development.
Only then will the political climate, in which increases in
production and employment can be achieved, be secured and
maintained.
According to theory, these three priority goals are incompatible.
Agrarian reform literature often suggests that higher production
and more equality are contradictory goals. As a first thesis,
it is suggested here, that under Asian conditions, higher
production, more employment and more social and economic equality
are complementary goals. Higher production, whether achieved
with modern technology or within traditional agriculture,
requires the application of more labour and can be reached
in the long run only if the necessary social and economic
equality provides incentives and the possibility for more
effort on the part of the producers.
A precondition for this thesis is the possibility to reach
higher production by higher inputs of labour, i. e. agriculture
produces below the production possibility curve because of
unutilized resources in labour, land and capital.
A second thesis is that often it is technically possible
to increase production by more inputs of labour. This is possible
without investment and innovations, i. e. within the framework
of traditional agriculture because of unused resources. This
is evident from a comparison of good and poor holdings under
equal conditions, by comparing optimum yield and average yield
and from the fact that resources of land and water are insufficiently
or incorrectly used. Underutilization of available irrigation,
limited application of double cropping and unused arable land
indicate that agriculture in Asia is often not as intensive
as it could be. If we apply modern technology, the possibilities
to raise production by applying more labour increase even
further. Fertilizers, improved varieties, pesticides, better
utilization of water, double cropping, etc. require larger
amounts of additional work.
If these two theses are accepted, the next logical step
is to ask why the potential is not used by many Asian peasants.
This question is all the more relevant as it becomes more
and more accepted that Asian peasants behave quite rationally
within the given framework. It is suggested that institutional
factors hinder the application of more labour in agriculture.
Among the institutions hindering a higher input of labour,
land tenure systems play an important role. We believe that
the prevailing unequal distri-ubtion of land and water is
a major hindrance for the application of more labour. Many
holdings in Asia are so small that the labour force available
cannot be used up. As the opportunity cost of labour in many
such cases equals zero, the family will apply more labour
until the marginal productivity nears zero. Even then the
small holdings often provide no opportunity to use the labour
available. On the other hand, large farms offer less possibilities
for work because they tend to be labour extensive. The cropping
pattern of large farms favours crops requiring less labour
than those typical for small holdings, and large farms tend
to keep fewer livestock, which is labour consuming.
It is often argued that reduction of farm size is against
the needs of economic development. It seems, however, that
this cannot be generalized. Larger holdings are the first
to apply modern techniques and are often examples of good
cultivation. On the other hand, usually with increasing size
of farms, the intensity and yield per acre diminish. There
is experience to show that after dividing large holdings into
smaller ones, productivity was maintained or even increased
(Japan, Taiwan, Egypt). If it is sometimes claimed that production
has been reduced after reforms, it is usually because of confusion
between production and marketed production. Another important
factor in this connection is that the conditions for production
are very often more in favour of larger holdings while the
service structure necessary for small holdings is not available.
On a closer scrutiny it is apparent that the positive features
attributed to larger farms do not generally hold true. Although,
in areas of the Green Revolution, larger farms usually apply
modern technology, and even in rain-fed areas, some large
farms offer examples of good cultivation, this is more the
exception than the rule. The majority of large holdings in
Asia are not centrally managed, but cultivated by a large
number of small tenants and often with little advice or influence
by the landlord. In all such cases, the advantages of large
farms in achieving improved production do not apply since
there is no large farm as an operating unit but only a large
ownership holding. Since this applies to the majority of cases,
it is suggested that under Asian conditions, reduction of
farm size by redistribution of land of large holdings is in
agreement with preconditions for economic development because
this will increase production and labour input. Economies
of scale in general are primarily related to labour saving
techniques, while land saving techniques, such as improved
seeds, fertilizers, pesticidse, etc., in principle can be
applied by all farm sizes. Besides, it seems that increasing
farm size belongs to a later stage of development than that
reached by most Asian countries.
If one accepts the fact that agriculture has to absorb the
majority of the increasing population, an allocation of land
to farm sizes on the basis of their capacity to employ labour
seems to be indicated. This would be in favour of small farms
which are also the best choice if production increases have
to be attained with a minimum of resources in short supply.
The question remains how far the farm size can be reduced
without production suffering. This obviously varies with the
prevailing conditions and especially with the rural service
structure, but it can be taken for granted that the minimum
size is much lower than the ceilings instituted in many countries.
Next to farm size, the prevailing system of labour organization
is of importance in this connection. The thesis is advanced
that the widespread insecure tenancy and sharecropping hinders
the application of more labour. High rental charges, danger
of further augmentation and the dependence of their status
is, to quite an extent, responsible for the low level of labour
utilisation. The tenants have no incentive to increase their
efforts as they are not sure that they will earn the proceeds
of their investment of work and capital. For the same reason,
they are not likely to accept new labour-intensive techniques.
In some cases, landlords are even interested in maintaining
traditional agriculture because they can better control the
crops thus cultivated.
Restrictions on the amount of work performed apply not only
to small farms. As further thesis it is suggested that the
existing status hierarchy, decision-taking based on seniority,
and attitudes towards labour, especially manual labour, hinder
the application of more work in agriculture. It is sometimes
incompatible with the status of the landowner to perform manual
labour so that his functions are limited to the supervision
of the work of others. This is the case not only for big landlords,
but often for all those whose property is above the average
in the village. Within the traditional structure of the extended
family it often occurs that the older, more traditional members
of the family prevent innovations which are suggested by younger
more progressive members.
The application of more work to agriculture would, in many
cases, increase production, even under conditions of traditional
agriculture. The Green Revolution has shown that an even higher
increase in production is attainable by applying modern technology
in agriculture and that this technology requires more labour
per unit of land than traditional farming.
Modern technology has a high demand for rural services,
such as trade, marketing, provision of credit and extension
services. It seems that much of the difference in efficiency
in large and small holdings can be attributed to differences
in access to the rural service structure. Regardless of many
attempts to organize schemes for the provision of the necessary
services to small farmers, competition for these services
always ends with larger farmers having them at their disposal
while they are less easily obtainable by small holdings. Without
access to rural services, however, smaller farmers have hardly
a chance to share in the modern productive and labourintensive
agricultural technology. Small farmers are either driven entirely
out of agriculture or revert back to traditional subsistence
farming. If small holdings are to participate in modern technology
and benefit from higher productivity and intensive utilization
of labour, a modification of the rural service structure seems
necessary. In view of the inherent difficulties in supplying
rural services to small farms without larger farms reaping
the maximum benefit the thesis is advanced that a dual system
of rural service structure is necessary, especially for credit
and for the supply of inputs and marketing, in order to let
small farms have a share in modern technology. The service
system for small farms should not be accessible to large holdings,
should have other terms and conditions to satisfy the special
needs of small farmers and may very well include subsidies.
It is beyond the topic of this paper to discuss possible
forms of organization for rural services. In passing, the
opinion shall be expressed that organizations with the village
as a basis of their activities — like village co-operatives
— seem to have a poorer record than those which serve
small regions. The latter are above intra-village rivalry
and have a turnover which is large enough to allow the employment
of trained professional staff. Farmers' Associations and the
Comilla scheme are examples of the latter type.
The need for dualistic service structure includes research
which up to the present tends to promote larger farms. To
let small farmers participate in the development of agriculture,
a reallocation of research efforts seems to be indicated.
The experience made in Japan shows that it is quite possible
to develop modern technology for small holdings.
These measures to improve the rural service structure for
smaller farmers are part of the reform of land operation which
attains special importance if intensification and modernization
of agriculture and not merely land redistribution is aimed
at. But these measures can be of benefit only to those peasants
and tenants who have control over the organization of their
holding and security of their tenure. This hardly applies
to sharecroppers and insecure tenants whose position has to
be improved before reform of farm operation can be of use
to them. In order to let them share in the modernization process
of agriculture, so that they can apply labour more intensively
and attain higher yields and income, successful measures of
tenancy reform are a prerequisite.
Experience in Asia shows that tenancy reforms have a good
record if tenants join in special organizations to represent
their interests against landowners. The thesis is advanced
that tenants' associations are a prerequisite for successful
tenancy reform, because only the increased bargaining power
of the masses of tenants is strong enough to withstand the
landlords. The establishment of such associations seems very
urgent in order to attain the conditions which make it possible
for the tenants to apply their labour for their own betterment.
These and other checks on the power of the rural upper classes
are indicated for several reasons. A contribution of the affluent
progressive farmers to over-all development and the transfer
of part of their gains to public ends will be possible only
if political and economic power are separated and economic
power is limited to a level which is not destructive to society.
This has to be attained in a way that maintains the economic
performance of progressive farmers which is so necessary for
the economy; but it should also be ensured that the activities
of the progressive farmers are not only to their own personal
benefit but to the welfare of society at large. This new aspect
of land reform will be more difficult to implement than the
abolition of intermediaries. It was relatively easy to mobilize
public opinion against them but it will be much more difficult
to get support against progressive farmers who have done everything
the government asked them to do to improve the food situation
and who are therefore praised as having great merits. However,
if the goal of increased social and economic equality has
any meaning, part of their gains in finance and power have
to be transferred to society as a whole.
Concerning the landless, the same holds true as for tenants.
The necessary economic and social equality of agricultural
labourers is attainable only if they associate in organizations
which can bargain with their employers. This is a repetition
of experiences in industry where capitalistic industry required
labour unions to function as a counterbalance. The task, however,
is much more difficult in view of the lack of training and
experience of rural labourers.
Provisions for suitable land tenure systems and agrarian
structures along the lines indicated above will undoubtedly
increase employment, production and income and contribute
to more social and economic equality. However, the limitation
of the factor land in many regions sets a limit to this process.
Even with complete utilization of all employment possibilities
in agriculture by necessary agrarian reform measures in some
regions, not all the available labour force can be employed.
Here, unemployment and underemployment will continue with
their adverse effects on progress in agriculture. Agrarian
reform can contribute to the employment problem but not solve
it. The employment problem can be solved only in the framework
of the comprehensive development process of which agrarian
reform is one important aspect. If rural employment projects,
such as transfer of "overflow" irrigation to "controlled"
irrigation, control of salinity and waterlogging, building
up of rural infrastructure, etc., are used to improve the
agrarian structure, these measures can promote the development
of agriculture which in turn can help industry by raising
the purchasing power of the rural masses. With this in mind,
as a last thesis, it is suggested that successful agrarian
reform has to be incorporated in the over-all planning of
development. Agrarian reforms as limited measures are always
of limited effect.
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