Land Reform
Success Hinges On Commitment

By Ganesh Prasad Pandeya

MOST of the world’s poor people earn their living from land assets. An inverse relationship is often found between land holding and poverty incidence and vulnerability. We all know that agriculture in the low-income countries has the potential capacity to produce enough food for a growing population, and to improve the income and the welfare of the poor. Secured access to land is not just about farming but it is considered the most powerful and safest route to productive assets for the stable consumption of the poor by providing food security because their non-farm income activities are severely limited and highly volatile. Land is also central to the lives of the poor, funding everything from social occasions to medical treatment to helping serve as convertible asset for mortgage or collateral. It is also considered as influential aspect of social prestige and socio-political participation; and landlessness usually brings powerlessness in rural areas. The nature of landholding and access to the market has a direct bearing on the extent of lasting benefit and opportunity to improve the livelihoods of the poor.

Successful land reform would be a potent means of reducing income inequality and poverty incidence, restructuring the rural economy and protection of environment. Other options for income equalisation, such as progressive taxation and social security system are more difficult and less effective in the context of a developing economy. Land reform can slow down rural-urban migration, and increase rural farm and non-farm income earning opportunities along with directly benefiting in nutritional and health status, and the level of living standards of the poor. Because of successful land reform in Japan, South Korea, and Taiwan they succeeded in rapidly transforming agricultural sector into faster industrialisation; enhanced growth and reduced poverty.

Land reform in Nepal through redistribution and tenancy reform is more urgent today than ever before because income inequality and unemployment in rural Nepal is worsening, and the potential of the green revolution has yet to be tapped. Apropos of equity, it is equally relevant because the bottom 40 per cent of the agricultural households operate only nine per cent of the total farmable land, while top 6 per cent occupy more than 33 per cent; and the inequality index is 0.52 per cent reflecting a highly skewed concentration of land in the hands of few. Unevenly distributed land may exert a pressure for conflict. Many studies reveal the more skewed landholding system, the higher the incidence of poverty and higher social instability. In addition, the smaller the farm size, the higher the productivity: a study by International Fund for Agriculture Development reveals that land productivity of smaller farms is usually at least twice that of the larger ones, and in all cases is at least as productive as larger farms. This was confirmed by farm level data of Indian villages, where a 20 per cent decline in gross output per hectare was associated with doubling a farm size. However, an alternative approach to land reform - commercial farming and consolidation of land – should be applied together where it is possible.

Despite this reality, a recent announcement of land reform by Prime Minister Deuba has received both enthusiastic support and protest in the political, socio-economic market signifying that the task ahead is not easy. Existing constitutional and political hurdles could create further difficulties in the spirit of proposed measures. In addition, although it is easy to show why land reform is a key for reducing poverty, securing access to land, deciding who gets it, and under what conditions remains a contentious issue. Failures of land reform in the past have often been costly by generating conflicts and entailing long term socio-economic and political instability and insecurity. To achieve success from the land reform programme, calculations must not only be economically efficient, but also politically and bureaucratically feasible based on Nepal’s current political capability. In addition, it is not so easy task to correct the land inequality: redistribution of land can disturb the economy by deterring saving including capital flight, impeding growth, and rising fake lawsuits as is presently happening in Nepal.

Land reform should have two-pronged objectives of simultaneous achievement of greater efficiency and more equity, and transformation of the agricultural sector towards industrialisation by enabling the farmers to transform their current subsistence-ridden farming into a dynamic, commercially oriented operation, with crop diversification and intensification, and creation of non-farm employment.

In addition, various interventions are needed simultaneously with the land reform programme to have a perceptible impact in the economy. Some of the key interventions required are: firstly, rural infrastructure - mainly roads, electrification, communication irrigation facility and financial institutions for rural credit. Provision of rural infrastructure will help to peg the rural agricultural-based industrialisation, promotion of cottage industries and the farm-to-market accessibility system. Better access to land accompanied by such facilities can improve the productivity of land and labour for poor with proper incentives and opportunities.

Secondly, efforts towards land reform can hardly be achieved without an honest and properly functioning bureaucracy, a stable institutional framework, an adequate legal and regulatory provision for land administration, and a durable protection of property rights. The existing bureaucracy suffered by maladministration could hardly achieve this overarching goal. If the program cannot succeed to redistribute the land in an apolitical way, the situation of the country will further deteriorate. In order to protect and promote the rights of small peasants in the long term, a cooperative system can be the best solution especially in the rural areas. Thirdly, there needs to be simple, transparent, and uniform rules and regulations: complex rules and exceptions will only increase the benefit to the bureaucratic, and socio-political elites.

Lastly, instead of practice of land confiscation, new approaches to land reform should be adopted which stress an inclusive and market-based approach of bringing together various stakeholders – the landless, landlords, civil society and the government - for the protection of durable property rights. Any land reform measures must respect the right to property granted by the law of the land. A modest rate of compensation should be given to the landlords, and the land acquired from the excess ceiling should be provided to the poor households at the below market price through installment payment system. In addition, the reform system should remove the barriers against women’s possession and control over land, and give them equal access to land.

Although land reform is an important aspect of development in Nepal, it should not be completed at the expense of human capital and industrialisation. Also an egalitarian land reform programme alone does not guarantee the successful agricultural and rural development. The decisive factors for the welfare of the poor are not the land and crops, land holding, but improvement in human capital through health facilities and advancement in knowledge through qualitative education which could significantly enhance the economic prospects and welfare of the people. Low human capital disadvantages, especially for women, explain low productivity and low innovation because human beings have the ability and intelligence to lessen their dependency on cropland and diminishing sources of energy if they have proper education and technology. A healthier population brings reduction in sickness and expansion in productivity which contributes to work, consumption, raises subsequent learning, wage rates, and cuts risk of income lost due to illness.

Similarly, knowledge is the most powerful and innovative engine of production and a means towards a more civilized society. Increases in human capital, as a powerful measure for shifting from physical, capital, technological and employment stagnation, contributes to innovativeness, rural non-farm production and urban works, better opportunities and entrepreneurial ability which is valuable in both agricultural and non-agricultural production. In addition, rapid industrialisation is considered as the key to economic progress: the higher the percentage of population in agriculture, the poorer the country. The transformation from agriculture towards industrialisation is the means of modernisation.

In conclusion, only a programme tailored with these subsidiary policies would initiate the rural agricultural transformation along with the higher multiplier pay off spilling over the non-farm sectors. Only such policies would help the farm and non-farm sector employment and income opportunities. This seems to be an ambitious plan for action. In fact, it is not so. By going ahead with time bound reform process and action plan with strong commitment to development, these goals can be pursued and implemented simultaneously. Though it seems painful in the short term to adhere to simultaneous policies, it could turn out into a ‘blessing in disguise’ in the long-term if the policies are implemented properly.

Other Stories

• Rumble In The Himalayas?

• Memorable Excursions