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Agricultural policies for optimising agrarian structures
Written by: Michel Merlet, (English version: Mary Rodeghier)
Writing date: November 2007
Organizations: Association pour contribuer à l’Amélioration de la Gouvernance de la Terre, de l’Eau et des Ressources naturelles (AGTER), Institut de Recherche et d’Applications des Méthodes de Développement (IRAM), Réseau Agriculture Paysanne et Modernisation (APM), Fondation Charles Léopold Mayer pour le Progrès de l’Homme (FPH)
Type of document: Research Paper
Merlet, Michel. Proposal Paper. Land Policies and Agrarian Reforms. AGTER. November 2007. (English version: Rodeghier, Mary). 120 p.
5. Agricultural policies for optimising agrarian structures
Although agrarian reforms are often inevitable once the agrarian structure has become strongly polarised, they cannot become a permanent mechanism for intervention due to their economic and political cost.
Other types of land policies are needed, such as policies of permanent regulation of land markets aiming at optimising land resources distribution through time and preventing undesirable processes of concentration81. These land policies must also permit the agrarian structure to develop by modernising family farms.
This type of policy has been decisive in most developed countries, especially in Western Europe. Whereas a few years ago, the historic paths of developed countries were unavoidable references for people curious about the development process in developing countries82, they have now been erased from most of the reference works of economists working for international organisations and development agencies83. Neo-liberal dogma is so efficiently pervasive that even mentioning market regulation today has become blasphemous. Even in the European Community, very few voices raise to assert the advantages of land policies that nonetheless considerably contributed to creating conditions for economic development in Europe.
These polices can be of different kinds:
Corrective interventions on land markets. The example of the SAFER in France is the subject of a specific record in volume 2 of the paper84.
Land consolidation, i.e. regrouping and recomposing plots that have been divided generation after generation and which have become too small or narrow to permit the use of modern farming techniques. In order to be carried out at a reasonable cost and without too many legal problems, land consolidation demands strong participation from farmers who must agree to exchange parcels of land amicably in order to permit the constitution of viable farms.
Interventions on other markets and in particular, the financial market. The most important of these and that is linked most directly to our subject is land credit, which is a vital addition to most mechanisms intended to eliminate the segmentation of land markets. If farmers have no access to financing, the land for sale can be purchased only by the wealthiest and largest land owners, hence leading to the concentration of property85.
Tax policy incorporating land taxation, which eventually is the only way of offsetting the effects of unearned income.
Regulation of successions, and tax incentive systems that tend to orient inheritances towards a single heir86
A number of specific aids related to structural policies, the installation of young farmers, early retirement of elderly farmers, though these measures imply that the government has the means to carry out such a policy.
And the authorisation to produce in conformity with a structural policy.
Policies related to forms of tenant farming, as mentioned earlier on the subject of securing farmers’ use rights (regulation of tenant farming which exists in most European countries) should not be forgotten either.
A clear separation between the status of the productive farm and that of the legal ownership of real estate can be another way of managing land. This helps correcting problems related to transfers of land from one generation to another87.
Lastly, aid given to disadvantaged regions is nearly always necessary in order to achieve uniform development of a country’s territory. In this respect, the example of the Netherlands is particularly interesting. Its land management system has been subject to considerable State intervention alongside farm unions. The Dutch agricultural sector has become one of the most productive in Europe. The Netherlands’ agricultural policy established and maintained until only recently a regional price system intended to offset the inequalities of regional production88.
Although these policies have above all been implemented by developed countries, they could also be important for developing countries. It appears clear that Albania, after a radical redistribution of land that approaches collectivisation, now requires a policy to set up viable farm structures89. Structural policy is also vital for other Mediterranean countries90.
In Brazil, the implementation of several similar policies has begun with the participation of the powerful farmers’ organisation CONTAG (Confederação Nacional dos Trabalhadores na Agricultura, Brasil) and the government. These include among other things setting up land credit systems91. These projects, which have received support from the World Bank, have been presented sometimes as projects to replace agrarian reform, which we described as “market-assisted agrarian reform”. They certainly help farmers’ organisations to acquire new and very useful experience in the field of land policy, though they in no way replace agrarian reform92.
Box # 15 A few examples of land policies in Western Europe93
Western European countries all have agrarian structures based on commercial family farming. How have they managed their structures so as to permit modernisation and avoid the creation of large capitalist farming structures?
Comparing the situations in Denmark, Netherlands94, France, Italy, Spain and Portugal is most interesting. The southern parts of southern European countries have a hacienda type agrarian structure that has required land reforms. Here we focus on the northern territories of these countries in which small farms have been predominant.
The participation of farmers’ organisations seems to have been an essential element in the success of structural policies. It was much more important in the countries of Northern Europe.
In Denmark, a policy was applied to control agrarian structures as early as the 18th century. Agricultural policy was supported by “a disciplined peasantry well organised, and managed in farmers unions (Land-boforeniger)”, established to fight for the political and economic freedom of the peasantry, which went on to build a powerful cooperative sector.
In the Netherlands, the Land Administration Foundation, established in 1950, above all intervenes in areas of rural development within a political framework designed to encourage the interruption of activity, though it rarely intervenes on the free market. From 1953 to 1963, sales of farmland were subject to two checks (price and purchaser). Control over tenant farming was maintained and farm policy is managed jointly by farmers’ unions and the government.
In France, structural policy, the Tenant Farming Status, and SAFER are managed jointly by the government and farmers’ unions. These were implemented thanks to the combat led by the farmers after the war.
Policies aiming at the same objectives can be found in Southern Europe as well, though the relative weakness of the farmers’ organisations, especially in Spain, did not produce the same results. Those countries have also openly sought to develop family farming. The policy of land consolidation has been applied everywhere with varying degrees of success. Also, attempts to secure farmers’ tenure rights on owner-operated farms have been effectuated.
These market and structural regulation policies are not perfect. They can give rise to corruption and different types of manipulation. The European context has certainly favoured their creation, due to the continent-specific agrarian history. More often than not, regulation functions through systems managed jointly by governments and farmers’ unions.
However, apart from these limitations, these policies are nonetheless essential for a country in which family farming plays an important role and where there is no virgin land to be exploited. However, there are a certain number of prerequisites:
It is difficult and even impossible without strong, representative and democratic farmers’ unions.
It is also impossible without a coherent agricultural policy that protects family farming from the dramatic effects incurred when put in competition with farms that produce the same products at incomparably lower prices, for reasons having nothing to do with economic efficiency.
81 Which would lead in time to carrying out an agrarian reform!
82 See record # 5. Taiwan in part 2 of the paper, C. Servolin, from E. Thorbecke, “An example where agrarian reform, agricultural policy and economic development are coherent with each other”. See also M. Merlet, « L’optimisation de l’utilisation des ressources foncières: une question stratégique de gouvernance, qui n’est plus seulement nationale, mais aussi locale, et mondiale » in Un agronome dans son siècle. Actualité de René Dumont, Paris : Karthala, June 2002.
83 There was nothing, for example, on this subject in the introduction of the international teleconference organised by the World Bank in March 2001 on land policies (except for two contributions from O. Delahaye and M. Merlet), or in its conclusions. See Deininger, Land Policy and Administration: Lessons learned and new challenges for the Bank’s development agenda. Preliminary Draft. 2001 and Land institutions and land policy. Creating and sustaining synergies between state, community, and market. A policy research report, World Bank, 2001.
84 See record # 16, France: The SAFERs, an original land market regulation mechanism that is operated by the State and farmers’ organisations. By Michel Merlet and Robert Levesque.
85 Dividing estates through inheritances constitutes an opposite phenomenon that often has a less significant impact.
86 As in England.
87 See the example of the Agricultural Land Trusts (Groupements Fonciers Agricoles) in France and record # 17 by Jose Bové on the Larzac Lands Civil Society Group in part two of the paper.
88 See record # 15, S. Devienne, “Netherlands: an interventionist agricultural policy aimed at reducing regional inequalities”
89 See record # 12, A. Civici, “Albania. From absolute collectivism to radical egalitarian division of land”.
90 On this subject, refer to the different articles in Cahier Options Méditerranéennes # 36 published by the Insitut Agronomique Méditerranéen, Montpellier, 1996. For example, Ohran Dogan and Bahri Cevik, “Les procédures du remembrement en Turquie » and by the same authors « La politique d’aménagement des structures de production en Turquie » and Négib Bouderbala, « Le morcellement de la propriété et de l’exploitation agricole au Maroc ».
91 See Antônio Márcio Buainain José Maria da Silveira Edson Teófilo (NEAD), Reforma agrária, desenvolvimento e participação: uma discussão das transformações necessárias e possíveis.
92 The negative consequences of their implementation were the increase in tension between farmers’ organisations and the vigorous opposition from other organisations such as the Landless Workers’ Movement, which fears that they will divert attention from the urgent need for agrarian reform in Brazil.
93 From Hernandez, Maria-Isabel, Ejemplos de políticas de tierra en varios países de Europa occidental. España, Francia, Portugal, Italia, Dinamarca, RESAL, IRAM, August 2001.
94 See record # 15. Part Two.