WDP32 July1988 Public Disclosure Authorized
32Ez World Bank Discussion Papers
Public Disclosure Authorized Tenancyin SouthAsia Public Disclosure Authorized
Inderjit Singh
** D 60.3 .Z63 56 988 .2 Public Disclosure Authorized
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32ES World Bank Discussion Papers Tenancyin SouthAsia
Inderjit Singh
The World Bank Washington, D.C. Copyright ©)1988 The World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A.
All rights reserved Manufactured in the United States of America First printingJuly 1988
Discussion Papers are not formal publications of the World Bank. They present preliminary and unpolished results of country analysis or research that is circulated to encourage discussion and comment; citation and the use of such a paper should take account of its provisional character. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Any maps that accompany the text have been prepared solely for the convenience of readers; the designations and presentation of material in them do not imply the expression of any opinion whatsoever on the part of the World Bank, its affiliates, or its Board or member countries concerning the legal status of any country, territory, city, or area or of the authorities thereof or concerning the delimitation of its boundaries or its national affiliation. Because of the informality and to present the results of research with the least possible delay, the typescript has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to Director, Publications Department at the address shown in the copyright notice above. The World Bank encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Permission to photocopy portions for classroom use is not required, though notification of such use having been made will be appreciated. The most recent World Bank publications are described in the catalog New Publications, a new edition of which is issued in the spring and fall of each year. The complete backlist of publications is shown in the annual Index of Publications,which contains an alphabetical title list and indexes of subjects, authors, and countries and regions; it is of value principally to libraries and institutional purchasers. The latest edition of each of these is available free of charge from Publications Sales Unit, Department F, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from Publications, The World Bank, 66, avenue d'lena, 75116 Paris, France.
Inderjit Singh is the principal economist in the China Department of the World Bank.
Library of Congress Cataloging-in-Publication Data Singh, Inderjit, 1941- Tenancy in South Asia / Inderjit Singh. p. cm. -- (World Bank discussion papers ; 32) Bibliography: p. ISBN 0-8213-1091-7 1. Land tenure--South Asia. 2. Agriculture--Economic aspects- -South Asia. I. Title. II. Series. HD860.3.Z63S56 1988 333.3'0954--dcl9 88-17384 - 3.11 -
PREFACE*
Many argue that tenurial systems in South Asia are a formidable barrier to technologicalinnovation in agriculture and to having the benefits from such innovation reach the tenant. They argue, too, that tenants on small farms -- the poorest of the poor in rural areas -- get even poorer as the benefits of new techniques go to others, robbing tenants of the meager opportunitiesthey formerly had.
Inderjit Singh rejects these arguments. In this paper taken from his research on the institutional structures and relation- ships that shape South Asia's rural economy, he examines tenancy in South Asia and challenges the claims that landholding systems and structures are the prime source of the subcontinent's agricultural woes. Singh contends that the adoption of Green Revolution technologies has increased the demand for labor and boosted real agriculturalwages. The ensuing agriculturalgrowth has broken down many institutional,social, and cultural barriers previously facing the poor. This growth, when combined with measures to increase small farm productivityand wage employment, alleviates rural poverty. Singh sees radical reforms as quick and disruptive solutions to the problems of the rural poor. The real priorities for policymakers are measures to speed agricultural growth and to provide the physical and institutional infrastructureneeded to sustain it.
Singh presents tenancy and land reform in a wider context in his forthcoming book "The Great Ascent: The Rural Poor in South Asia". Here the discussion focuses on tenancy's history and its role in the agricultural economy. It also suggests how tenancy promotes or impedes static efficiency and the adoption of new technologies and speculates about the likely evolution of the tenurial system. * I am indebted to Mr T Narain who provided invaluableassistance on the research for this paper.
-v-
CONTENTS
Page
THE ORIGINS OF SOUTH ASIA'S TENURIAL SYSTEM ...... 1
TENANCY TODAY: CHARACTERISTICS AND NUMBERS ...... 5
India ...... *#*...... *.*es...... 8 Bangladesh and Pakistan ...... 18 Conclusions ...... 25
SOME ROLES OF TENANCY IN IMPERFECT RURAL MARKETS...... 27
Tenancy as a Mechanism for Resource Adjustment ...... 27 Tenancy and Incentives ...... 29 Tenancy as a Credit System...... 30 Tenancy, Risk and Entrepreneurship ...... 32 Tenancy and Transaction Costs . . 35 Tenancy, Indivisibilities, and Economics of Scale...... 36
CAN TENANCY BE EFFICIENT? ...... 38
Specification of Inputs...... 43 Cost Sharing ...... 44 Limits on Duration of Leases ...... 50 Transition to Fixed Rent Tenancy ...... 53
TENANCY AND NEW AGRICULTURAL TECHNOLOGIES ...... 55
Adoption of HYVs and Use of Nutrients ...... 55 Do Tenants Gain from New Technologies?...... 62 The Impact of New Technologies on the Tenurial System... 69
ENDNOTES ...... 74
ANNEX TABLES ...... 81
BIBLIOGRAPHY ...... 103 - vi -
TABLES
Page
Table 1: India: Operating Households by Tenancy Status.... 9
Table 2: India: Changes in Tenancy by States Leased-in Area as Percentage of Total Area Cultivated...... 10
Table 3: India: Area Under Different Types of Tenancies, by Size Group of Holding (1961-62 and 1971-72)... 13
Table 4: India: Tenancy in Small Farms (No. of Holdings Leasing in and Area Leased In) By Size Group of Operated Holdings, 1971-72 ...... 16
Table 5: Bangladesh: Changes in Tenant Holdings and Area in Bangladesh (1960 19978) ...... 19
Table 6: Farm Holdings and Tenancy by Size, 1977...... 21
Table 7: Pakistan: Regional Changes in Tenancy, 1960-1972 ...... 23
Table 8: India: Association Between Cost Shares and Crop Shares in Sharecropping Tenancies...... 47
Table 9: Bangladesh: Estimated Distribution of Benefits of Fertilizer Use to Farms Among Different Farm Size Groups, Aman Season, 1979...... 66
Table 10: Pakistan: Gross Crop Production Per Acre by Farm Size and Tenancy, 1976-77...... 67 - 1 -
THE ORIGINS OF SOUTH ASIA'S TENURIAL SYSTEM
Today's land tenure arrangements in South Asial/ stem from the system that evolved under Mughal rule in the 17th and 18th centuries and took its final shape under the British in the 19th and 20th centuries. The successor independent nations have had to contend with this common legacy.2/
In the Mughal period, the cultivator was a state tenant who paid rent to his landlord (the state, or the ruler as its embodiment) in return for the benefits derived from his land. In the later stages of Mughal rule, occupancy rights took on the attributes of private ownership, but free alienation on an individual basis was still not recognized. Even in those days, a peasant's payment was one-third to one-half of the gross value of his produce.
Rent collection was assigned to a class of "revenue farmers", known as zamindars. At the same time land grants (jagirs) were given to others who had the right to collect rent in return for their services to the ruler. These two classes of revenue assignees -- the zamindars and ja.grdars -- became intermediaries between the state and the ryot (peasant cultivator). Thus three types of claim on the land existed simultaneously -- the customary claim of the peasant, the derivative claim of the intermediaries, and the final, superior claim of the state. The cultivating peasantry enjoyed security of tenure on the land they tilled as long as they supplied a share of their produce to the established authority; they had no legal or absolute ownership rights, however.
Like the Mughals, the British rulers of India needed to raise revenue to finance the operations of government. They chose the same instrument (the land tax) and the same class of intermediaries (the zamindars), but added an innovation -- the creation of a landlord class. - 2 -
The British East India Company, superimposing eighteenth- century Western concepts of private property on a very different indigenous land system, 3/ assumed that the "revenue farmers" in fact owned the land, even though they neither worked on it nor invested in it. Ignoring any rights of the actual tillers, the Permanent Settlement of Bengal in 1793 gave the zamindars the right to fix their terms with the cultivators in return for a fixed land revenue from the zamindars to the state. The latter was payable in cash while the rents to be paid to the zamindars by the actual cultivators, now classed as "tenants", were not. By a single piece of legislation, actual tillers of the soil became "tenants," while a class of "revenue farmers", now vested with an absolute property right in land, became de facto owners of the land though they did not cultivate it. It is doubtful whether any other piece of legislation was to affect the lives of so many millions for so long. Its legacy still remains in the inegalitarian land systems and the hierarchy of land interests in Eastern India and Bangladesh today.
In other parts of India, mainly in the South, another type of land settlement, the ryotwari system, was instituted. Under it the land revenue was collected directly from the ryot -- the peasant cultivator. This system was not totally successful in preventing the emergence of "parasitic landlordism", but the problem of a class of intermediaries with rights separate from those of the cultivators was less severe.
In the Northwest, notably in today's Indian and Pakistani Punjabs and Western Uttar Pradesh, an intermediate system, called the mahalwari, came into being. Under it a village was treated as a corporate body (mahal) whose cultivators were jointly responsible to the Government for revenue. For this purpose a village headman (lambardar) was recognized who was himself an influential cultivator.
Over time, the introduction of a tax payable in cash and the -3-
spread of the money economy and commercialized agriculture forced many small peasants into debt to money lenders (mainly village merchants), who acquired land through alienation. 4/ Thus lease- holding money lenders became yet another class of absentee landlords, a development barely affected by legislation passed specifically to slow down the alienation of land. 5/
Whether in the zamindari areas of the Bengals and Bihar, the ryotwari settlements in Bombay, Southern India, and Madhya Pradesh, or the mahalwari settlements in the Punjabs and Western Uttar Pradesh, by Independence the basic pattern of landholding in India was the same:
"At the apex of the agrarian structure was the landlord [of which there were two classes]... The first ... tended to hold land in more than one village and were most commonly found in zamindari and jagirdari regions. These were the classic intermediaries ... Secondly, there was a class of smaller, normally resident 'proprietors,' who typically held land in one village [usually] in ryotwari and mahalwari areas...
India's agrarian structure had two further major components: a peasantry and a class of landless laborers. Among the peasantry some differentiation was fairly evident... being most marked... in ryotwari and mahalwari areas..."
"There were landless laborers in Mughal India... [an4 this class grew in numbers in the 19th and 20th centuries." O
Subsequently, although several attempts were made to reform the zamindari system by recognizing other rights in the agrarian structure, the institution of tenancy as such has continued essentially unchanged in India and Pakistan. In India, the so- called "Zamindari Abolition" legislation was only partially successful in improving the position of tenants, in Pakistan, although the jagir class was eliminated, the ownership of large estates was unaffected and landlordism remained basically intact.
In Bangladesh, as described by Jannuzi and Peach (1980 p. 13- 15), the "hierarchy of land interests" now comprises (in descending order): -4-
- the state;
- maliks and other landowners who are rent-paying tenants of the state, but who may or may not farm some or all of the land they own;
- raiyats 7/ (or tenants in the normal sense) who lease in land from "owners", for cultivation with family or hired labor;
- under-raiyats (or subtenants) who have taken temporary leases from raiyats;
- Bargardars (sharecroppers) who have tenuous or non- existent rights in land, and operate it (usually with family labor) in return for a share of the crop paid to the "landlord" (who could be the original owner, or a raiyat or under-raiyat); and landless wage laborers who have no rights in land. A hierarchy of this sort exists in some degree or another in most of the subcontinent, although the ryotwari areas of the Indian South and West and the mahalwari areas of the North are less subject to the gradations of tenancy and subtenancy characteristic of Bangladesh. It is important to note, too, that the various groups making up the hierarchy are not mutually exclusive. Landlords may also be tenants of land owned by others; a tenant (raiyat) can also be a landlord in relation to a subtenant (under-raiyat); all smallholders (owners, tenants, and subtenants) may rely to some extent on wage labor for their livelihood. This complex network of land-labor relationships makes it very difficult either to identify "target groups" of the poor in relation to specific agrarian classes, or to devise programs to benefit one group while excluding others. Nor is the simple dichotomy between "small tenants" on one hand and "big landlords" on the other a valid one in most cases, as will become clear in the next section. - 5 -
TENANCYTODAY: CHARACTERISTICSAND NUMBERS
What forms do tenancy contracts currently take and how much of the land in South Asia do they cover? Are the extent and nature of tenancy changing? What are the characteristics of tenants, and how numerous are tenant households relative to other agricultural households?
There is general agreement that available data on both the number of tenants and the acreage under tenancy are underestimates. Accurate figures are hard to establish, however, even where local records exist on land holdings and observers are familiar with local conditions. There are several reasons for this: peasants tend to be reticent about their tenurial relationships (whose extent and exact terms are rarely shared even among family members); available estimates do not take full account of the common practice of making an oral agreement; where leases are short, data rapidly become outdated.
More importantly, reform legislation designed to prohibit subletting, regulate rents, and confer security of tenure has given many landlords and tenants a common interest in concealing their agreements, which might be deemed illegal. Another response to legislation has been to shorten the length of agreements, so as to avoid clauses of the law that attempt to give permanent rights to tenants of long standing. If the drive to conceal tenancy stems from the fear of land legislation, concealment would be likely to be greater among persons leasing out land than among those leasing it in. Data on leased-in areas are therefore deemed to be more reliable for measuring changes in tenancy. In the case of India, there is in fact a wide disparity between the reported figures for leased-in and leased-out areas, as recorded in the various NSS Rounds. 8/ But if, as some suggest, even leased-in areas are significantly under-reported by tenants who are afraid lest their landlords deny them a further lease, then it is - 6 -
questionable whether any survey data can reveal the true picture.
Definitional difficulties compound these problems. Definitions of "tenancy" and "ownership" cannot be precise and differ from survey to survey. Further, tenanted land is often recorded as cultivated by its owner because respondents have accurately reported it as under "personal cultivation." Given all these uncertainties, it is safest to assume that the available data are at best minimum estimates of the extent of tenancy.
To the extent permitted by the data, the subsections that follow will examine three main aspects of tenancy:
-- the tenurial status of households operating land: that is, whether the households operating land are (a) owner- cultivators who own in their entirety the holdings they operate; (b) pure tenants, who lease in all the land they cultivate; or (c) mixed tenants, who cultivate a combination of owned and leased-in land;
-- the area under tenancy: that is, the percentage of operated area that is leased in and the percentage of owned area that is leased out;
-- the types of tenancy contracts -- sharecropping, fixed rentals in cash or in kind, and labor service contracts
-- under which rented land is operated. The question of tenurial status is vital because it signifies differences in resource endowments, in access to land, credit, and factor markets, and in the extent of reliance on wage employment. Mixed tenants and pure tenants face different production constraints and consequently may respond differently to opportunities for agricultural modernization. The former, who operate some land of their own, are more likely than the latter to possess some draft animals, simple tools, and a little working capital (attributes which recommend them to landlords). In addition, the land that mixed tenants own helps them to gain access to credit institutions whose services are generally not - 7 -
available to pure tenants. Finally, mixed tenants are more likely to possess husbandry and managerial skills. Bell (1978) has argued that in these circumstancesthe mixed tenant is more of an entrepreneurthan a laborer.
Most pure tenants, by contrast, have no resources other than labor power; they have no secure access to land or other assets, or to credit. They may be contracted to landowners through arrangementswhich link their supply of labor to their access to land (and often credit). In addition to cultivating small plots of rented land, under contracts covering a period as short as a single year or crop season, they may work as wage laborers on the fields cultivated by the landlord. The draft power, seed, and other inputs required to cultivate the plots that they rent are usually provided by the landlord in exchange for a share (usually half) of their produce (net of harvest payments in kind).
The most common types of tenancy contract are sharecropping and fixed rent tenancy. Under sharecropping, the rent is a contracted percentage (usually half) of the output of the rented land, while a fixed rent contract involves a specified rental either in cash or in kind. Under another type of arrangement,the rent is fully or partly paid in labor services. Other things being equal, these forms of tenancy have different implications for the contracting parties' incomes and incentives. In particular, the landowner's share under a sharecropping arrangement depends directly on the level of output, so that the consequencesof a change in output, whatever its cause, are shared between the landlord and tenant. In fixed rent tenancies, however, any reduction or increase in output only affects the tenant cultivator. -8-
India
There are two sources of data on the extent of tenancy in India -- agricultural censuses and selected rounds of the NSS. Most knowledgeable observers prefer the NSS data, because it has been shown that agricultural censuses probably overstate the number of small ownership holdings and underestimate the incidence of mixed tenancies, since they are based mainly on a retabulation of village records of owner-cultivators, and consequently overlooks their leased-in land or reports it as "owned". 2 -/
Tenurial Status. Table 1 shows the tenurial status of operational holdings in India from the early 1950s to the early 1970s. In 1971-72, nearly three-quarters of these holdings were cultivated wholly by their owners. Only 4 percent were cultivated wholly by tenants. The remaining 22 percent were mixed tenancies made up partly of owned and partly of leased-in land.- L0 Looking at changes over time, owner-cultivation apparently increased during the 1950s and 1960s, while pure tenant holdings fell from 17 percent of operational holdings in 1953-54 to 4 percent in 1971-72. Some better-off mixed tenants may have consolidated their positions as owner-cultivators, and other poorer ones may have ceased to operate land, but there is considerable debate as to whether the recorded decline in pure tenant holdings is real, or whether a large amount of tenancy was simply driven underground by legislation.1l/ The weight of the evidence suggests that tenancy has in fact declined: a drop in the proportion of entirely leased-in holdings, often combined with a relative increase in mixed holdings, has been observed throughout India and in such widely differing conditions that it cannot be ignored. (Sanyal 1977.)
Area Under Tenancy. By 1971, only 11 percent of India's cultivated area was recorded as being leased-in. Table 2 shows - 9 -
the leased-inpercentages of different size classes of operational holdings, and the distributionof the leased-in area among these categories. The area under tenancy fell sharply between 1953-54 and 1960- 61, followingpassage of the ZamindariAbolition Acts and related legislation. Some tenants acquired ownership rights,
Table 1
INDIA: OPERATING HOUSEHOLDS BY TENANCY STATUS
1953-54 1961-62 1971-72
Operational Number of 50.8 57.1 Holdings (mln) 55.5 x of which: 72.6 74.4 - Entirely Owned 60.2 21.8 21.7 - Partly Owned/Partly Tenanted 22.9 5.5 3.9 - Entirely Tenanted* 16.9
(8th Round 1953-54), Source: GOI: National Sample Surveys, Numbers (a) 30, 36, 74 (b) 144 (17th-Round 1961-62) and (c) 215 (26th-Round 1971-72) households. * These are not necessarily operated by andless - 10 -
Table 2
INDIA: CHANGES IN TENANCY BY STATES LEASED-IN AREA AS A PERCENTAGEOF TOTALAREA CULTIVATED
State 1953-54 1960-61 1970-71
Andhra Pradesh 19.o07 9.15 9.01 Assam 43.54 15.36 19.69 Bihar 12.39 10.25 14.50 Gujarat n.a. 5.83 3.91 Haryana 23.26 Punjab 76.89~_l 35.393/ 28.01 Jammu & Kashmir 22.17 14.13 8.06 Karnataka 16.37 18.16 15.90 Kerala 23.63 15.30 8.59 Madhya Pradesh 18.61 6.40 7.46 .Maharashtra n.a. 8.74 6.15 Orissa 12.58 10.75 13.46 Rajasthan 12.92 4.87 5.26 Tamil Nadu 27.53 16.55 13.07 Uttar Pradesh 11.38 8.06 13.01 West Bengal 25.43 17.65 18.73
1/ Figure is for Andhra region. The figure for Hyderbad State, which is included in present-day Andhra Pradesh, was 18.04.
2/ Erstwhile, Punjab (including present-day Haryana) plus Delhi and Himachal Pradesh.
3/ Erstwhile, Punjab State (including present-day Haryana and parts of Himachal Pradesh).
Source: Bardhan (1976), cited in Ahluwalia, (1978). - 11 -
while many owners took back their land for their own cultivation, fearing the provisions of the legislation.iZ2 More recently, owners have found that improved technology and infrastructure make it profitable to farm their own land. The share of the total leased-in area operated by small tenants has been increasing over time: in 1953-54 one-fifth of the leased-in area was operated in holdings of under 5 acres; by 1971-72, this share had risen to nearly 37 percent. Meanwhile, the proportion of leased-in land represented by relatively large operational holdings has declined -- leased-in holdings of over 10 acres fell from 61 percent to 38 percent of the total between 1953-54 and 1971-72.
Table A.1 in the annex shows the state-by-state data on changes in tenancy over time. In 1970-71, a majority of states had a higher proportion of their total operated area leased-in than the 11 percent national average, but the percentage was greater than 20 percent in only two cases -- Punjab and Haryana -- and had been falling everywhere since 1953-54. Declines in tenancy and increasing cultivation by owners are corroborated by village studies in Uttar Pradesh, Punjab, West Bengal, Orissa, Andhra Pradesh, and Tamil Nadu.13/
The proportion of land under tenancy is highest in Punjab and Haryana, at 23 and 28 percent. (This high incidence of tenancy in states where the green revolution has been most successful should dispel any simple-minded notions of tenancy as a brake on agricultural growth, an issue discussed in more detail later in this paper.) Historically, this area has had the highest incidence of tenancy in India, but here too the leased-in area has fallen dramatically. The most rapid decline took place in the 1950s, before the onset of the green revolution, and must have been due to land reform legislation. 1 4/
Types of Tenancy Contracts. The main types of contracts identified earlier were sharecropping and fixed payments in cash - 1 2 -
or in kind. In most sharecropping contracts, the tenant's produce is shared equally between him and his landlord. In addition, he often has to supply the inputs he needs. By contrast, fixed rentals allow tenants to keep the whole economic surplus after meeting cultivation expenses (including their rental payments). Fixed rentals are generally thought to be more favorable to tenants than crop sharing, but small cultivators, hampered by their inferior bargaining power and lack of resources to pay cash rent (which is often required in advance), may have no alternative but to accept sharecropping arrangements.
The view is often expressed that cash-rent tenancies are becoming more important in India as a whole. In fact, however, although the total area under tenancy has fallen slightly, the proportion of it farmed under sharecropping contracts has increased, from 38 percent to 47 percent between 1961 and 1971 and the sharecropped acreage has increased significantly in absolute terms, from 13.4 to 16.1 million acres over the same period (see Table 3). Cash rent tenancies are giving way to sharecropping in nearly all size groups, but more so in the larger ones. Nevertheless, the predominance of sharecropping remains greatest in the smaller size groups of tenanted holdings, while cash rentals account for increasing proportions of the total as the size of holding rises.
The incidence of different types of tenancy varies from state to state, depending on the main crops grown. Broadly speaking, sharecropping tenancies are most common in the East and Northwest, where paddy and wheat are dominant crops: they account for 93 percent of the area under tenancy in West Bengal, 83 percent in Jammu and Kashmir, 78 percent in Bihar, 54 percent in Haryana and Uttar Pradesh, and 45 percent in Punjab. Fixed-produce tenancies predominate in Kerala and Tamil Nadu in the South where plantation crops are important. Fixed cash rent tenancies are associated with oil seeds and cotton (traditional cash crops), notably in Table 3
INbIAt AMA UNDER DIFFiRtNT TYPES OF TEMANCIES, BY SIZE GROUP OF HOLDING (1961-62 AND 1971-72)
1961-62 ______1971-72 Size Group Cash Rent Fixed Share Others Total Cash Rent Fixed Share Others Total (Acres) Produce Produce Prodtuce Produce
Under 2.5 7 (17) 10 (12) 12 (43) 12 (27) 11 (100) 10 (9) 13 (10) 19 (53) 18 (28) 16 (100)
2.5 - 5.0 11 (18) 18 (14) 20 (48) 14 (20) 16 (100) 13 (10) 21 (13) 24 (55) 18 (22) 20 (100)
5.0 - 10.0 19 (22) 29 (16) 25 (41) 20 (20)) 23 (100) 23 (14) 29 (15) 24 (47) 24 (24) 25 (100) F
10.0 - 25.0 31 (28) 29 (13) 25 (34) 29 (24) 28 (100) 30 (19) 30 (IS) 22 (41) 26 (26) 25 (100) over 25.0 31 (35) 15 (8) 18 (31) 24 (25) 22 (100) 24 (28) 7 (7) 11 (39) 14 (26) 13 (100)
All Groups 100 (26) I0O (13) 10( (18) 100 (23) 100 (100) 100 (15) 100 (13) 100 (47) 100 (25) 100 (100)
Totals 9.0 4.5 13.4 8.2 35.2 5.2 4.3 16.1 8.5 34.1 (million Acres)
Note: I) The percenitages in parenthesis inidicate area unider tenanicy type as % of total area in size group by year. 2) Figures may niot add to totals due to roundings and conversions.
Source: H. Laxlminarayan, and S.S. Tyagi, "Interstate Variations of Tenianicy, Economic and Political Weekly, Vol. XII, No. 39, Sept. 24, 1977 (NSS Data). - 14 -
Karnataka, Andhra Pradesh, Marashtra, Gujerat and Punjab- 15/ In Punjab there has actually been an increase in cash rental contracts in recent years; the proportion of cash-rented to total leased land rose from 31 percent in 1967-68 to 45 percent in 1973- 74,16/ probably in response to the adoption of new technologies.
Characteristics of Tenant Farmers. In India as a whole, small farmers account for the majority of individual tenant holdings, but relatively large ones account for the bulk of the total leased-in area. Table 4 shows the proportion of all tenant holdings (numbers) and of all tenanted land (area) represented by different size groups of operational holdings. Nationwide, 72 percent of all tenant holdings in 1971-72 were smaller than 5 acres, but these holdings accounted for only 37 percent of the cultivated land. Statewide differences are however considerable. Table A.1 in the annex show this data. In Eastern India, 60-70% of the tenanted area is in holdings below 5 acres, as is also the case in Tamil Nadu and Karnataka. Further, the share of tenanted area in these small holdings has been increasing in most states over time.
Relatively few of the households that lease in land own large amounts themselves. Table A.3 in the annex shows that 88 percent of the households leasing in own less than 5 acres, and 28 percent own no land.17 The Table also shows that nearly three-quarters of all landless (in the sense of owning no land) households (73 percent) lease in land for cultivation.
The importance of small tenants varies considerably from state to state. In several states -- Assam, Bihar, Himachal Pradesh, Kerala, Orissa, Tamil Nadu, Uttar Pradesh, and West Bengal -- the average size of tenanted holdings is small. The incidence of tenancy generally is also above the Indian average in all these states except for Himachal Pradesh and Kerala. This correlation between small tenant holdings and an above average - 15 -
percentage of land under tenancy is not universal, however. Punjab, for example, has a high 28 percent of its total operated area under lease (Table A.1 in the annex) but 57 percent of the leased-in area is in holdings larger than 10 acres (Table A.4 in the annex).
Thus while tenancy is evidently a "small farmer problem" in some states, the participation of larger cultivators in the land rental market should not be ignored. Table A.4 in the annex provides data on proportions of land leased in and leased out by size categories of holdings. It shows that larger farmers are in fact marginally more likely to lease in than small ones. (For India as a whole, over 38 percent of leased-in land is in holdings of over 10 acres, while under 37 percent is in holdings of less than five acres.) Similarly, despite the fact that leasing-out is predominantly a large farm phenomenon (56 percent of leased-out land is from holdings of over 10 acres), the data nevertheless show that nearly one-third of all leased-out land comes from the smallest holding size group (31 percent of all such land was leased from holdings of under five acres).
The state-by-state data in Table A.4 also show that the states with large proportions of small tenants also tend to have large proportions of small landlords. At least 40 percent of all land in ownership holdings of less than 5 acres is leased out in Assam, Bihar, Himachal Pradesh, Jammu and Kashmir, Kerala, Orissa, Uttar Pradesh, and West Bengal. Similarly, states that tend to have large tenants (mainly in the West and North) also tend to have large landlords; at least half of the land leased out in Haryana, Karnataka, Maharashtra, Punjab, and Rajasthan is from holdings of over 10 acres.
The evidence presented so far suggests that patterns of tenancy in India are much more complex than the simple stereotype of large landlords and small tenants would suggest. In many parts of the country, landlords may own and lease out quite small Table 4
INDIA: TENANCY IN SMALL FARMS (NO. OF HOLDINGS LEASING IN AND AREA LEASED IN) BY SIZE GROUP OF OPERATED HOLDINGS, 1971-72
Size Group Maharashtra Gujarat Kerala Punjab ALL INDIA (Acres) N A N A N A N A N A
1 0 - 11.4 0.2 9.3 1.0 63.0 22.4 0.6 - 19.7 3.3
I - 2.5 13.0 0.7 17.8 3.3 19.5 20.7 2.9 0.7 28.4 13.2
2.5 - 5.( 24.6 10.7 14.2 6.9 10.6 26.0 19.3 9.0 24.2 20.4
5.0 Over 51.0 88.4 58.7 88.8 6.9 30.9 77.8 90.3 27.7 63.1 0a%
All Sizes 100.0 100. 100. 100. 100. 100. 100. 100. 100. 100.
N (1)0s) 558. 218. 389. 355. 14,655.
(1000 A Acres) 2729 827. 242. 1880. 32,814.
All Operated Area (mA) 44.4 8.56 2.82 6.7 310.4
All Operated 11olding (m) 4.68 2.34 2.25 0.67 57.07
Note: N .and A are thie iitinber of holdirigs leasing in and area leased in distributed over the size distribution of
operated holdings.
Souirce: NSS, Report No. 215, 26th Rotind Tables on Landholdings" State Reports, Table (19). - 17 -
parcels of land. Some are absentee landlords -- widows or individuals employed outside agriculture;others find that their holdings are too small to be viable, and rent them out while pursuing other rural occupations.L-, Many individuals are landlords and tenants simultaneously. In West Bengal and Kerala, for example, small holders often lease out land they own in distant villages while leasing in land near their homes. Others lease out and lease in land parcels in the same locality so as to acquire more compact and contiguous areas for cultivation. Finally, large farmers lease in land mainly to extend and consolidate their holdings, which are run on a commercial basis. There is considerable evidence of this practice from Punjab, Hlaryana,Western Uttar Pradesh, and Gujarat. Large holders who lease out land are generally though not exclusivelyof the rentier class -- those who neither participate in nor supervise agriculturalwork.
The main conclusion for policy from the empirical data is that it would be simplistic to identify tenants with the poor and landless and landlordswith the rich. Measures to benefit tenants will help both small and large farmers, and measures to deny advantages to landlords will affect a significant proportion of the rural poor as well as the relativelywell-off. Moreover, even allowing for under-reporting,the proportion of India's cultivated area under tenancy of all kinds is sufficiently small, and the trend decline in this proportion is sufficientlymarked (unless one argues that there has been an increase in the bias towards underreporting over time), to be able to say that any problems associated with tenancy are unlikely to constrain agricultural growth for the country as a whole. We shall discuss this issue further in later sections.
Tenancy may, however, present difficulties in certain specific areas where its incidence is above the Indian average and where it is mainly concentratedin small holdings (see Tables A.2 - 18 -
and A.4 in the annex). The states most affected are Assam, Bihar, Orissa, Tamil Nadu, Kerala, Uttar Pradesh and West Bengal.
Bangladesh and Pakistan
The data on tenancy in Bangladesh have to be patched together from a variety of sources to get an indication of trends. Because of conceptual differences between different sources, the data in Table 5 should be treated with caution. 19/
Tenancy seems to be more extensive in Bangladesh than in India. Over a third of operational holdings and two-fifths of the cultivated area are operated under some form of tenancy, although pure tenancy accounts for only seven percent of holdings and about four percent of the cultivated area.
Data from a number of partial surveys seems to suggest that tenancy has increased somewhat since Bangladesh's independence. The proportion of cultivating households who are pure tenants seem also to have risen more rapidly than the proportion of the total cultivated area leased in by them, implying a decline in the average size of these holdings.-L/ Although Table 5 shows a proportionate decline in the area under mixed tenancy, evidence from microeconomic surveys suggest that it may in fact have been increasing.211 But a comparison of the two agricultural censuses -- 1960 and 1977 -- suggests an increase in the proportion of households in mixed tenancies, a decline in pure tenancies and a decline in the proportion of area under tenancy. It is hard to conclude anything about trends in tenancy from this information.
Notwithstanding the increase in tenancy in recent years, the data in Table 5 show that nearly two-thirds of all farming households, with about over-half of the cultivated area, are owner-operators.22/ A large proportion of cultivators also rent out some land -- about a quarter of all rural households according to M. Hossain (1977). Table 5
BANGLADESH: CHANGES IN TENANT HOLDINGS AND ARMA IN BANGIADESH (1960-1978)
1 9 6 0 (a) 1/ 1 9 6 7 -6 8 (b) I/ 1 9 7 3 _7 4 (c) 2/ 19 7 7 (d) 2/ 19.7 8 (e) 2/ (Ag. Census) (Master Survey of Agr.) (BIDS) (LOS) (LOS)
A. Operational Holdings/ 6.1 6.9 7.0 8.2 .9.3 Cultivating Households (100.0) (100.0) (100.0) (100.0) (100.0) (millions)
-X owner-operators 61.0 66.0 67.0 61.2 64.5
-X owner-tenants 37.0 30.0 27.0 32. 28.1
-X pure tenants 2.0 4.0 6.0 6.8 7.4
B. Area of Cultivated 21.7 21.6 N.A. 18.8 24.3 Holdings (mln. acres) (100.0) (100.0) (100.0) (100.0) (100.0)
-X owner-operated 54.0 57.8 N.A. 54.0 58.5
-% owned-leased in 45.0 38.9 N.A. 41.7 37.7
-Z purely leased in 1.0 3.4 N.A. 4.3 3.8
-X under all forms of leasing in 18.0 17.0 25.0 22.9 23.7
1/ The data are for "cultivating households."
2/ The data are for "operational holdings."
Sources: (a) COB Ag. Census (1960), (b) MSA (67-68) cited in WCAARDand Robinson, (c) BIDS data cited in
Jabbar (WEAARD 1978), (d) Jannuzi and Peach (1980). - 20 -
Are most tenant holdings very small, and do such holdings account for a large proportion of the leased-in area? Recent data, shown in Table 6, suggest that the position is more complicated than this. Nearly 75% of all operational holdings below 1 acre and nearly two-thirds of those between 1.1 and 2.5 acres are wholly owned.23/ The majority of mixed tenancies are between 2.5 and 10 acres -- quite large by Bangladesh standards. 24/ Pure tenancies are mostly small, however; 88 percent of all such tenancies and 69 percent of the area under pure tenancy are in holdings of less than 5 acres.-L/ In 1977-78, nearly 60 percent of tenant and owner-tenant households leased in one acre or less; only 2-4 percent of such households reported leasing in more than 5 acres. Even though the average amount of land rented is small (about 1.4 acres), this does not necessarily mean that all holdings that include rented-in land are small (as implied by Jannuzi and Peach); owner-tenants may farm their own land in addition to what they rent in.
Although a large variety of tenancy arrangements exists in Bangladesh, sharecropping has been and is predominant.-6/ In 1960, according to the Agricultural Census, 89 percent of all land under lease was rented on a sharecropping basis; this proportion varied little with the size of holding27/ By 1977, according to the LOS, sharecropping contracts were used by 92 percent of all households leasing in land, and covered 94 percent of all the land area leased in. The most common form of sharecropping is the borga, where the owner receives 50 percent of each harvest from his borgardar (share-tenant) but does not share in the cost of fertilizers, water or labor. Many sharecroppers are required to make additional payments in cash or pay a higher share of the crop to the owner (See Table A.6 in the annex). Sharecropping and other rental aggreements are reported to be mostly oral.28/
The LOS data suggest that tenants do not remain on the same land for long. Table A.7 in the annex shows that in the late 1970s, 60-70 percent of all tenant households had contracts lasting less than 3 years. A quarter to a third had contracts TIbe 6
FAME HXDICSAID 1MCY BY SIE, 1977
Total Ibiitigs a_ cr Ibldings __ wn)er-ruuTenant Holdings Tenant Ibhdings Size Acreage Acege Acreage Farued Acreage Rented A reage Total Acreage Classif. Total Average Total Average Total Average Total Average Total Average Ihder Tenancy (acres) t.iber (acres) (acres) l&mber (acres) (acres) Nmaber (acres) (acres) (acres) (acres) 1.mber (acres) (acres) (acres) (2)
0.1 - 0.5 342,040 109,009 0.319 290,168 90,252 0.311 49,033 17,855 0.364 9,991 0.204 2,839 910 0.321 10,901 10.0 0.5 - 1.0 648,302 472,029 0.730 456,107 327,188 0.714 186,144 142,091 0.763 69,160 0.372 4,051 2,788 0.688 71,948 15.2 1.0- 1.5 799,282 961,580 1.203 511,531 608,847 1.186 280,445 346.661 1.236 158,507 0.565 5,306 6,095 1.149 164,602 17.1 1.5- 2.5 1,322,258 2,574,475 1.947 733,545 1,416,222 1.931 579,976 1,141,638 1.968 489,038 1.395 8,737 16,619 1.902 505,657 19.6 2.5- 5.0 1,829,458 6,402,140 3.499 908,701 3,152,844 3.470 910,333 3,213,974 3.531 1,269,692 0.843 10,424 35,382 3.394 1,305,074 20.4
5.0- 7.5 726,272 4,335,620 5.970 387,947 2,311,9D0 5.959 335,355 2,007,188 5.985 720,391 2.148 2,970 16,531 5.566 736,922 17.0 7.5- 10.0 269,296 2,279,487 8.465 149,289 1,259,523 8.437 119,197 1,013,344 8.501 326,350 2.738 810 6,632 8.188 332,982 14.6 10.0 -12.5 140.796 1.540,086 10.938 87,651 955,688 10.903 53,046 583,402 10.998 189,575 3.574 99 1,012 10.222 190,587 12.4 12.5 -15.0 62,9t)1 849,186 13.5t]0 37,638 5t)8,233 13.503 25,171 339,724 13.497 110,194 4.378 92 1,244 13.522 111,438 13.1 15.0- 25.0 93,357 1,691,215 18.116 63,976 1,158,404 18.107 29,256 530,861 18.145 162,725 5.562 125 1,973 15.784 164,698 9.7 Over 25.0 23,211 744,664 32.082 15,768 496,701 31.501 7,443 247,973 33.316 86,074 11.5S4 - - - 86,074 11.6
Total/Average 6,257,173 21,959476 3. 646321 12,285305 3.369 2,575,399 9863 3.722 3,591,636 1.395 35,453 9,165 2.515 3,680,801 16.8
Source: Bagladesh &Ireau of Statistics, Agriculture Caisus 1977. Cited in IBRD (1983). - 22 -
lasting under one year. Such insecurity of tenure would certainly inhibit longer-term investment and commitment to technical change requiring investment. How does this state of affairs compare with conditions in neighboring West Bengal? Tenancy covers less of the cultivated area in West Bengal than in Bangladesh, but otherwise the situation seems similar, involving the triple disadvantages of small holdings, a high incidence of tenancy in small holdings, and a high proportion of tenant holdings under sharecropping. In 1970-71, although 34 percent of agricultural holdings in West Bengal included leased-in land (31 percent were mixed holdings and only 3 percent were pure tenancies), only 18 percent of the total operated area was leased in, compared to 25 percent in Bangladesh. Holdings of less than 2.5 acres accounted for similar proportions -- around one third -- of the total leased-in area in West Bengal (1970-71) and Bangladesh (1967-68). In West Bengal as in Bangladesh, and unlike many states in India, 93 percent of all tenancies were sharecropped.2 9 /
Tenancy is much more widely prevalent in Pakistan than in India or Bangladesh. Data for 1972 show that about 60 percent of both numbers of land holdings and cultivated area were operated under some form of tenancy (Table 7). Over half of all tenant holdings (30 percent of the total cultivated area) are pure tenancies. The average tenant holding in Pakistan is much larger than in India or Bangladesh -- over 10 acres -- and nearly half of all tenant holdings are between 5 and 12.5 acres (Table A.8 in the annex).
In Pakistan, both the number of tenanted holdings and the total area under tenancy have declined (Table 7). Perhaps in response to changes in tenancy legislation, holdings seem to have been taken back for cultivation by their owners, and some land has been sold by large holders. As a result, while the number of middle sized (5-25 acres) tenant holdings and the area they cover have increased, small tenancies have declined in number and many small tenants have become landless. There has been a significant Table 7
PAKISTAN: REGIONAL CHANGES IN TENANCY, 1960-1972
Pakistan: All Farms (mln , mA) 4.9 48.9 3.8 49.1 (23) * % Owner operated (41) (38) (42) (40) (21) 4 % Owner/Tenant operated (17) (23) (24) (31) 8 38 % Tenant operated (42) (39) (34) (30) (36) (24)
Punjab: All Farms (mln , mA) 3.3 29.2 2.4 31.0 (29) 6 % Owner operated (43) (38) (42) (39) (29) 7 % Owner/Tenant operated (19) (25) (29) (36) 10 54 % Tenant operated (39) (37) (29) (26) (47) (26) 1
Sind: All Farms (mln , mA) 0.7 9.7 0.7 9.5 10 (2) L % Owner operated (20) (29) (24) (31) 30 3 1 % Owner/Tenant operated (9) (15) (13) (19) 62 25 % Tenant operated (71) (56) (63) (51) (2) (12)
Compiled from M.H. Khan (forthcoming) citing Pakistan Census of Agriculture 1960 and 1972.
* negligible - 24 -
shift towards mixed owner-cum-tenant holdings, especially those between 5 and 25 acres.30/
Fixed rentals (in cash or in kind) are not very common in Pakistan; nearly 85 percent of the area under lease is sharecropped. Most sharecropping contracts are on a 50-50 basis, but nearly 15 percent provide for a smaller share of output to be transferred to owners. There is evidence, however, that the sharecropped area has declined in both Sind and the Punjab.
Conditions in the two major provinces differ in a number of ways. First, the proportion of total holdings and area under some form of tenancy is greater in Sind than in the Punjab. Second, pure tenancy predominates heavily in Sind whereas in the Punjab mixed tenancies equalled pure ones in number and surpassed them in area by 1972 (Table 7). Third, while a high proportion of holdings of up to 12.5 acres in the Punjab is owner-cultivated, in Sind a high proportion of them is operated by tenants. In Sind, two-thirds of the area in marginal holdings of less than 5 acres is cultivated by tenants, compared with only one third in the Punjab. (Table A.8 in the annex.) Finally, while Punjab has many small landlords, in Sind most landlords own large holdings. If the dichotomy between small tenants and big landlords applies with any force, it does so in Sind more than elsewhere in the subcontinent.31/
The East and West (Indian and Pakistani) Punjabs also differ in important respects with respect to tenancy. First, 53 percent of all holdings in the East are under some form of tenancy, but pure tenant holdings are quite uncommon (5 percent); altogether, leased-in land amounted in 1971-72 to 28 percent of the total cultivated area. By contrast, in the Pakistani Punjab in 1972, nearly 60 percent of the holdings and over 45 percent of the cultivated area was reported as leased-in, and pure tenants cultivated more than half of both the area and holdings under tenancy. Second, mixed and pure tenant holdings in the Pakistani Punjab are, on average, nearly twice as large as those in the - 25 -
Indian Punjab. Finally, whereas sharecropping is dominant in the Pakistani Punjab, less than 45 percent of all tenant contracts in the Indian Punjab are on this basis.-L32/ Combined with the differences in the pattern of land holdings, these contrasts imply significantly different tenurial arrangements in the two Punjabs.
Conclusions
Overall, tenancy appears to be a declining but still important feature of South Asia agrarian structure. Large areas remain under tenancy in both North and East India, in Bangladesh and particularly in Pakistan. Tenant holdings in East and South India and Bangladesh (but not in Pakistan) are generally small. "Landlords" are by no means exclusively large farmers. A significant proportion of the cultivating households in Eastern India, Bangladesh, and perhaps Sind, face the special difficulties associated with holding small amounts of wholly leased and sharecropped land. The available country-by-country data can be summarized as follows:
In India:
-- Tenancy of all kinds accounts for only 11 percent of the cultivated area and around one-fourth of all cultivated holdings (this is an all-India figure and is probably an underestimate).
-- Tenancy is most important in the North (in Punjab it accounts for 28 percent of the area and nearly 53 percent of the holdings), significant in the East (in West Bengal it accounts for 19 percent of the area, and 34 percent of the holdings), less important in the South (in Kerala it accounts for 9 percent of the area and 18 percent of the holdings) and least important in the West (in Gujerat it accounts for only 4 percent of the area and 9 percent of the holdings).
-- Tenancy is not necessarily confined to small holdings. - 26 -
Holdings of less than 2.5 acres predominate in the East and South, but in the the North and West most tenant holdings exceed 5 acres. Most tenant farmers also operate land that they own. The area under pure tenancy is negligible, even in states where the incidence of all forms of tenancy is high. Sharecropping is the predominant form of tenancy and seems to be on the increase, although tenancy as a whole, especially pure tenancy, has been declining rapidly.
In Bangladesh:
Tenancy accounts for 23 percent of the cultivated area and 25 percent of cultivated holdings. As in India, most tenants operate both owned and tenanted land. The area under pure tenancy is less than 5 percent. Most tenant holdings are very small; over 70 percent are less than 5 acres in size. There are also many sub-tenancies, although their number cannot be established. Sharecropping is the main form of tenancy, accounting for nearly two-thirds of the total area under tenancy. The incidence of tenancy, especially of mixed tenant holdings, seems to be increasing over time.
In Pakistan
Tenancy is of major importance, accounting for nearly 60 percent of the cultivated area and holdings. It is particularly extensive in Sind, where it accounts for over 70 percent or more of both holdings and cultivated area. Pure tenancies account for more than half of the number of tenancies and nearly half of the tenanted area. In Sind, over two-thirds of all tenants are pure tenants. Most tenancies are relatively large (between 5 and 12.5 acres); small tenants account for less than a fifth of all - 27 -
tenant holdings. The larger holdings tend to be mixed tenancies, especially in the Punjab.
-- Pure tenancy has declined only marginally as a proportion of all tenancies, which have remained fairly constant as a proportion of total holdings and area.
-- Sharecropping is the dominant form of tenancy. Bearing in mind that official estimates tend to underestimate the extent of tenancy, and that the decline in pure tenancies in India could be partly a result of reclassifying tenants as agricultural laborers in more recent surveys, the evidence suggests that tenancy still plays an important role in the agrarian structure of the subcontinent. In the sections that follow, I will consider some of the functions that tenancy, and in particular sharecropping, may serve in the rural economy; examine the "efficiency" of tenancy as an institution; and discuss its relationship to the new agricultural technologies.
SOME ROLES OF TENANCY IN IMPERFECT RURAL MARKETS
Tenancy is almost universally regarded as undesirable by policy makers in South Asia. This stems mainly from a misunderstanding of its functions. The very fact that tenancy arrangements have endured in one form or another for so long in the subcontinent, despite innumerable attempts at "tenancy reform," suggests that they are seen to be useful by both landlords and tenants. What are the mDtivations of the parties to tenancy contracts and the functions of tenancy arrangements in South Asia's agricultural economies?13/
Tenancy as a Mechanism for Resource Adjustment
Tenancy can be viewed as a contractual system that helps rural households to adjust their use of resources, particularly land, to their endowments of resources, notably labor and draft animals. Thus, landless households may find that they are better - 28 -
off leasing in land rather than seeking wage employment, given the limited and uncertain job opportunities in rural areas. Conversely, where labor is scarce, especially during peak seasons, landowners may prefer to lease out land rather than depend on an uncertain supply of labor. Each group seeks to modify its initial endowment of factors of production by trading an initially relatively abundant factor for a relatively scarce one.
Much of the difference in initial endowments, as I have noted in previous chapters, is a function of the unequal ownership of land -- although it should be borne in mind that even if land were equally distributed, unequal endowments of other factors could still lead to tenancy. Clearly, however, a key role of tenancy is to redistribute land between those who own it and those who do not. In most of the subcontinent (with the exception of the Indian and Pakistani Punjabs), those who lease in land are mainly (but by no means only) the landless and small landowning households while those who lease out land are mainly (but by no means only) large owner-operators. Tenancy thus makes the distribution of operational holdings more equitable than the distribution of ownership holdings (particularly in East India and Bangladesh, and even Sind in Pakistan), and contributes to a better distribution of incomes than would be possible without it.
But this role of tenancy as a mechanism for resource adjustments depends fundamentally on the absence or imperfection of markets for these resources. Suppose that resources were unequally distributed, but that there were perfect markets for all factors, and all these factors were perfectly divisible. Then those with 'less' than the optimum amount of land, labor, skills or other resources could obtain them from others. Factor ratios would be equalized and there would be no need for tenancy as a special arrangement. Markets (and prices) would perform the function of allocating resources optimally over households and through time. The leasing in of land by landless households to more fully utilize their supply of labor" would be unnecessary if they could offer their labor through a perfectly operating labor - 29 -
market. Similarly the need for landowners to lease out land in exchange for labor would be unnecessary, as they could easily obtain labor and other complementary inputs through markets. Unequal resource endowments, especially land, would still lead to unequal incomes, but tenancy would not be necessary.
In reality, however, land and labor markets are generally fragmented, imperfect or non-existent in rural economies. In India, for example, land is rarely bought or sold. Transfers are mainly via inheritance; sales, to the extent that they occur, are either the result of the seller getting into financial difficulties or due to legislation. Failures in labor and capital markets also abound; these too tend to make tenancy a useful adjustment mechanism.
As already noted, tenancy arrangements can take different contractual forms, but their commonest form in South Asia is sharecropping. In conceptual terms, sharecropping represents a transitional type of production agreement among owners of land and owners of labor -- falling in between pure labor contracts on the one hand (in which labor suppliers are simply paid a wage and have no stake in the product of the land) and fixed rent contracts on the other (in which, after setting aside their rental payments, tenants "own" whatever their holdings produce). In general, sharecropping arrangements are associated with relatively underdeveloped markets and relatively simple agricultural systems, while fixed rent tenancies tend to become more important in more complex agricultural economies. Because of the predominance of sharecropping in South Asia, the discussion of "tenancy" in the remainder of this chapter will usually refer to share tenancy unless otherwise indicated.
Tenancy and Incentives
The argument that tenants have a greater incentive to work than wage laborers is firmly rooted in classical economics. Adam Smith, J. S. Mill, Turgot in France, and more recently Marshall, - 30 -
have stressed the fact that different contractual arrangements between owners of land and labor provide different incentives,and that there is an evolutionaryprocess involved in moving from one system to another.
Smith argued that in Europe share-tenancy(the metayer system as it was called in France), succeeded serfdom, and itself in turn gave way to fixed rent tenancy, with each system providing a progressivelygreater incentive. Share tenancy was economically preferable to a serf-masterrelationship because:
"Such tenants, being free men, are capable of acquiring property, and having certain proportion of the produce of the land, they have a plain interest that the whole produce should be as great as possible... A slave, on the contrary, who can acquire jothing but his maintenance consults his own ease... -
The fixed rent tenant, however, has still more incentive than the sharecropper. According to J. S. Mill: "The Metayer has less motive for exertion than the peasant proprietor, since only half the fruits of his industry... are his own. But he has a much stronger motive than the day laborer,who has no other interest in the result than not to be dismissed" (quoted in Jaynes 1979, p. 12).
Why is the sharecroppingstage necessary? Why not move from pure labor contracts directly to fixed rents? Among other things, share-tenancyarrangements respond to tenants' lack of capital and credit.
Tenancy as a Credit System
Where markets for capital and credit are imperfect or underdeveloped, the only way an assetless person may have of gaining access to these resources is to enter into a tenancy contract. The role of tenancy as a credit system was well recognized by the classical writers, including Smith and Turgot - 31 -
(Jaynes 1979). Karl Marx, totally in consonance with the classical tradition, wrote: "As a transitory form from the original form of rent to capitalist rent, I may consider the metayer system or sharecropping, under which the manager (farmer) furnishes labor (his own or another's) and also a portion of working capital, and the landlord furnishes... another portion of working capital... On the one hand the farmer here lacks sufficient capital required for complete capitalist management. On the other hand, the share here appropriated by the landlord does not bear the pure form of rent. On the one hand, the sharecropper... is to lay claim to a portion of the product... as possessor of part of the instruments of labor as his own capitalist. On the other hand, the landlord claims his share not exclusively on the basis of his land-ownership, but also as lender of capital. 35
Here I have a view that (a) the sharecropper is a capitalist although one who lacks 'enough' credit; and (b) the landlord gets returns to his capital other than pure rent, even though these cannot be distinguished from the rental share. Marx's view contrasts sharply with some current 'Marxian' literature that characterizes rental shares as 'exploitative' and 'usurious'.
A sharecropping contract -- and the right it confers to a share of farm output -- may also give the tenant access to the credit system by serving as collateral for working capital and other loans in markets where these are available.3-/ A more common credit arrangement linked to the tenancy system is that by which landlords provide consumption loans to tenants. Recent work by Braverman and Srinivasan (1979, 1980) has shown that there are good reasons for this type of arrangement; it both lowers the cost of credit to the tenant and enables the landlord to monitor the tenant's effort.
Landlords may also provide credit to tenants by supplying them with inputs, with the tenant's contractual share of the costs being subtracted from his share of output after the harvest. In many cases of this kind, the landlord will also supply the tenant with subsistence credit. - 32 -
The landlord's motive in providing credit in the form of production inputs may be to ensure that tenants use the most profitable techniques. Nevertheless, he still has to make sure that the tenant who supplies the direct labor does indeed use the inputs, and does not resell them. Therefore
"Since the landlord must monitor the terms of the contract with the tenants anyway, it will often be advantageous for him to also be the tenant's direct creditor or an intermediary between the tenant and a credit specialist."(Jaynes, 1980, p. 27).
Finally, tenancy as a credit system does not only comprise credit flows from landlords to tenants. Sometimes the tenant may provide the landlord with the liquidityhe needs, either by paying a cash sum that is adjusted after harvest or by sharing in costs. When markets for credit are underdeveloped,a landowner who is short of credit in relation to his endowments of land may seek out tenants with cash or access to credit, because they may represent the least-cost source of the funds he needs. Thus although arrangements under which the landlord is the lender are generally seen as the norm, the opposite can also frequently be the case. This is particularly true when the "landlords" are small owners and tenants large operators. As noted earlier, such conditionsare widespread in South Asia.
Thus, in the absence of efficient credit markets, tenancy may serve as a substitute credit system. Attempts to abolish the system or change its terms will need to be accompaniedby measures designed to replace its functions in the credit market.
Tenancy, Risk, and Entrepreneurship
Agricultural production and its returns are inherently risky, and those who participate in an agrarian economy can reasonably be expected to wish to limit the risks they face. Different types of contractual arrangement between owners of land and labor have - 33 -
different risk-sharing consequences. In a fixed rent tenancy contract the tenant bears all the risk, while in a fixed wage contract the landowner bears the risk. Under a sharecropping arrangement the returns to tenant and landlord depend on realized output; production risks are thus divided between them in proportion to their agreed shares (in the "normal" 50:50 type of arrangement, for example, both risk and return are equally shared). In the presence of uncertain agriculturalreturns, risk averse agents might therefore be expected, other things being equal, to opt for share contracts because they permit some spreading of productionrisks.
Cheung (1969) was the first to put forward the hypothesis that the choice between different forms of land tenure arrangement was likely to be affected by the parties' risk aversion under uncertainty. Subsequent studies have, however, shown that given Cheung's assumptions, sharecropping contracts are no better at spreading risk than a mixture of rental and wage contracts under competitiveconditions.17/ In competitiveland and labor markets, in which land is available at a fixed rental and labor opportunitiesexist at a given fixed wage,
A tenant can take on risk by renting land at fixed rent and spread it by selling labor for a non-random wage, for then rent and wage opportunitiesin the market will give factor shares that will be identicalto those which rule under sharecropping." (Bliss and Stern 1979, pp. 3.21-22).
Thus even under production uncertainty, a share contract can be replicated by a suitable combination of the two polar forms of contract, provided that fully competitivemarket conditionsexist.
But since the problem in real-life agriculturaleconomies is precisely that such competitivemarket conditionsmay not in fact pertain, the risk-spreading advantages of sharecropping arrangementspersist. Thus, given imperfector incompletemarkets (particularlyfor labor and crop insurance),sharecropping may be - 34 -
a "second-best" system for sharing risk, but the only one available in practice.
If risk represents a major hazard of agriculturalproduction, the possibilityof affecting production outcomes through effective entrepreneurial decision-making represents a major opportunity. But the extent to which an individual cultivator can benefit by exercising his entrepreneurialor managerial skills varies by crop and region. Rao (1971) was the first to note that sharecropping seemed more prevalent in India when crops provided little scope for decision-makingby tenants, whereas fixed rent contracts were most often observed when more decision-making was needed. He argued that "the existence of a significant scope for entrepreneurship may occasion fixed rents" because they allow tenants to capture the returns from their decisions (while at the same time freeing risk-averse landowners from the consequencesof productiondecisions made by their tenants).
Rao tested his hypothesis using data from South India, and found that sharecropping dominated rice producing areas with assured irrigation,while fixed rents prevailed in tobacco growing regions. In the latter areas, small holders tended to lease out land to larger operators. The implication seems to be that where price and production uncertainties are large and decision-making may be complex, smaller landowners, who are more risk averse and less educated and knowledgeable, may wish to transfer both decisions and risks to larger tenants, preferably under fixed- rental contracts.
Newberry (1975) suggested that fixed rent contracts might be preferred for crops requiring entrepreneurial skills where (i) tenants had special skills they did not wish to share with landlords, (ii) landlords were more risk averse than tenants, or (iii) landlords faced the problem of "moral hazard" -- that is they could not determine whether shortfalls in output were the tenant's fault.
Again, the problem -- or at least the motivation for entering - 35 -
into tenancy arrangements -- appears to be based on the existence of incomplete or imperfect markets. If entrepreneurial and management skills were divisible, and if markets existed for these skills, those possessing them could obtain returns from them without entering into a tenancy contract. Similarly if markets for agricultural information and know-how were well established, landowners could obtain these things without leasing out land. As these markets develop, skills and information become "tradeable inputs" and can begin to play an important part in farming (as in the United States, for example).
Tenancy and Transaction Costs
Different types of tenancy arrangement not only yield different benefits but have different enforcement and negotiating costs. Cheung (1969) argued that these costs were higher under sharecropping than fixed wage or fixed rental arrangements and implicitly assumed that fixed contracts had no negotiation costs.38/ Whether this is so is not clear. Certainly the monitoring and supervision costs of sharecropping contracts would in principle seem likely to be higher than those for a fixed rental. By comparison with farming with hired labor, however, sharecropping would seem to have the advantage.
Datta and O'Hara (1980) point out that as long as there is an imbalance between the ownership of land and labor, some form of tenancy must result. Each form involves some "inefficiency" produced by the transaction costs of enforcing and monitoring the contract.3-9/
"when labor is hired at a fixed wage rate, labor shirks in both quantitative and qualitative terms. When land is leased-out at a fixed rent the tenant has little direct incentive to maintain the soil fertility, irrigation facilities and other durable assets attached to land. On a share contract where the tenant receives a share of the total output, both problems are present, but each in a lesser degree than under the fixed payment contract... The degree and character of monitoring - 36 -
however vary across contract types from continuous and detailed in the case of fixed wage contracts where the landowner works alongside the laborer, to infrequent and "after-the-fact" for many fixed rent contracts." (p.70.)
The preferred type of tenancy contract should, of course, be the one that minimizes these costs. But assessing them is a complex task and depends on agronomic conditions, types of crops grown, the characteristics of the parties to the contract, and the institutional arrangements under which they operate. It is difficult to make valid generalizations about which type of contract has the lowest transaction costs. Datta's and O'Hara's analysis implies that, as sharecropping is widely observed, it must often be the best form of arrangement for lowering transaction costs.
Tenancy, Indivisibilities, and Economies of Scale
There are many indivisibilities in farming, especially for the small farmer. One important example in South Asia is the availability of draft power, in the form of a pair of bullocks.AP/ Since the rental market in draft animals is very A41/ poorly developed- , those with some land but without draft power may decide to solve the problem by leasing out the former to others who possess the latter. Contrariwise, small farmers who own draft animals but have very little land42/ may find that the best way they can use their indivisible input of draft power is to rent in additional land. Both of these kinds of situations are commonly observed in South Asia; indeed, the possession of draft animals is often an important criterion for being able to rent in land.43/ Potential tenants who own animals can gain access to land, while the less fortunate cannot even enter the land lease market as potential tenants.
Indivisibilities also imply economies of scale, and wherever such economies are substantial -- as when large-scale farm equipment is involved -- there is a strong tendency for existing cultivators to lease in more land or to take leased-out land back - 37 -
from tenants for self-cultivation.
Finally, diseconomies of scale are also cited as a reason for the wide prevalence of tenancy in South Asia. Given the small size of many individual parcels of land and the fragmentation and geographically dispersed distribution of ownership holdings in the subcontinent, extensive leasing in and leasing out may be the only effective way of organizing cultivation without running into enormous supervision costs. Owners will often lease out distant plots and lease in conveniently located ones. This use of tenancy represents an indirect (and generally desirable) form of land consolidation. This short overview has tried to show that tenancy arrangements in general, and sharecropping contracts in particular, can serve a variety of useful purposes in an environment in which markets for land, labor, credit, information, and entrepreneurial and managerial skills are underdeveloped and imperfect, and in which risk is endemic, transaction costs are high, and indivisibilities and fragmentation of holdings present major problems. Under these circumstances, sharecropping, which appears economically inefficient in a 'perfect' world, becomes a realistic second best solution. "Share contracts must be understood as an imperfect response to incomplete and imperfect markets caused by fundamental imperfections of information and resulting transaction costs." (Jaynes, 1980).
Thus, although policymakers have been prone to assume that tenancy is inefficient, it may not in fact be so in the context of South Asia complex but imperfect agricultural markets. Given these complexities, agrarian reform also becomes a more complicated matter. Attempts to limit sharecropping arrangements, or to substitute money rental contracts for them -- or to abolish tenancy by fiat -- are bound to be unproductive. For agrarian reform to be successful, the advantages offered by tenancy contracts must be understood, and alternative institutional arrangements must be devised to meet the needs they currently serve. In the absence of such an approach, reform will be misguided and ineffective. - 38 -
CAN TENANCY BE EFFICIENT?
In the previous section I showed that share tenancy, although in theory a "second best" arrangement for handling economic relations between owners of land and owners of labor, might be the most appropriate type of contractual relationship in rural economies beset by rigidities and imperfections. Nevertheless, many economists and policymakers tend to perceive it as economically inefficient. The received wisdom is well expressed in Ladejinsky (1965):
"The principal features that characterize the tenants' plight are stagnating agricultural economies; scarce land yet concentrated in a few hands; low yields but high rents; poor families but expensive farms; too many people living on too little land and small holdings getting smaller under rising pressure of population with no alternative occupation; inadequate tools, indebtedness and usury, malnutrition and illiteracy; keen competition among the peasants seeking scarce land in the hands of the relatively few who have it; absence of any chance for advancement within agriculture, little margin for risk taking; and subsistence farming with a lack of dynamic or regenerative capacity...
An exploitive system of tenancy prevails in most countries of the underdeveloped world. Rack renting and insecurity of tenure are its hallmarks... The incentive to improve the land and produce more does not exist, nor is there a place for creative technology on a wide scale. To the extent that these conditions preclude a measure of equalization of opportunities, they stifle progressive impulses and tend to underwrite stagnation in agriculture..." (p. 355).
"Crop sharing is seen as making economic sense only where there is a danger of recurring crop failures. Barring such exceptions, it may be said that part of security of tenure should be fixed monetary rent" (p. 370).
"Just as insecure and difficult tenure conditions make for low productivity... ownership... makes for higher productivity... ownership is the magic that turns sand into gold. It flows from the idea that investments and productivity are promoted through the incentive of private individual ownership of land. - 39 -
... if this (ownership) is absent all else may prove ephemeral, including security of tenure and rent reduction...This explains why in the final analysis the issue is one of land for the landless" (p. 350).
Most of the relevant legislation in South Asia has been predicated on these and similar views. Public policy (and academic argument) has stressed the need to enforce ceilings on land holdings, provide security of tenure, reduce rents or crop shares, confer ownership rights on tenants, convert rents in kind to cash rentals, prevent the ejection of tenants, and restrict landlords' rights to take back land for self cultivation. How accurate is the negative view of tenancy, and how appropriate are the policies which flow from it? In the remainder of this chapter I will discuss whether tenancy can be efficient, and whether it represents a barrier to innovation. Chapter 8 will take a closer look at past legislationon tenancy and the problems and prospects of "tenancy reform".
Production is said to be efficient when, using a given technology, no reallocation of available resources between different uses or between different participantsin the production process could increase total output. The view that tenancy is inefficient has a long history, going back at least to Adam Smith44/ but it is Marshall who is most often cited as the authority for the poor opinion in which tenancy is held. In Marshall'swords:
"For when the cultivator has to give to his landlord half of the returns to each dose of capital and labor that he applies to the land, it will not be in his interest to apply any doses the total returns to which is less than twice enough to reward him. If then he is free to cultivate as he chooses, he will cultivate far less intensivelythan on the English plan; he will apply only so much capital and labour as will give him returns more than twice enough to repay himself: so that the landlord will get a small share even of those returns than he would have on the plan of a fixed payment." (Marshall,"Principles", 9th Ed. p. 536). - 40 -
The implications are clear. The marginal product of variable inputs is higher (and exceeds marginal costs) under share rent than on fixed rent or owned land; the labor/land ratio (intensity) as well as the output per acre will be lower under share tenancy. Thus production will be inefficient.
But even classical writers, and Marshall in particular, were aware of the fact that most of the defects in share tenancy were a function of how it was practiced in a given context, and that there were conditions under which it could operate efficiently.
Marshall also suggested (in his side notes) that "if the control of the landlord is slight the cultivation is poor, but if it is effective the results may not be very different from those on the English plan", and that "if the tenant has no fixity of tenure the landlord can deliberately and freely arrange the amount of capital and labour supplied by the tenant and the amount of capital supplied by himself to suit the exigencies of each special case.1'45/ Thus if the landlord could (i) evict his tenants at will, (ii) control and supervise a tenant's use of inputs, and (iii) share in input costs, sharecropping would be as efficient as a fixed-rent system -- as Marshall in fact argued that it was in the America of his time. Indeed he felt that these changes would "infuse new life into what a little while ago was regarded as a decaying system.'
Since Marshall's day an enormous amount has been written on tenancy. I shall not attempt to summarize it here, but will rather try to examine some of the available empirical evidence on 47 efficiency.4- Efficiency is difficult to define and measure. Unfortunately, such comparative data as exist -- e.g., on input intensity or output per unit of area on holdings that are sharecropped and on others cultivated under different kinds of tenurial arrangement -- are inconclusive or based on inappropriately small samples, and few empirical studies are completely satisfactory.
The available evidence that looks at the intensity of input - 41 -
use and output per hectare on sharecropped and owner operated farms is mixed, although the bulk of the evidence suggests few differences in efficiency. Several studies in India document the fact that tenancy has no adverse effects on efficiency. These include studies in Gujerat by Vyas (1970), in Andhra Pradesh by C.H.H. Rao (1971), in West Bengal by Dnivedi and Rudra (1973), Parthasarathyand Prasad (1978) in Andhra, Bliss and Stern (1979) in UP, Jabbar (1977), Hossain (1977), and Zaman (1973) in Bangladesh and Ahmed (1974) in West Punjab in Pakistan. Studies by Bhardwaj (1974) in Maharashtraand Chattopadhyay(1979) in West Bengal suggest the opposite, however, while studies by Bagi (1979a, 1979b) in Haryana provide mixed findings.
A problem with a number of these studies is that they do not control for farm size, raising the possibility of confounding differences due to size with those due to tenancy, particularly where tenancy and farm size are correlated. Chakravartyand Rudra (1973) carefully controlledfor farm size, and used data from West Bengal, Andhra and Punjab to suggest that there were in general no marked differences between tenant and owner operated farms except in the smallest size groups (0-5 acres). They concluded:
It would seem that the generallyheld idea about tenant farm economic performancebeing worse than that of owner farms might be valid when the comparisonis confined to small sized farms, but not so when medium or big farms are thought of. Obviously the lessor and the lessee have between them enough of resourcefulnessto overcome the factors that are supposed to contribute to the tenant farmers inefficiency."
Their finding has important implications since, as I have seen, the share of tenant area accounted for by farms of less than 5 acres is very significant (over 50%) in many states in India (see Table A.2 in the annex) and in Bangladesh. Parthasarathyand Prasad (1978) and Hossain (1977), however, found that size and tenure had no impact on resource use or productivityand hence efficiency. - 42 -
Differences between farms may also arise from factors other than size. Access to credit and markets, differences in land quality, and risk aversion come readily to mind. One way of controlling for these sources of variation is to examine the differences between inputs and outputs per acre on owned and leased land operated by the same farmer. Bell (1976) did this in Bihar; he found that input use, intensity and yields were higher on owned land than on leased-in land and concluded that sharecropping was inefficient. Hussain (1977) also found differences in resource use between owned and leased-in land in Bangladesh, but Surivedi and Rudra (1973) in their study in West Bengal found none.
That empirical "evidence" of this sort is inconclusive is not surprising because the enormous diversity in agronomic, market and tenurial environments makes it difficult to control for the confounding influences of a variety of sources of variation in farm performance -- especially when many of these sources are highly correlated. Since a conclusive test may not be possible, I will have to examine supplementary evidence. I therefore turn to examining whether factors of the kind identified by Marshall can in fact be used to make tenant farming efficient.
Johnson (1950) set out the kinds of arrangements that landlords and tenants might undertake in practice to make sharecropping operate reasonably well. He mentioned three techniques available to the landlord for enforcing efficient cultivation: (a) the landlord might describe in the contract in great detail what the tenant was required to do -- cropping patterns, cultivating practices, and levels of inputs to be used -- i.e., specification of inputs; (b) the landlord might contribute to the costs of inputs, thereby inducing the tenant to apply them more intensively, i.e. cost-sharing; (c) the landlord might grant only short term leases, so that he could discontinue a lease if production was less - 43 -
efficient than under an alternative contract; -- i.e, limiting the duration of leases. To the extent that these techniques are used, they should in theory make operating a sharecropped holding more like owner cultivation or tenancy under a fixed cash rental system, and thus more "efficient". Any tendency for contractual arrangements to move from sharecropping to cash rentals should also in principle improve efficiency. What is the evidence on these points from South Asia?
Specification of Inputs
Sharecropping has been deemed to be "inefficient" because, under the terms of a share contract, the tenant has insufficient incentive to optimize the use of resources on the land he farms. If, however, a landlord is in a position to specify and enforce an efficient pattern of resource use on his tenants' land, this difficulty can be overcome. The empirical evidence on the incidence of landlord control of this kind is mixed.
In some parts of India, tenants apparently enjoy considerable autonomy. Rudra (1975) and Bhardwaj and Das (1975) report that tenants in West Bengal and Orissa respectively make most decisions about cultivation. This is also true in the Indian Punjab and Haryana (Kahlon and G. Singh 1973, and Lakshminarayan 1973). Tenants' independence of action seem to be linked to the extent of their assets (land, tools, animals) and managerial skills -- and possibly to the cost to the landlord of enforcing a specified pattern of resource use.
In other areas, however, landlords seem to be deeply involved in input and output decisions, especially once HYVs are introduced. Share contracts often involve agreements on the inputs to be used, their quantities, how input costs are to be shared, and even the cropping pattern to be adopted. Parthasarathy and Prasad (1978) noted that, in West Godavari in Andhra Pradesh, when modern varieties of rice were introduced, - 44 -
"Decision making more and more shifts to the landlord. He e i es on the variety to be grown, supplies a major part of the capital for nontraditional inputs and provides the finances to the tenant." Bardhan and Rudra (1980) noted that landlords did not confine themselves to the supervision of harvesting, but got involved in decisions relating to what crops to grow and what inputs to use.48/ Zaman (1973) notes that absentee landowners are rare in Bangladesh and that most landlords closely supervise the work of their tenants. This close supervision and cooperation has in some cases evolved into an arrangement whereby costs and outputs are equally shared (see next subsection). In Pakistan's North West Frontier Province, Albrecht (1974) notes that "decisions concerning cropping patterns are in principle made by the landlord", but "better than average tenants are usually given a wide latitude in this sphere." Nevertheless, landlords controlled the purchase of yield-increasing inputs, the crops to be grown, and the costs to be shared. This system of extensive landlord involvement meant that "the quality of management of individual landlords (determined) the success or failure of tenant agricultural systems."
It thus appears that whether under traditional sharecropping or under a system that is adapting to new technologies, many landlords are interested in how tenants use their land and what inputs they use. On the other hand, when landlords consider that tenants have adequate skills and assets for the technologies they use, the tendency is to leave them alone. In either case the system seems flexible and capable of promoting efficiency.
Cost-Sharing
Contractual arrangements specifying of inputs may be expensive for landlords to supervise (and to enforce if tenants fail to meet the specified requirements). An alternative approach to promoting the efficiency of sharecropping is through cost- sharing by landlords and tenants. In formal terms, if a landlord's proportionate share of all variable input costs is the - 45 -
same as his share of the value of output, resource allocation will be efficient even with productionuncertainty (Bell 1976, Newberry 1974). How extensive is cost sharing, what costs are shared, and what is their relationshipto output shares?
Although no systematic data are available on the extent and nature of cost sharing arrangements,a large number of independent studies from different parts of South Asia suggest that cost sharing is not unusual and that its importance is increasingwith the modernization and commercialization of agriculture. In particular, landlords have been increasinglysharing in the costs of modern inputs -- fertilizers,pesticides, HYV seeds, and even land taxes and irrigation charges -- in proportion to their share of output. But not all inputs are shared. In most cases, tenants still supply all labor and draft power inputs.
India. Vyas (1970) reported that in Gujarat in the 1950s, tenants supplied family labor, bullocks, implements and seeds, while all other input costs were equally shared. Rudra (1975) reported that in West Bengal output was generally shared equally, but that shares of costs and by-products varied more widely. Generally, however, "the 50:50 cost-share is found to accompany most frequently the 50:50 crop share -- though non-matching cases are also not uncommon" (p. A60). He noted that the costs of human labor, bullocks, and plows were always the responsibilityof the tenant; irrigation costs were borne by landlords, while seed and fertilizer costs were shared (equally in a quarter of the cases). Parthasarathy (1975) reported cost sharing in the West Godavari district of Andhra Pradesh; C. H. Rao noted extensive cost-sharing in Kota (Rajasthan)and Karnal (Haryana), and found an association between crop shares and the incidence of cost sharing. Parthasarathyand Prasad (1978) found that landlords in Andhra Pradesh shared the costs of pesticides and fertilizersin proportion to their share of output. They noted that landlords' crop shares rose with the introductionof modern varieties -- with a majority of the landlords demanding a 2/3 share of output. - 46 -
Jodha (1979) reported wide variations in input and output shares in the semi-arid areas of Maharashtra and Andhra Pradesh. A tenant's share in both input and output was normally 50 percent, but the latter could rise to as much as 75 percent if mid-season difficulties increased the cost of cultivation. Input shares ranged from proportionate cost sharing to cases where tenants paid all costs. Tenants' input shares rose if owners provided credit or if tenants decided to use more costly inputs, but in the latter case so did tenants' output shares. Input and output sharing arrangements appeared not to discourage the adoption of new technology. Table A.9 in the annex shows the wide range of arrangements cited in Jodha's study.
Bardhan and Rudra (1980) using 1975-76 data from 334 randomly selected villages in four states -- West Bengal, Bihar, Orissa and Uttar Pradesh -- found that in two-thirds of all reported cases the landlord/tenant share ratio was 50:50. They found that tenants' crop shares tended to increase with the cultivation of HYVs or the use of fertilizers. But most significantly they noted "a remarkable association between the crop share and the incidence of cost sharing," with the landlord's share of output increasing as he shared in the costs. In West Bengal and Uttar Pradesh, cost sharing was more frequently observed in "advanced" villages where tubewells, chemical fertilizers, and HYV seeds were more widely used.
The same study found many variations in terms of who bore which costs. Traditionally, tenants provided labor and bullocks, while the landlord supplied land and paid irrigation charges. With the new technologies, tenants have tended to bear the costs of seeds and manure. The costs of fertilizers are borne equally; fertilizer use actually leads to cost sharing of other inputs. Finally, most but not all contracts show cost shares corresponding to crop shares, with the division close to a 50:50 split (see Table 8). Table 8
INDIA: ASSOCIATION BETWEEN COST SHARKS AND CROP SHARES IN SMARECROPPINGTENANCIES.
(Percentages)
West Bengal Bihar Orissa Uttar Pradesh Cost Shartng Cost Sharing Cost Shartng Cost Sharing
Docs Does Do-s Does Exists not Total Exists not Total Exists not Total Exists not Total exist exist exist exist
_ 2 3 4 5 6 _O _7 8 9 12 13
Tenant's share 98.5 0.5 100 65.2 34.8 100 96.2 38 100 less than 50X (19.0) (12.0) (15.6)
Tenant's share and 68.4 30.6 100 57.8 42.2 1)0 56.5 43.5 100 61.4 38.6 100 owner's share 50:50 (67.0) (86.5) (79.3) (81.8)
Tenant's share 10.4 89.6 100 33.3 66.7 100 16.7 83.3 100 0.0 100.0 100 above 50%. (14.0) (2.5) (20.7) (0.6)
Total 66.7 33.3 100 58.3 41.7 100 48.3 51.7 100 66.5 33.5 100
Note: The figures in brackets are the percentages of different crop shares.
Source: Bardhan and Rudra (1980). - 48 -
Cost sharing has become more prevalent where modern technologies have been introduced.4~9-/Ladejinsky (1965) reported that in Ludhiana district, Punjab, the cost of fertilizers was shared proportionately when HYVs were introduced. Randhawa (1974) reported that in Ferozepur, for each of the three years up to 1969-70, the costs of seeds and fertilizers were shared equally between landlords and tenants. Lakshminarayan (1973) noted that in Haryana the costs of modern inputs were equally shared following the introduction of new varieties. Similarly Parthasarathy and Prasad (1973) reported from West Godavari in Andhra Pradesh that the costs of fertilizers and pesticides were borne by the landowner in proportion to his share in gross output. An earlier study in the same region by Sen and Verghese (1960) showed that when HYV paddy was grown, the landlords provided modern inputs such as seeds, fertilizers, and pesticides; tenants' shares of the costs of these items were deducted proportionately from their output share at harvest.
The proportion of output kept by the landlord has tended to rise with the introduction of new HYV technologies. In Kota, Rajasthan, Bapna (1973) reports that increases in rents took the form of interest free loans to landowners, with the alternative being payment of two-thirds of output as rent. Lakshminarayan (1973) reported that share rents in Karnal, Haryana, were raised from one-third of output to 50 percent. In West Godavari, Andhra Pradesh, Parathasarathy and Prasad (1974) noted that rent payments of two-thirds of output were uncommon for tenants cultivating local varieties, but that landlords insisted on and obtained a two-thirds share if tenants chose to grow HYVs. On the other hand, W. Khan and V.B.R.S.S. Rao (1973) reported that rents in some districts did not change after the introduction of HYVs.
In regional terms, cost-sharing is more common in former ryotwari areas in the West, Northwest and South (Rao 1975). In these areas those leasing out land have relatively small holdings and the social structure has favored technological change. By contrast, cost-sharing seems to be very limited in former - 49 -
zamindari areas in the East where those leasing out are big landowners. For example in the Kosi area of Bihar where large land holdings still persist, available land and water are grossly underutilized, inefficiency is rampant, and cost sharing is nonexistent.
Pakistan. In the Pakistani Punjab, Naseem (1971) reports that sharecroppers generally pay 50 percent of their produce as rent; input costs are also shared equally except for the costs of seeds. Taxes are shared 50:50 but the cost of canal water is borne wholly by the landlord. In many areas where new wheat varieties are grown, the custom is for the landlord to bear all input costs as well as providing credit. Naseem notes that this kind of access to inputs through landlords can make tenants significantlybetter off than many small cultivators.
In the Peshawar region of the North West Frontier Province, most of the land is sharecropped,and landlords usually provide fertilizers and other yield-increasing inputs on credit until harvest (Albrecht 1974). The costs of fertilizersare not always shared in the same proportion as output, although they tend towards a 50:50 split when they are. Water charges are usually paid by landlords. The lack of extensive cost-sharing was attributed to the poor bargainingpower of tenants.
Bangladesh. Cost-sharing does not yet seem to be a widely reported practice. Zaman (1972) found that the majority of sharecroppers bore the entire costs of fertilizers in both irrigated and unirrigated areas. Irrigation costs seemed to be shared more often, with landownersoften paying all the irrigation costs. Jannuzi and Peach (1980), basing their observationson the much larger 1977-78 Land Occupancy Survey, found very little cost sharing. They reported that in both 1977 and 1978 less than 6 percent of tenant respondentsindicated that the owner of the land shared responsibility for the provision of fertilizers, pesticides, irrigation or seeds. Hossain (1977) also reported - 50 -
that landlords neither stipulated tenants' inputs in lease contracts nor shared input costs. Jabbar (1979), using 1973/74 data, noted that in Mymeningh, Rangpur, and Dinajpur "half crop sharing without sharing of inputs was the dominant form of rental arrangement." Zaman (1973) noted that although nearly all share leases were on a 50:50 basis, the sharecroppers bore the entire costs of cultivation -- except, curiously in some of the same areas examined by Jabbar, where he found that in 1969 the type of lease in which costs as well as output are shared equally by owner and tenant "is the more common practice." He showed, however, that the net marginal returns to fertilizer application were high enough to allow sharecroppers to make some money even if landowners did not share the cost, so that the type of lease was not a barrier to fertilizer use.
In summary, available evidence suggest that cost-sharing is on the rise in India, especially in areas where new agricultural technologies are being adopted. In other parts of the subcontinent, however, notably Bangladesh and Pakistan's North West Frontier Province, cost-sharing appears to be minimal. Even where the practice is widespread and growing, however, partial rather than full cost sharing is the rule; labor and draft animal costs are still borne by tenants. With traditional technologies, for which these items are major inputs, arrangements of this kind are likely to entail a less than optimal use of inputs and consequent inefficiency. By contrast, where the new technologies are gaining ground and the costs of purchased inputs -- seeds, fertilizers and water -- are shared in proportion to output shares, efficiency is served.
Limits on Duration of Leases
Short leases can be used to enforce efficiency (Johnson, 1980, Newberry, 1976a), because landlords can and do evict inefficient tenants and retain the more efficient ones. The threat of eviction is also an indirect way of enforcing - 51 -
contractual provisions such as intensity of input use. Are tenancy contracts in fact relatively short in South Asia, and how frequently do landowners change tenants rather than renewing leases?
Available evidence, though fragmentary, suggests that the average duration of leases is indeed short -- usually a crop year -- and that this tendency is being reinforced especially with the introductionof new technologies.
Rudra (1975) reported that in West Bengal share contracts were predominantlyannual, although some were for longer periods of 2-4 years. In most cases, however, contracts were oral and the tenant had been with the same owner for 5 years or more. Eviction of tenants did occur, but usually took place because the owner wanted to cultivate the land himelf, and not in order to give land to another tenant. This is consistent with the view that sharecropping in West Bengal is efficient; otherwise there would have been evictionsof inefficientsharecroppers, given the short- term nature of most contracts.
Bhardwaj and Das (1975) report a growing tendency in Orissa towards shorter contracts, in fixed rentals as well as among sharecroppers. They suggest that this trend may reflect the desire of landlords to capture the benefits of marginal growth in productivityby constantly raising rents to new tenants.
Bardhan and Rudra (1980) found that most tenancy contracts ran for a year (nearly 76 percent of the total in West Bengal, 53 percent in Bihar, 98 percent in Orissa, and 78 percent in Uttar Pradesh). Others were for even shorter periods; the practice of leasing for specific crops for a specific season only was on the increase (a tendency also noted in Orissa -- see Bhardwaj and Das 1975).
The practice of leasing land on a seasonal basis is apparently also widespread in the semi-arid regions of Maharashtra and Andhra Pradesh, in both irrigatedand unirrigated areas (Jodha 1979). In a group of six villages, contracts for between 70 and - 52 -
98 percent of the area leased out were for one year or less. (Most of the tenants were large cultivators while landlords were smallholders.) Longer-term leases were confined to absentee landlords, small farmers leasing out to cover their indebtedness or landlords helping their aged or disabled kin. Moreover, most long-term leases involved fixed rental payments rather than sharecropping. Jodha felt that tenancy was used as a device for the periodic readjustment of resources -- land, water, labor -- in a highly uncertain environment and that the land market operated mainly through tenancy rather than sales or purchases. Bardhan and Rudra (1978) came to the same conclusion on the basis of their studies in West Bengal and Bihar.
In Bangladesh, most share tenancies are oral and of relatively short duration (Jannuzi and Peach 1980). Over a quarter of all tenancies in 1978 were for one year or less and another 35 percent were for 2-3 years. Surprisingly, however, one-third were for 15 years or more. Evictions were frequent, and "sharecroppers are shifted frequently from plot to plot, season to season.
Might this "insecurity of tenure" prevent sharecroppers from cultivating their holdings more intensively or restrict their productivity? Hussain (1977) found that shorter leases were correlated with greater intensity of cropping. He also found that although productivity was lower on sharecropped land, the productivity differences were the least for tenants with very short tenure. He concluded that "the fear of eviction can restrain the tenant, although only partly, from cultivating the land less intensively."
Zaman (1973) notes that sharecroppers in Bangladesh have no opportunity to develop occupancy rights on their plots, because landowners rent their land to new sharecroppers every year. He considers that this lack of occupancy rights may lead sharecroppers to lack incentives for investing in inputs like water, improved seeds and fertilizers.50/ - 53 -
Leases are becoming shorter in Pakistan, especiallyafter the introductionof wheat HYVs (Naseem 1979). Albrecht (1974) reports that landlords in the Peshawar region choose their tenants with care; possession of bullocks, adequate labor, and diligence are important factors in selection. There are no written contracts, leases are usually long term (often for generations) but "weak tenants" are liable to be dismissed.
It thus appears that the ability to evict or change tenants is used in Eastern India, Bangladesh and Pakistan as a means of ensuring greater efficiency. On the other hand, "reform measures" designed to provide greater security for tenants have had a perverse effect. Leases have been shortened and the turnover of tenants has risen -- but the motivation has been landlords' fear of losing their holdings rather than the promotion of greater efficiency. Finally, in areas where markets are underdeveloped and technologicalchange has had a minimal impact, the traditional system of long leases and a patron-client relationship between landlord and tenants still survives, with little evidence of shortening of leases to ensure efficiency.
Transition to Fixed Rent Tenancy
Finally, a trend away from sharecropping and toward fixed rent tenancy also tends to promote efficiency. There is some evidence that the advent of irrigation and new HYV technologies has led to the displacementof share tenancies by fixed-rent (cash or kind) contracts. In the Ferozepur district of the Indian Punjab for example, the area under sharecropping fell from 33 percent to 6 percent between 1954-55 and 1969-70, while the area under cash rentals increased (Rao 1971). Another study covering the same area shows that the area under cash rentals rose from 32 percent in 1967-68 to 74 percent in 1971-72 (Kahlon and G. Singh 1973). Where the impact of the green revolutionhas been minimal, however, sharecroppingsystems continue with full vigor. In some cases there has even been a swing towards share tenancy -- in West - 54 -
Godavari, for example, as reported by Parthasarvathy (1973).
Where cash rent systems have become prevalent, particularly after the introduction of HYVs, the rental rates have risen dramatically. Lakshminarayan (1973) reports that cash rents in Haryana increased 2 1/2 times -- from Rs. 100 per acre in 1966-67 to Rs. 250 in 1971-72. The higher rents reflect an increasing demand for land in view of dramatically rising land productivity and a fall in the available supply.
Bhardwaj and Das (1975) reported that fixed cash rentals were displacing traditional sharecropping in Orissa, especially in irrigated areas where HYVs are extensively cultivated. Bardhan and Rudra (1980) also report an increase in the incidence of fixed-rent tenancies in some areas, and for some crops. Over 90 percent of the cases they investigated in West Bengal and Bihar involved the replacement of sharecropping by fixed tenancy, but in Orissa and Uttar Pradesh all or nearly all tenancies were sharecropped. Finally, Jodha (1979) reports that in the semi-arid areas of Andhra Pradesh fixed-term transactions were quite extensive (76 percent of all leases in one village). But these mainly involved absentee landlords and tended to be long-term leases.
The picture that emerges from the preceding review of the available evidence does not support the view that tenancy is an irremediably inefficient way of organizing production. On the contrary it appears that the institution has evolved in the direction of eliminating inefficiencies traditionally associated with it. Together with the declining general importance of tenancy over time, these findings suggest the existence of tenancy per se is unlikely to be a major impediment to the efficient allocation of resources or to the transformation of agriculture in South Asia -- provided that new technologies can be delivered, adopted and widely dispersed, and that the necessary inputs reach tenants on time and at prices that are remunerative for them. But will tenants in fact adopt the new technologies, will - 55 -
their landlords sanction their adoption, and, once they are adopted, how well will tenants fare? I turn to these issues in the next section.
TENANCY AND NEW AGRICULTURALTECHNOLOGIES
Improvements in the livelihood of the rural poor in South Asia depend critically on raising the productivity of small farmer agriculture. Since so many small farmers cultivate some or all of their holdings as tenants, it is important to know whether tenancy is compatiblewith the spread of the new agriculturaltechnologies or whether higher productivity among small farmers cannot be achieved without radical structural change in landholding systems in the subcontinent. This section examines three broad questions: (i) Is tenancy a barrier to the spread of more productiveagricultural technologies -- more specifically,what is the evidence on small tenant farmers' adoption of HYVs and their use of the nutrients the new varieties need? (ii) In cases where new technologies have been adopted, have tenants been able to share in the gains from higher productivity? (iii) Finally, what impact are the new technologies likely to have on tenancy as an institution?
Adoption of HYVs and Use of Nutrients
As with the question of efficiency, there is an extensive literature purporting to show that sharecroppingarrangements per se represent a major barrier to innovation. Proponents of this view argue that landlords find it economicallypreferable to keep tenants in a quasi-feudalstate of permanent debt and dependence, rather than to encourage the use of new technologies, because adoption of innovative techniques will reduce tenants' indebtedness. A landlord's consequent loss of interest income from money they lend to tenants, it is asserted, may well be greater than his gain from his share of the increase in output that the new technologies can provide, and will in any event - 56 -
reduce the landlord's control over his tenants. A succint exposition of this thesis is given in Bhaduri (1973):
technological improvements which raise the productivity level of the kishan [sharecropper] become undesirable to the landowner to the extent that they increase the kishan's available balance of paddy in relation to his consumption level so as to reduce his requirement for consumption loans. For it weakens the system of semi-feudalism, where economic and political power of the landowner is largely based on his being able to keep the kishan constantly indebted to him. Further, since the semi-feudal landowner derives his income both from property right to land and usury, he will be discouraged from introducing any technological improvement so long as the gain in income from increased productivity brought about by technological change falls short of his loss in income from usury due to a reduction (or complete elimination) in the level of consumption-loan required by the kishan. ...the semi- feudal landowner... is rationally put off from small improvements... which perpetuate indebtedness but reduces his overall income, while he is also put off from big improvements because it makes the kishan free from perpetual debt and destroys the political and economic control of the landowner over his kishan, even though on an exclusively economic grounds it may be profitable to him. This... leads me to argue that the semi-feudal production relations operate as a barrier to the introduction of improved technology that results in higher output per kishan" (pp. 135-136).
Similarly, Scandizzo (1979) has argued that landlords will be reluctant to adopt land-augmenting innovations if interest earnings, and price margins (due to landlords' marketing of tenants' output) are high.
The "semi-feudalism" hypothesis has been questioned by a number of analysts, but it remains a powerful and widely-held view.511 As in the case of the debate over efficiency, it is not our intention to review the arguments on both sides in detail. It is worth noting, however, that available empirical evidence from South Asia does not support the semi-feudal paradigm -- even for East India, on which much of the theorizing and anecdotal information in support of the paradigm is based. For example, - 57 -
the most recent and comprehensive empirical survey for India (Bardhan and Rudra 1980) found that landlords took a keen interest in investment on their tenants' land and shared in the cost of new inputs so as to encourage tenants to use them. On the question of the landlord's role as a supposedly usurious moneylender, uninterested in new technologies and concerned only with obtaining exorbitant interest income from tenants, this study found that many landlords did in fact give advances to their tenants for new inputs such as seeds or fertilizers or actually advanced these inputs in kind to be repaid with crop shares. Furthermore, over half of these loans were reported as being interest free. "All this is a far cry from usurious landlords uninterested in productive investments." (Bardhan and Rudra, 1980, p. 292).
In commenting on the semi-feudalism argument the same study concludes:
"In the literature on production relations it has become an uncritically accepted habit of thought to equate tenancy with feudalism and indebtedness by poor peasants to their landlords with debt bondage... In our surveyed villages unpaid and obligatory services by the tenant for the landlord is quite uncommon -- even less common is the phenomenon of a tenant being tied to any particular landlord. The landlord quite often (though certainly not always) gives production loans to the tenant, shares in the costs of the needs and fertilizers, etc., participates in decision making about these inputs and in general takes a lot of interest in productive investments on the tenant from (as well as on his self cultivated land) quite contrary to the prevailing image of rentier or usurious landlords." (p. 292). "Our survey results... suggest that the institution of sharecropping as it has been evolving in India does not at all conform to the stereotype of landlord-serf relationship. On the contrary... the institution has been adapting itself more and more to the needs of increasing production and profit by entergr2sing farmers, with owners and tenants." (p. 290).52
Thus at the very least it appears that the semi-feudal model is an imperfect guide to the complex reality of tenurial relations - 58 -
in South Asia, or to the nature of the connection between tenurial systems -- especially sharecropping -- and innovation. If anything, the empirical evidence discussed so far in this and the previous section suggests that many landlords may actually encourage their tenants to adopt new technologies and to use the associated inputs. In the absence of a general theory that squares with reality, we must turn to a thorough examination of such empirical data as exist. The available evidence on the comparative adoption of HYVs and use of fertilizers by sharecroppers and other groups is reviewed in the remainder of this section.
There is extensive evidence that farmers who hold some or all of their land as tenants rather than as owners are at least as willing as pure owner-cultivatorsto adopt new HYV technologies. Von Blackenberg (1972) found that "progressive" farmers in the Punjab leased in 65 to 67 percent of their land, while "average" farmers leased in much less (46 percent). Mishra and Tyagi (1972) in their study of Kota district in Rajasthan, found that there was a higher proportion of farmers who leased in some land among those who adopted HYVs than among those who did not, while pure owners were more likely to be "non-adopters". Mukherjee (1970) found no significant difference between owners and tenants in adopting HYVs; he also found that tenant farmers used more fertilizer per unit of area than owners (see also Vyas 1976). C. H. Shah (1972) found a similar situation in Maharashtra and Gujarat.
On the basis of data collected for the Plan Evaluations Organization (PEO) of the Indian Planning Commission, Lockwood, Mukherjee and Shand (1971) and Vyas (1976) concluded that the rate of adoption was not significantly different between owners and tenant farmers. They did find that in most cases the initial adopters were likely to be enterprising large or middle farmers; after a lag of two to three years, however, no significant differences remained between the adoption rates of large, medium, and small farmers -- and the lagged effect was more a matter of farm size than of tenurial status. - 59 -
In a recent and careful study of the adoption of HYV paddy in North Arcot, Tamil Nadu, N. Chinnappa (1977) reported that adoption rates generally increased with size of operational holding, but "age of cultivator, his tenure status and caste did not seem to influence adoption in the area, whereas literacy exerted a positive influence."53/ Harris (1977), in a detailed village study in the same area, actually found that tenants who adopted HYVs used more intensive farming methods and obtained higher yields [than owner-cultivators]although his sample size was too small to draw any significantconclusions.
There is evidence from microeconomicsurveys that tenants may be less likely to use nutrients than owner-cultivatorsin some areas. A 1980 study by the InternationalFertilizer Development Center (IFDC) examined nutrient use, HYV adoption, and irrigation in selected areas of Bangladesh, (a) by size of ownership holding and (b) on owner-operated holdings and the rented portion of holdings consisting of both owned and leased-in land. Table A.11 in the annex shows that nutrient use, the percentageof land under HYVs, and the percentage of irrigated land are all lower on rented than owned land. But this finding is confused by a "size effect", since the average size of rented holdings is only one-third of that of owner-operated holdings. Table A.12, however, corrects for this bias by giving data on nutrient use per unit of area by size of owned and tenanted holdings. Nutrient use is still significantly lower on leased-in than on owner-operated land (although it is very high on the holdings rented in by the landless -- possibly as a result of cost-sharingor landowners' control of inputs on these holdings). The difference in intensity levels between owned and rented-in land seems to be in line with Bell's (1977) finding in the rice region of Bihar, that fertilizer use on mixed holdings was higher on the owned than the tenanted portion of the cultivated area; thus the possibility remains that tenancy may be correlated with lower levels of fertilizer use in some areas.
Support for this hypothesis (but not for the broader one that - 60 -
tenancy is negatively correlated with innovation in general) can be found in a study (Haidar 1977) carried out in selected areas of the Pakistani Punjab. As Table A.13 in the annex shows, the average size of tenant holdings is not significantly different from that of ownership holdings and tenant farmers match or outperform owner-cultivators in terms of cropping intensity, bullock use, labor use, percentage of area fertilized, irrigation, and tubewell use; the tenants' nutrient use per acre, however, is much lower than the owner-occupiers'. Whether this phenomenon is due to the former group's inability to obtain fertilizers or some other institutional cause is not known, but it is borne out by the lower average yields experienced on tenant holdings, as shown in Table A.14 in the annex._4/
The results of an even more extensive survey of over 1200 irrigated farms in the Pakistani Punjab and Sind, carried out jointly by Pakistan's Water and Power Development Authority (WAPDA) and the World Bank, are available for the crop year 1976/77. Analysis of the data by size of holding and tenancy status reveals no systematic positive or negative relationship between tenancy and (i) cropping intensities (Table A.15 in the annex), (ii) yields for HYV wheats (Table A.16 in annex) and (iii) fertilizer use per acre on areas planted to HYV wheats (Table A.17 in the annex), once size of holding is held constant. These and Haidar's findings suggest that, at least in Pakistan, tenancy has not been a significant barrier to innovation in general.
Finally, information from the extensive Additional Rural Income Survey (ARIS), carried out by the National Council of Applied Economic Research in 1970/71 and using a sample of over 2800 farms from all states, provides a comprehensive basis for looking at the relationship between tenancy, adoption of HYVs, and nutrient use.
Table A.18 in the annex gives the all-India data on the percentage of farmers who have adopted HYV seeds (mainly wheat and paddy) by size of holding and tenancy status. Although the rate - 61 -
of adoption seems to be positively correlated with size of holding (except among tenants), there seems to be no systematic relationshipbetween tenancy and adoption.
Turning to nutrient use, Table A.19 gives data on nutrient use per acre of fertilized land, for all crops. No systematic differences emerge in nutrient use, either by farm size or tenancy status. On small holdings of less than 7.5 acres, however, pure tenants systematically use more nutrients per acre than pure owners, who in turn use more nutrients than part-tenants.
Might these national figures conceal regional differences? Might tenancy impede innovation in Eastern India and Bangladesh (where small sharecropperspredominate) but not do so in Northern, Southern and Western India or in Pakistan, (where tenants are larger and partial cost-sharingand cash-rentalsystems seem to be emerging)?
To test this possibility, I examined regional breakdowns of the data for nutrient use by size of holding and tenancy status. They revealed no systematic relationship between tenancy and nutrient use, once size of holding is controlled for. Thus the available evidence on tenancy, HYV adoption, and nutrient use in South Asia suggest that (i) there is no systematic relationshipbetween tenancy status and either adoption of HYVs or nutrient use in most of the subcontinent;and (ii) to the extent that any evidence could be found of a negative relationship, it was mainly confined to nutrient use in Eastern India and Bangladesh.
But these regions are also the ones in which market imperfectionsabound and landless sharecroppersor small tenants have the most limited access to modern inputs. Thus the causal question remains: if tenants lag in adoption of HYVs or nutrient use in these areas, does the problem lie in tenancy arrangements as such, or in other economic and social constraints? One is finally led to agree with Schutjer and Van der Veen (1977) when they write: the available literature suggests that the more - 62 -
important tenancy links may be indirect, that tenancy will be found to influence adoption and the efficiency of application of inputs indirectly through variation in the access to credit, purchased inputs and perhaps product markets and technical information." Thus it seems reasonable to conclude that tenancy per se is unlikely to be a constraint on the adoption and diffusion of the new technologies, but that a successful and widespread transition to HYV cultivation by small tenants requires that they have adequate and timely access to modern inputs.
Do Tenants Gain from New Technologies?
The preceding sections have discussed two kinds of objections that are often raised against share tenancy -- that it is economically inefficient, and that it inhibits the adoption of new agricultural technologies. I have argued that neither of these propositions is confirmed by the balance of available evidence. But critics of tenancy often also advocate "reform" on a third ground -- that the distribution of benefits from cultivation is inequitable, with gains going disproportionately to landlords rather than tenants. In particular, it is asserted that the benefits of HYV adoption need to be redistributed so that tenants share more fully in them. What is the evidence on current patterns of distribution, and do the data suggest a need for radical change?
A number of studies have presented data to suggest that the benefits from HYVs have been unequally shared and have worsened rural income distribution.55/ For example, Parthasarathy and Prasad (1974) state that "data relating to changes in profits from rice cultivation and changes in levels of living confirm that the proportion of households reporting increases in profits from rice cultivation is greater among big cultivators and owners... the evidence suggests that given an unequal distribution of land, the new technology sharpens inequalities and makes relative distribution of incomes much worse since more than 70 percent of - 63 -
the value per hectare that is added went to owners of land while wage earners got less than 10 percent."
Unfortunately,comprehensive and systematic studies designed specifically to look at the distributive impact of new HYV technologiesdo not exist for South Asia. Much of the available information is based on anecdotal evidence and incomplete analysis. The effects of the new technologiesare often confused with the consequences of other changes that have occurred simultaneously,and the interplay of causal relationshipsis not clearly understood. That the introduction of HYVs does not necessarily worsen the position of the poor is shown by a recent study by Ranade and Herdt (1978) using Phillipine data from Laguna. They conclude that:
"the operators (mainly tenants) had an increase of nearly 30% in their real incomes in the wet season and 25% in the dry season... Averaged across seasons the increase in absolute earnings amounts to 40% for hired labor, 25% for operators and 10% for landlords," (p. 91). "Changes in technology did not work to the disadvantage of either hired labour, or in most cases operators, but if anything, worked to the disadvantage of landlords." (p. 97).
Another study (Hyam and Herdt 1978), which also examined Phillipine data, concluded that technological change "promotes more equal distribution of incomes through the downward pressure exerted on prices and hence on the incomes of those farmers with a large marketed surplus" (p. 300). The authors cautioned,however, that these beneficial income distributioneffects might be masked if technological change took place when income disparities were increasing for other reasons and the numbers of the landless poor were growing rapidly. In South Asia, population pressures have raised food demand by more than the advent of HYVs could raise supply; food prices have therefore risen and income distribution has worsened, because better-off farmers have more food to sell than the poorer ones. (Of course, in the absence of the green revolution, the increases in food prices and income disparities - 64 -
would have been even greater.)
Given the complexitiesof separating out the various causal influenceson trends in income distribution,it may be more useful to assess the relative gains accruing to different groups from new agriculturaltechniques by trying to quantify the direct benefits realized from adoption by tenants and landlords. The best available data are presented below.
India. The results from an analysis of the NCAER 'ARIS' survey in 1970-71 are shown in Table A.20 in the annex. The table shows the incomes of those who adopted HYVs as a percentage of the incomes of those who did not, broken down by size of farm, tenurial status, and region. The following generalizationsemerge: -- Pure tenants seem to have gained significantly in all size groups, except the very smallest (those with holdings of less than an acre). -- The data are unambiguous for the North and South, but non-adoptionor absence of data make the situation in the East (primarily a rice cultivating zone) and the West (which includes India's arid areas) difficult to judge. -- Part-tenants have also gained almost everywhere and in most size categories (exceptagain in the smaller holding size categories). -- Owners have gained consistently in virtually all size groups and areas. -- The relative gains experiencedby pure tenants seem to be on the average much higher than for owners and part owners (although the fact that most of the pure tenant farms in the sample are from the North and South may bias these results somewhat).
Bangladesh. I do not have comparativeincome figures for adopters and non-adopters of HYVs in Bangladesh. Data is, however, available on the benefits accruing to owner-cultivatorsand tenant farmers respectivelyfrom fertilizeruse -- a reasonable proxy for - 65 -
gains from innovation. The results, which are broken down by farm size, are given in Table 9 and Table A.21 in the annex. They show that:
-- Net total benefits from fertilizersuse accrued primarily to small and very small farms (of less than 2.5 acres).
-- Net total benefits accruing to tenants are significantly smaller than those accruing to owners.
-- For owned land, net incremental benefits are higher on holdings of less than 2.5 acres than on larger ones; for tenanted land, these benefits are slightly less for smaller holdings than for larger ones.
-- Net incremental benefits are smaller on tenant holdings than on owned ones in all size groups.
-- The transfer of net benefits to landlords was very large (70 percent) in the smallest size group of tenanted holdings, but fell to 20 percent for holdings of between one and 2.5 acres, and to only about 5 percent for larger holdings. Thus the evidence for Bangladesh suggests that tenants gain, but by less than owners, and much of small tenants' gains go to landlords; this is especially true for those in the smallest size group of holdings (who are typicallysharecroppers).
Pakistan. Direct evidence on incomes from crop production and percentage increases in incomes per acre following adoption of HYVs is available from a World Bank/WAPDA survey of 1200 irrigated farms in Sind and West Punjab in 1976/77. Table 10 shows incomes, and Table A.22 in the annex shows adopters'incomes as percentages of non-adopters'by different size groups of holdings and types of tenurial status.
A striking point about Table A.22 is that comparative percentages could not be calculated for many categories because nearly all farmers in them had adopted the new technologies. The results show that:
-- Incomes per acre are inverselyrelated to farm size. Ubs9
DMIJAtS: EUrs IMNOW OFQUS tFOF I It 10 FAIM MUM; DI1T FAIR s1 M S, AM AS3, 1979
oa' tad ____ Te.wted IaM~ ____ Averrge Average dtaland_ Ditrihition Dltstrtbutiou.- Average Oi~~~~st-rbution Distribution Fam Size Inreent In Net (Litivated Of I rents of Net TIcrewent in Net of tncresnt of Net (Acres) Rice Yields Benefits Area in Rce Otu Henefits Rice Ylds Benefits in Rice Ieftts iupit Tfo lb/acre Ta/acre cres lb 2 TK X lb/acre 1K/acre lb 2 TI %
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)
F. size F 1.0 85.5 55.87 436 37,278 32 24,359 49 60.7 18.18 26,465 26 7,926 30 0.33 1.0 < F. size F 2.5 55.9 28.80 551 30,801 26 15,869 32 50.3 20.35 27,715 27 11,213 43 0.71 2.5 FF. size F 5.0 43.3 8.17 484 20,957 18 3,954 8 41.6 5.63 20,134 20 2,725 11 0.69 F size > 5.0 37.2 7.27 751 27,937 24 5,460 It 36.1 5.61 27,111 27 4,213 16 0.75
All sa,le 2,222 116,963 1to 49,642 100 101.425 100 26,077 1(XI
tAmed Laid Tenited tand* ON
Increnits in Icrewnts in Incrmits in Inreients in Farm Size Rice (XLitm Net Benefits Rice Outpit Net Bemfits Tbo (acres) (Ibfarm) (TKJfarm) (Ib/farter) (TK/farwr) (1K/fam) (1) (2) (3) (4)
F. Size F 1 94.4 61.67 67.0 20.06 0.33 1.1 < F. Size F 2.5 91.7 47.23 R2.5 33.37 0.71 2.5 < F. Size F 5.0 129.4 24.40 124.3 16.82 0.69 F. size < 5.0 221.7 43.33 215.2 33.47 0.77
F. Size F 2.5 93.1 55.03 74.1 21.18 0.38 F. Size J 2.5 169.8 32.69 164.0 24.09 0.74
&a1rce: IFUI, ETuityEffects of Fertitiser tme in gtadesh" Tables 19 and 20
*renm*ted lard refers to the adjustedproportion of the operated Labd vter sharecroppirn arrarenits.
Note rice ytelds refer to pFddy and not grain.
+T/o: Ration of benefits receivedby tenants to those receivedby raswra to each stze clais. 'fable 10
PAKISTIAN:(hiSS CUR PlIllUCrIN PER AXE BY FAN1 SIZE AND T12ANCY, 1976-77 (RWEE VALLE(F (OP AT MAr PRI(E PER ACREPLANEI))
Size (Cup (Acres)
Tenure 0(5.0 5.0<7.5 7.5<10 10<12.5 12.5<15 15(20 20(25 25<37.5 37.5 TUEAL
1593.44 1154.41 1015.30 1273.13 1260.68 990.70 904.01 1412.28 1048.38 1172.40 OWNERa/ 31 45 39 56 57 74 51 95 104 552 1160.11 667.08 465.18 1864.21 1409.57 680.30 5U0.08 2317.73 648.22 1328.05
467.79 1122.57 1375.72 1195.87 1078.29 1296.55 1065.28 1241.44 1151.94 1199.77 GE R-ThWIl/ 6 5 19 18 10 24 19 21 19 141 484.79 767.27 1007.18 990.91 530.90 709.92 605.20 844.29 1022.04 819.73
1243.33 1929.85 864.30 1678.37 802.03 619.84 954.57 652.76 926.78 1089.47 IUE T l/WIY 4 7 5 7 7 3 7 il 2 53 (fixed rent) 502.13 1411.89 443.22 1049.78 199.77 369.83 656.57 305.34 324.52 826.13
2131.45 1978.97 1660.91 1750.08 1434.39 1191.01 926.33 1193.29 892.14 1526.63 9IABZlXWPEIA' 18 35 27 49 24 41 21 22 7 244 1808.09 1395.10 1061.61 1504.11 1099.96 847.00 922.82 769.66 562.76 1272.15
1670.22 1525.37 1276.69 1456.38 1256.50 1092.40 944.10 1299.79 1053.16 1259.16 TUrAL 59 92 90 130 98 142 98 149 132 990 1227.58 1126.21 849.69 1638.08 1220.44 739.85 634.75 1967.87 701.63 1239.01
NLMHROF MISSIN; OBSRVATIONS= 1012
Source: World Bank and WAPDA "Extended Agro Economic Survey of the Iiidus Basin," 1977. Out of 2002 farms, 990 sold some of their output. The latter were selected, the price that they experienced for the crop and the area that was planted with that crop enabled this calculation. Although the farm size groups are net cultivated land. Note: a) Wholly owned land; b) part owned and part leased-in land; c) wholly leased-in land on fixed rental basis; d) wholly leased-in land on sharecrop basis. - 68 -
-- There are no significant differences in incomes by tenurial status, although in some small size categories sharecroppersactually had higher incomes than fixed-rent tenants, part tenants or owners.
-- Whenever comparisons permit, (i.e. in farm size categories with both "adopters" and "non-adopters") sharecroppers who have adopted HYVs often seem to have had greater percentagegains than owners or part owners. It appears that all classes of farmers in Pakistan gain from the adoption of HYVs, regardless of tenurial status. Of course, the size of individual tenant holdings is relatively large in Pakistan, as is the total area under pure tenancy, especially in Sind.
The country-by-countryevidence presented above suggests that the new technologies have benefitted all farmers, including tenants, and that relative gains are not correlatedwith tenurial status; nevertheless, the landlord's share of his tenants' gains seems to be larger where very small sharecropping tenancies predominate. In absolute terms, the gains from new technologies are related more to the size of a cultivator'sholding than to his tenurial status, but where average holdings are small, net benefits to tenants are likely to be less. A difference emerges between Bangladesh, where small and very small share tenancies dominate, and Northwest India and Pakistan where mixed tenancies are more common and tenant holdings are larger. In Bangladesh, tenants have gained less and kept less of what they have gained. In Northwest India and Pakistan, there is little difference between the gains of tenants, part-tenants,and owners. Data on landlords' shares are unavailable for these latter areas, but the growth of partial cost sharing (especially for HYV inputs) in these regions suggests that landlordsmay not be expropriatingan unduly large proportion of tenants' gains. (This may be less true, however, in the zamindari areas of Eastern India, where landlords seem to be able to get larger shares and tenants seem to gain less.) - 69 -
These findings, and the findings of earlier sections -- that tenancy appears to be on the decline, that it is meanwhile performing some useful functions in imperfect rural market economies, that it is not necessarily inefficient and that conditions exist for making it relatively efficient, and that it does not seem to represent a critical barrier to the adoption of new technologies-- suggest that little need be done in the way of legislationto curb or eliminate tenancy. Nevertheless, the cause of "tenancy reform" has a long history and a powerful contemporary constituency. But what if the forces of progress, in the form of new agricultural technologies, serve to make tenancy reform irrelevant by weakening to the point of non-existence the sharecroppingsystem that reformers so abhor? This is the last question that I examine in this paper.
The Impact of New Technologieson The Tenurial System
How do the new technologiesaffect tenure systems? Technical change affects the productivity of land, and may lead to consequential changes in the area under tenancy, the terms of tenancy contracts, or the distributionof gains between landlords and tenants. C. H. H. Rao (1975) notes that the extent and nature of these effects depend upon the type of technologicalchange and the relative bargaining power of landlordsand tenants.
Bardhan (1976) developed a theoretical model in which landless workers lease in land on a sharecropping basis from a monopolistic landlord.-6/ Tests with state-levelIndian data for the early 1950s showed that the proportionof land under tenancy:
-- increases with land-augmenting technological change (irrigation,multiple cropping, adoption of HYVs), with the labor intensity of the crops cultivated,and with the extent of unemployment;but
-- decreases with production risk, higher interest rates, and increasingly imperfect markets (in which prices tenants pay are above market rates). - 70-
Extending the analysis to discriminate between the consequences for share tenancy, fixed rent contracts,and tenants who also own land, data from various sources for the 1960s confirm that the proportionof land leased out under sharecropping: -- increases with the labor intensity of crops cultivated, with the extent of unemploymentamong landless families, and with the harvestingwage rate; but -- decreases as owner-tenants become more wealthy, as the gap between the indices of land augmenting technical progress widens in favor of owner-tenants,and as credit and new input markets become more imperfect (that is, as prices increasingly discriminate against sharecroppers and in favor of mixed holdings of owned and tenanted land). 57/ Bardhan's results seem to confirm the general trends observed in South Asia. As Bell (1977) argues, once irrigationand land- intensive technologiesand programs are introducedin traditional sharecropping areas, production risks fall. If credit programs allow increaseduse of modern inputs and public works programs mop up unemployment without bidding up real wages, the result is an increase in the area under tenancy.
But although land-augmenting technological progress may increase the total area under tenancy, fixed-rent tenancies are likely to gain at the expense of sharecropping in areas where landless sharecroppers compete with owner-tenants, landlords demand fixed-rent contracts, and owner-tenants have better access to credit (having land as collateral) or irrigation (because they have local power). The evidence for this trend is most dramatic in Punjab and Haryana, where fixed-rent tenancies have proliferated in the wake of the green revolution. (I discussed the evidence for the transition to fixed rent tenancies earlier in section D.)
Bell (1977) concludes that if access to credit and inputs is unequal, programs to raise agricultural productivity by encouraging land-intensive technologies (such as the use of HYVs) - 71 -
are likely to further the developmentof agriculturalcapitalism, "for owner-tenants are surely capitalists in the making." Landless sharecroppers become merely landless laborers, totally reliant on wage employment.
At the same time, the traditional identification of land ownership with economic power and tenancy with weakness begins to break down, as small landownerswho lack access to inputs rent out their land to larger cultivatorswho can mobilize credit to obtain the seeds, fertilizer, and water they need. Thus, although the new technologiesare in principle scale-neutral,their effect in institutionally biased markets can be to discriminate against small ownership holdings, and to encourage a form of "reverse tenancy" where large operators lease in still more land. As I have already stated, this state of affairs has important implications for "reform" programs that assume that legislation should be directed at reducing landlords' rights: such programs may in fact end up by penalizing weak "landlords" and rewarding rich and powerful "tenants".
Tenancy is also being affected by technical change in the form of mechanization-- particularlythe introductionof combines and tractors. Where mechanizationhas been labor-displacing,as in the Pakistani Punjab, the impact on share tenants is direct and dramatic. They are generallydisplaced in large numbers, becoming landless laborers as tenanted land is taken back for self- cultivation by owners, or is consolidated into relatively large holdings (see Naseem 1979).
The advent of tubewell irrigation can have similar consequences. B. Ahmed (1972, 1975) found that in a small sample in the Pakistani Punjab nearly 70 percent of tenants were ejected after tubewells were introduced, while the holdings of the remaining tenants increased, and owner-operatedholdings expanded by 32 percent. The displacementof tenants by owners was a major source of the expansion, although land purchases also contributed to it. The total area under tenancy dropped from 32 percent to 12 - 72 -
percent of the area under cultivation.
Ahmed found that the impact of tractors was even more dramatic. Landlords who purchased tractors ejected the great majority of their tenants, and enlarged the holdings they operated by an average of 46 percent, from 36 to 52.4 acres. The average size of the remaining tenant holdings increased from 12.7 to 13.2 acres. The total area under tenancy dropped from 24 percent to 4 percent of the cultivated area. These changes were accompanied by a decline in total labor use per acre, a decline in family labor use per acre, and an increase in hired labor use per acre. The displaced sharecroppers were now landless laborers.
In a carefully documented study of the introduction of tractors in Pakistan, McInerney and Donaldson (1975) confirm these trends. An average of 4.5 tenants were displaced per tractor introduced, the mean size of tenant holding absorbed being 11.5 acres. The average size of holding in the areas surveyed increased from 18 ha to 44 ha, and there was a 39 percent decrease in labor use per ha. Not all of these changes can be attributed to tractors alone but tractors certainly contributed to them.
In the Indian Punjab, where tractors and tubewells are typically much less powerful and the scale of farming is generally smaller, the effects of mechanization and new irrigation techniques have been much less drastic. Nevertheless, tenants have been displaced, the size of ownership holdings has risen and pure sharecropping systems have been virtually eliminated (Kahlon and Singh 1973, Johl 1977). The broad effects of technological innovations in agriculture on tenurial systems are well summarized by Bell (1977):
... tenancies will be foreclosed by landlords anxious to reap the enhanced rewards to own cultivation arising from technical progress and most of the smaller (and most poor) sharecroppers will be the losers. At the same time there seems to be a niche for a more prosperous and perhaps numerically large class of middle tenant cum-owners operating under (partial) cost share leases. For they possess the means, the ethos and the - 73 -
ability to corner some of the services of the agricultural extension and credit agencies which are necessary to exploit fully the potential form of this lease. Either way the traditional sharecropper seems destined to disappear." (p. 189-190).
Thus the answer to the question posed at the beginning of this subsection seems to be that technology-led agricultural development does indeed tend to dispose of the reformers' bugbear, sharecropping,by the operation of market forces.
This is not necessarily a surprising finding. Recall the point made earlier in this chapter, that sharecroppingrepresented a transitionalstage between a system that operated on the basis of serfs bound to the land and one of cash rent tenancy. During such a transition, in which the money economy is still embryonic and agriculturalmarkets and institutionsare poorly developed or non-existent,sharecropping (as suggested in earlier sections) can represent an appropriate basis for regulating transfers between
owners of land and owners of labor?while also performing a range of other functions which would be handled by market mechanisms in more advanced economies. In areas where agriculturalproductivity rises and a money economy and its associated markets and institutions develop, however, sharecropping starts to lose its significance.
Thus it seems plausible to argue that it is underdevelopment that produces sharecropping, not sharecropping that produces underdevelopment. This hypothesis in turn suggests two conclusions. First, while policymakersneed to be sensitive to what the decline of share tenancy can mean for those adversely affected, the process of evolution away from it is symptomaticof positive development in the agrarian economy; as such, it should be welcomed. Second, in areas where sharecropping is still a vigorous institution, efforts to cure the disease (underdevelopment)by suppressing the symptom (sharecropping)are at best unhelpful and at worst counter-productive. - 74 -
ENDNOTES
1/ For the purposes of this paper, South Asia here refers only to India, Bangladesh and Pakistan.
2/ Agrarian studies have a long lineage in South Asia. For a review of the literature, see P.C. Joshi (1975). For historical background see M. Darling (1925), D. Thorner (1956), M.H. Khan (1977) and Jannuzi and Peach (1980). For an incisive look at some key issues, see Ladejinsky (1977).
3/ "In its approach to land, European policy was guided by the view that the system of private property should be encouragedand reinforced by law. Essentiallythis amounted to an attempt to superimpose on South Asian societies Western types of tenure arrangements...even if it meant riding roughshod over the distinctions drawn in the traditionalsystem between rights to occupy land, to receive tribute from it and to dispose of it." See G. Myrdal (1968) p. 1033.
4/ See Darling's (1925) account of the Punjabs and Jannuzi's (1974) account of Bihar, for example. This trend was related to the creation of proprietory rights in order to permit land to be used as Security. See Myrdal (1968), p. 1040.
5/ The Land AlienationAct of 1901 in the Punjab, for example.
6/ Byers (1974) pp. 230 quoted by C. Bell (1977).
7/ These are of two types--the "occupancyraiyat" who may have the right to occupy the land he holds, and the "non- occupancy raiyat" who does not.
8/ For 1953-54, 1967-72 and 1979-82, owned areas reported as leased out were 35, 14 and 17 million acres respectively, while operated areas reported as leased in were 68, 34 and 33 million acres respectively. Part, but by no means all of the difference,reflects rentals by rural householdsof land owned by urban ones.
9/ See Sanyal (1972) (1976), Sanyal and Sinha (1976), Dharam Narain and P.C. Joshi (1969) and Lakshminarayanand Tyagi (1977) for discussions of the significance of the differences between the data provided by the Agricultural Census data and the NSS.
10/ In sharp contrast, the 1970-71 AgriculturalCensus reported that only 9 percent of holdings were in both mixed and pure tenancies combined. - 75 -
11/ See Dhram Narain and P.C. Joshi (1969), P. Bardhan (1971) and S.K. Sanyal (1972) (1977).
12/ Narain and Joshi (1969) conjecture that more and more of the land actually cultivated by tenants came to be reported as cultivated with hired labor. Given that many contracts involve linked land and labor arrangements,this is entirely likely.
13/ Narain and Joshi (1969) cite corroboratingevidence for the decline in tenancy from studies by A. Majid (1969) in Uttar Pradesh: Lakshminarayan (1969) in Punjab; Roy (1969), Bandhopadhyayaand Shekar (1970), and Chakravortryand Pal (1969) in West Bengal; G. Patnaik (1970) in Orissa; G. Parthasaratyand L. Krishnamutri (1969) in Andhra Pradesh; and T.S. Yeshwanth (1969) in Tamil Nadu.
14/ Sanyal (1977) argues that tenancy has actually increased in Punjab (and in West Bengal). He reaches this result by comparing the area between the Lorenz curves for the distributionof ownership holdings (excludingthe landless) and of agricultural (operated) holdings, over time. He attributes this "contradictory" finding to the fact that there was enormous underreporting of leased-in areas in precisely those states where tenancy is predominant.
15/ Lakshminarayanand Tyagi (1977). See C.H.H. Rao (1971) for an explanationof why sharecroppingis dominant in foodgrain producing areas and fixed-cash contracts in areas with assured irrigation.
16/ A. Singh and A.K. Kahlon (1976), and Sheilla Bhalla (1976).
17/ Does this evidence contradict the earlier finding that only 4 percent of all operated holdings (or 15 percent of all tenant holdings) were pure tenancies? Not necessarily, because the earlier data are on holdings. All pure tenancies are not necessarily operated by landless households, because it is quite possible for an owner to rent out all the land he owns (say in another village) and to rent in other land for cultivation,being classifiedas a pure tenant with respect to that holding. It is possible therefore for 1/3 of all householdswho lease in land to own none, while at the same time only 15 percent of all holdings that include leased-inland are pure tenancies.
18/ See A. Rudra and A. Majid (1969), Lakshminarayan(1973) and A. S. Kahlon and G. Singh (1973).
19/ The data are from four different reports -- the 1960 Agricultural Census, the 1967-68 Master Survey of Agriculture (MSA), the 1973-74 survey carried out by the Bangladesh Institute of Development Studies (BIDS) the - 76 -
Agricultural Census of 1977 and the two Land Occupancy Surveys (LOS) carried out in 1977 and 1978. Since the first two collected data by "cultivatinghouseholds," and the last two by "operational holdings" they are not strictly comparable. The data on "pure tenancies" vs. "mixed tenancies" also differs considerably between the 1977 AgriculturalCensus and the 1978 L.O.S.
20/ Since the 1960 and 1967-68 data are on "cultivating households" and the 1973-74, 1977 and 1978 data on "operational holdings," even this may not have been the case. One cannot calculate the trends in the average size of tenant holdings from these data, as some authors have tried to do.
21/ See Jabbar (1977) and M. Hossain (1977).
22/ It is totally incorrect to argue [as Jannuzi and Peach (1980) and Stepanek (1979) using the data from the 1977 and 1978 LOS surveys have done] that "this country, long known for its millions of small farmers, is in fact cultivated by tenants" (Jannuzi and Peach 1980, p. 91). The 1977 Agricultural Census shows only 42% of operating households as pure or mixed tenants. The 1977 LOS data do not show "owner-operators"as a category. Instead they distinguish between (a) those cultivating their own land only, exclusivelywith family labor (23 percent of all cultivating households) and (b) those cultivating their own land only, with family and hired labor (another 38 percent of all cultivating households) -- that is, excluding all rural households that owned no land and no land other than homestead land. Both these groups are "owner-operator" households in the conventionalsense, in that they do not lease in any of the land they cultivate. Jannuzi and Peach, however, categorizeonly the first group as owner-operators, distinguishing the second group as owner-managers on the grounds that they use other than their own family labor and hence are not owner-operators. A classificationthat rests on the distinction between use of family labor only and family plus hired labor is not meaningful in South Asia, where evidence from a large number of farm management studies suggests that farms, owned or tenanted, that use only family labor are rare. Even the smallest farms hire some labor during peak periods; one of the most common arrangements is exchange labor, whereby a number of farmers jointly work in each other's fields. Moreover, all the surveys cited in table 7.5 suggest just the opposite - that nearly 2/3 of all holdings are operated by their owners.
23/ Comparable data for 1967-68 from the Master Survey of Agriculture are shown in Table A9.5 in the annex. They also support the view that a majority of small holdings are operated by owners. This is also generally so in India. In - 77 -
1960, for holdings of less than 1 acre, only 11 percent of the area was leased in, while for holdings between 1 and 2.5 acres the percentage was 19 percent. See S. K. Sanyal (1977).
24/ This was also the case in 1967-68. See Table A9.5 in the annex.
25/ In 1967-68 the comparable percentageswere 87% and 49%.
26/ See Stepanek (1978) and Jabbar (1978).
27/ See Sanyal (1977). Similar evidence is available from microeconomic surveys undertaken in the mid-1970s; see Jabbar (1978).
28/ The 1978 LOS data show that only 11 percent of all tenant and owner-tenant households reported a written tenancy agreement. Given the estimated rural literacy rates this is not surprising, but the absence of documentation makes it difficult to settle disputes regarding tenancy agreements. [Jannuziand Peach (1980)].
29/ See Sanyal (1977) and Lakshminarayanand Tyagi (1976) for a detailed statewide analysis of West Bengal data. Also see A. I. Ghose (1977).
30/ See M. H. Khan (1981),Chapter 3 for a complete discussion.
31/ Alam (1974) and Alavi (1976) refer to the interests of the powerful landlords as major factors affecting political- economic development in Pakistan. Thus in the provincial elections in 1951, 80 percent of the members elected in the Punjab and 90 percent in Sind were landlords. In the 1970 election over 75 percent of the members in the National Assembly were identified as "landlords"by Alam (1974). The persistence of the power of feudal elites owes much to Pakistan's agrarian structure.
32/ See Sanyal (1976) and Lakshminarayan and Tyagi (1977) and data presented in M. H. Khan (1979).
33/ There is an extensive literature on the subject of tenancy. Of particular interest are Bardhan (1979) (1975), Bardhan and Srinivasan (1971), Cheung (1969), Newberry (1974,1976),Newberry and Stiglitz (1979), C. H. Rao (1971), Reid (1974), Stiglitz (1974), Bell (1974, 1976, 1977, 1978), Bell and Zusman (1976), Roumasser (1979), Jaynes (1979a, 1979b) and Jodha (1979). The discussion that follows also relies heavily on the lucid analyses provided by Jaynes (1979a and 1979b) and C. Pant (1980).
34/ From the Wealth of Nations quoted in Jaynes (1979) p.5. - 78 -
35/ K.M Marx: Das Kapital, Vol. 3, Ch. 47 quoted in Jaynes op. cit.
36/ This function of tenancy agreements can be frustrated by legislation designed to protect tenants, which can lead to denial by landlords of tenancy arrangements and their unwillingness to offer written contracts. As a result, tenants who might otherwise have been eligible for credit have been denied it, because they are neither owners nor able to offer their tenancy as a security against loans.
37/ It has been demonstrated with increasing generality by J. Reid (1974), J. Stiglitz (1974), D. Newberry (1974, 1975) and Hammond (1977) that a competitive allocation achieved with wage and cash rental contracts alone cannot be improved upon in a Pareto sense, by introducing share contracts. For an excellent overview of the theoretical issues relating to the choice of rental contracts and the most recent post- Cheung neo-classical findings, see Newberry (1975). For an evaluation of some of these issues in an Indian context, see C. H. H. Rao (1971,1975), Bliss and Stern (1979), S. K. Datta (1980), C. Pant (1980) and C. Bell (1978).
38/ See Jaynes (1979) for a full discussion of these views. As classical economists assumed that the tenant made unilateral decisions about the allocation of his labor under sharecropping, the traditional model is thought of as implicitly assuming that the cost of mDnitoring labor inputs is infinite. By contrast, most neo-classical models, though recognizing the existence of monitoring costs, explicitly assume them to be zero in normal analysis. See Datta and O'Hara (1980).
39/ Jaynes (1980) points out that the very existence of transaction costs may imply that some markets are incomplete. Indeed much of the work on competitive market equilibrium with transaction costs and incomplete markets has shown that (a) first-best efficiency is simply not possible in general, and (b) that the introduction of additional markets may actually make some agents worse off. See Hart (1975), Hahn (1971), Green and Sheshinky (1975), and Radner (1970).
40/ Similar indivisibilities exist with regard to irrigation facilities and farm machinery, but problems in these areas are alleviated somewhat by the sharing of communal wells, the existence of some lease markets in water, and the fact that tractor hire services, though not widespread, are available in South Asia.
41/ A number of reasons have been given for this state of affairs, including the high cost of monitoring the use of one's animals, the fear of mistreatment of animals and the - 79 -
fear of overworkingand underfeedingleased animals; none of these seems particularlypersuasive, however (see Bliss and Stern 1979, and S. K. Datta 1980).
43/ The "command area" of a bullock pair varies from 2 to 12 acres depending on the intensityof cultivation.
44/ See Bliss and Stern (1979).
45/ In addition to Smith, Richard Jones, Karl Marx, John Stuart Mill, and Turgot have taken this view.
46/ Op. cit. p. 535-536.
47/ Op. cit. p. 536, footnote 2.
48/ For those interested in the subject, apart from Marshall's (1920) statement in Book VI, Chapter X, differentaspects of the problem have been examined by Johnson (1950), Cheung (1968, 1969), Bardhan and Srinivasan (1971),J. Reid (1974), Newberry (1974, 1976, 1977), Stiglitz (1974), Newberry and Stiglitz (1979), Shavell (1979) and Bell and Zusman (1976) among others. A good review of the issues is given in Jaynes (1980).
49/ Although field surveys confined to particular villages were reported by Bhardwaj and Das (1975), Bell (1977) and Bliss and Stern (1980), this was the first large scale survey of contractual relationships covering several states in rural India.
50/ The idea that sharecroppingacts as a deterrent to the use of modern inputs (because sharecroppers lack investible funds) overlooks the fact that landowners may have an incentive to share in costs, and may actually encourage cost sharing because it spreads risks and increases efficiency. In many instances the use of new inputs may actually be higher under sharecropping than under a fixed-rent system. C. H. Shah (1972) found that tenants in Gujarat and Maharashtra applied higher doses of fertilizers than owners. Similar findings were reported for HYV wheat and paddy areas in India as early as 1970 in a Plan Evaluation Organization (1971) study.
51/ Because of the absence of useful data, we will not discuss in detail here the relationship between short or insecure leases and on-farm investment. In principle, a tenant will not be interested in installinga tubewell or improving the quality of his land if he can be evicted summarily and without compensation. Indeed tenants who have crop-specific or seasonal leases are unlikely to be interested in any investmentwhose payback period is longer than a single crop season. Insecurity of tenure therefore seems likely to - 80 -
limit private fixed investment in agriculture in regions where short-term sharecropping leases continue to dominate. Thus the use of such leases as a spur to short- term efficiencymay have countervailingnegative effects on long-term productivity;where holdings are larger, however, and there is a trend towards fixed rent tenancies (i.e., in the Indian Punjab and Haryana), there is evidence that tenants do invest in tubewells and farm machinery (Kahlon and Singh 1973, Haider 1977).
52/ For objections to the hypothesis, see especially Newberry (1975), Ghose and Saith (1976), Srinivasan (1979a, 1979b), de Janvry (1979) and Bell (1976). Many other studies support the view that landlords are likely to oppose innovation on the part of their tenants, however. They include: Frankel (1971), Griffin (1979), Naseem (1971), Alamgir (1978), Jannuzi and Peach (1979), Stepanek (1979), Ladejinsky (1965), Dasgupta (1977),and A. K. Khan (1972).
53/ For other empirical rebuttals of various elements of the semi-feudal model, see especially Rudra (1975) and Jodha (1979) for India, and Hussain (1977) for Bangladesh.
54/ Parthasarathyand Prasad (1978) found that pure tenants had a lower tendency to adopt rice HYVs than pure owners (see Table A.10 in the annex). But they also noted that landlords controlled decisions about the crop varieties to be grown, and that small tenant farmers cited lack of access to inputs as their reason for non-adoption. Thus, low adoption rates among tenants appear to have more to do with landlords' policies and the need for credit to buy inputs than with sharecroppers'lack of interest in HYV use.
55/ If tenanted land were of poorer quality this too might explain the lower yields; we have no evidence on this point.
56/ See Ghose and Saith (1976), A. Salam (1977), Thiesenhusen (1974), Schutjer and Van de veen (1977),Lipton (1977,1978), Vyas (1977), H. Alavy (1973), S. Naseem (1977), Frankel (1971),Aggarwal (1973) and C. H. H. Rao (1971).
57/ See Bardhan (1976) pp. 6-7, and Bell (1977) on which this section drawn extensively.
58/ Bell (1977) p. 17 and Bardhan (1976) pp. 113-114. - 81 -
ANNEX TABIES
A.1 India: Changes in Tenancy Over Time A.2 India: Share of Total Tenanted Area Accounted for by Below 5 Acre and Above 20 Acre Size Groups of Operational Holdings in Different States, 1953-54 - 1961-71 A.3 India: Percentage of Rural Households Leasing in Land Under Any Terms, 1971-72 A.4 Percentage Share of Different Size Groups in Area Leased In and Area Leased Out in Different States A.5 Bangladesh: Distribution of Operated Holdings by Tenancy and Size Group, 1967-68 A.6 Bangladesh: In Kind Payments for the Use of Land Taken in from Others A.7 Bangladesh: Duration of Tenancy Relationships as Reported by Tenants A.8 Pakistan: Distribution of Operated Holdings by Tenancy and Size Groups, 1972 A.9 India: Tenants Share in Inputs and Outputs (Semi-Arid Tropic Villages) 1975-76 to 1978-79 A.10 India: Percentage Adopters and Area Under Adoption to Modern Rice Varieties by Size and Tenure, Pedupulleru, Andhra Pradesh, 1971-72 A.11 Bangladesh: Use of Nutrient (NPK) Inputs HYV Adoption and Irrigation on Owned and Rented land, Aman Season 1974 A.12 Bangladesh: Use of Nutrient (NPK) On Owned and Rented Land by Size Group of Land Owned, Aman Season 1979 A.13 Pakistan: Farm Characteristics by Size and Tenancy in Punjab, 1974-75 A.14 Punjab: Average Crop Yields by Farm Size and Tenancy, 1974- 75 Yields (Mds/Acre Cropped) A.15 Pakistan: Indus Basin - Aggregate Cropping Intensity by Farm Size and Tenancy, 1976-77 A.16 Pakistan: Indus Basin - Yields for HYV Wheat by Farm Size and Tenancy (KG/HA) 1976-77 A.17 Pakistan: Indus Basin - Fertilizer Use Per Hectare Planted with HYV Wheat by Farm Size and Tenancy (N+P In KG) 1976-77 A.18 All India: % Adopters of HYV Seeds by Farm Size and Tenancy (1970-71) A.19 India: Average Nutrient Use on all Crops by Farm Size and Tenancy, 1970-71 A.20 India: Percentage Increases in Incomes per Cultivated Acre Experienced by Tenants and Owners by Farms Size, 1970-71 A.21 Average Net Benefits of Fertilizer Use Transferred as Rent to Landlords and Redistribution of Rent Among Farm-Size Groups (Bangladesh, Aman Season, 1979) A.22 Pakistan: Percentage Increase in Crop Incomes per Acre by Adoption, Tenancy and Farm Size, 1976-77 Table A. I
INDIA: CHAGES IN TeNANCYOVER TIME
Size-Class of Leased in Area as Percentage Percentage Distribution of Operational of Area Operated in Each Size Total leased in Area by Size Holding (Acres) Class Of Operational Holding
(1) (2) (3) (4) (5) (6) t953-54 1960-61 1971-72 1953-54 1960-61 1971-72
0.01 - 0.99 28.45 23.52 20.49 1.69 2.62 3.33
1.00 - 2.49 26.64 18.82 18.55 5.73 8.10 13.14
2.50 - 4.99 25.05 16.52 14.58 12.35 16.04 20.19 1
5.00 - 7.49 21.99 14.64 11.53 10.68 12.70 14.30
7.50 - 9.99 20.29 13.58 12.18 8.66 9.82 10.71 1
10.U0 - 14.99 18.47 11.94 8.49 11.34 13.19 11.39
15.00 - 19.99 20.30 9.88 8.25 9.89 7.42 7.28
20.00 - 24.99 18.16 12.80 9.91 6.10 7.36 6.45
25.00 - 29.99 17.33 10.87 7.49 4.93 4.80 3.41
30.00 - 49.99 20.22 10.13 6.12 13.66 10.49 6.08
50 and above 17.84 7.67 4.92 14.97 7.46 3.72
All Size Classes 20.34 12.53 10.58 100.00 100.00 100.00
Sotirces: NSS 8th, 17th and 25th. Rounds (op. cit.) compiled in M.S. Ahluwalia (1978). - 83 -
Table A. 2
INDIA: SHAREOF TOTALTEUNTD AREA ACCWNT8DFOR ByYBEtUI 5 ACRE AND ABOVE20 ACRE SIZE GROUPSOF OPERATIONALHOLDINGS IN DIFFnRENTSTATES. 1953-54 - 1961-62 AND 1970-71
Below 5 Acre Holdings Above 20 Acre Holdings 1953-54 1961-62 1970-71 1953-54 1961-62 1970-71
North India Jammu & Kashmir 46.3 48.3 44.1 L.6 1.9 - Haryana 17.3 29.9 PEPSU or H.P. 3.0 63.0 43.6 - Punjab 6.4 7.1 9.7 46.8 33.6 22.1 Uttar Pradesh 46.4 42.8 51.5 11.1 13.2 6.8
West India Gujarat 2.3 12.6 11.2 77.3 44.5 32.9 Maharashtra 10.2 12.1 14.2 51.1 53.1 43.9 Madhya Pradesh 8.0 13.9 21.8 51.3 34.8 23.6 Vadhya Bharat 5.4 45.8 Vindhya Pradesh 14.4 31.4 Rajasthan 5.3 8.1 7.7 64.5 58.2 54.0
South India Andhra Pradesh 25.0 18.5 27.6 29.4 27.9 23.3 Hyderabad 6.4 68.5 Tamil Nadu 41.4 47.6 61.4 16.0 4.5 2.1 Karnataka 22.8 8.4 19.5 23.9 50.5 34.2 Kerala 53.2 60.0 69.1 12.5 4.7 0.6
East India Assam 32.1 63.5 70.2 9.3 0.1 0.1 Bihar 55.8 60.5 69.6 5.7 4.5 1.6 Orissa 39.8 45.7 56.7 13.3 6.0 6.8 W. Bengal 46.1 58.3 71.4 3.1 2.3 1.5
All India 19.8 26.8 37.0 39.7 28.3 19.4
Source: C. Pant (1980). Compiled from data presented from (a) NSS 8th round (Report 66, Table 5.6), (b) NSS 17th round (Draft Report 177, Table 4. ( ) A; Report 144, Table 10) and (E) NSS 26th round (Report 215, Table 19, Page 88). Table A.3
INDIA: PERCENTAGE OF RURAL HOUSEHOLDS LEASING IN LAND UNDER ANY TERNS, 1971-72
Size Group of H H tn H H which As a Z of As a % of Owned Land Group lease in those leasingin those leasi in (Acres) (mens) (men) (men) (men)
Landless 7.6 5.5 28 73
O - 0.5 21.8 4.7 24 22 1
0.5 - 1.0 5.8 1.7 8 29 co
1.0 - 2.5 13.9 3.4 17 25
2.5 - 5.0 12.1 2.2 11 18
5.0 - 10.0 9.4 1.4 7 15 above 10.0 7.8 1.0 5 13
All Sites: 78.4 19.9 100 25
Source: Computed from Government of India, National Sample Survey Organization, National
Sample Survey, No. 215, Tables on Landholdings 26th Round" (Table 4, Pg 69.)
1971-72. Table A.4
PeECEKTAGESuARe OF DIPPERENTSIZE GROUPSIN AREA LEASED IN AND AR8A LEASEDOUT IN DIPFEREN[ STATXS*
Up to 2.02 Hectares 2.03 - 4.04 Hectares 4.05 Hectares and Above Leased In Leased Out Leased In Leased Out Leased In Leased Out
Andhra Pradesh 27.82 31.06 26.77 20.39 45.41 48.55 Assum 70.22 52.02 24.98 32.41 4.80 15.57 Bihar 69.63 42.91 21.01 26.09 8.36 31.00 Gujarat 11.06 27.62 23.48 24.13 65.46 48.25 Haryana 12.78 16.34 27.84 22.44 59.38 61.22 1 Himachal Pradesh 62.96 39.99 26.93 34.76 10.11 25.25 CO Jammu and Kashmir 44.51 69.28 38.34 5.04 17.15 25.68 1 Karnataka 19.19 26.47 17.21 21.29 63.60 52.24 Kerala 70.48 68.17 17.13 17.77 12.39 14.06 Madhya Pradesh 21.95 19.91 24.88 24.74 43.17 55.35 Maharashtra 13.89 20.78 21.38 28.70 64.73 50.52 Orissa 56.44 39.08 26.56 27.55 17.00 33.37 Punjab 10.01 17.53 33.29 25.95 56.70 56.52 Rajasthan 8.10 10.05 21.82 7.92 70.08 82.03 Tamil Nadu 59.68 34.49 29.92 19.83 10.40 45.68 Uttar Pradesh 51.90 44.25 28.97 25.54 19.13 30.21 Bengal 71.51 53.10 23.92 25.26 4.57 21.64 All India 35.82 31.17 24.81 23.22 38.37 55.61
*The three leased in and leased ouit proportions add up to 100%. Table A.5
BANGLADESH: DISTRI8UTION OF OPERATED HOLDINGS BY TENANCY AND SIZE GROUP, 1967-68
Partty Size Group Wholly Owned Owned/Rented Wholly_Owned_ __ All _ (Acres) No. Area No. Area No. Area No. Area (X) (%) (%) (X) (X) (%) (%) (x)
Under 1.0 33(88) 6(88) 7 1 34 6 25(100) 4(100)
1.0 - 2.5 31(65) 19(65) 33 15 28 16 32(100) 17(100)
2.5 - 5.0 17(43) 28(54) 37 33 22 27 26(100) 30(100)
5.0 - 7.5 8(59) 17(55) 12 19 9 17 9(100) 18(100) OD ON 7.5 - 12.5 5(67) 16(58) 7 15 5 16 5(100) 16(100)
12.5 - 25.0 2(67) 11(58) 3 11 2 13 2(100) 11(100)
25.0 - 40.0 * 2(42) 1 5 * 6 * 3(100) over 40.0 * 1(50) I 1(100)
All Groups t00 100_ 100 100 100 100 100(100) 100(100)
Totals [no. in millions area in million acres] 4.6 12.6 2.1 8.3 0.2 0.7 6.9 21.6
Souirce: Government of Bangladesh, Bangladesh Bureau of Statistics, "Master Survey of Agriculture, 1967-68", 1972.
Note: Figures in parenthesis show number/acre in tenurlal class as a X of all in size groups.
* Insignificant. - 87 -
Table A..6
BANGLADESH - IN KIND PAYDMrNSFOR THE USE OF LAND TAIUN IN nOE OTHERS.
In-Kind Payments (Percent of Crop Produced)
Less than 50 percent 50 percent More than 50 Percent
Number of Number of Number of Percent Households Percent Households Percent Households of Total (000's) of Total (000's) of Total (000's)
33.4 1.26 2,478.9 93.27 145.5 5.47
Area Area Area (000 Percent (000 Percent (000 Percent acres) of Total acres) of Total acres) of Total
60.7 1.54 3,566.6 90.42 317.0 8.04
Additional Cash Payments b
Less than 50 percent 50 percent More chan 50 Percent
Number of Number of Number of Percent Households Percent Households Percent Households of Total (000's) of Total (000's) of Total (000's)
1.1 0.04 219.5 8.26 17.7 0.67
Area Area Area (000 Percent (000 Percent (000 Percent acres) of Total acres) of Total acres) of Total
1.4 0.04 411.5 10.43 35.4 0.90
a Components may not add to totals due to rounding. Data includes both tenant and owner-cum-tenanthouseholds. An additional 520.2 thousand rural households, possessing 364.8 thousand acres of land taken in from others, made only cash payments for the use of the land taken in.
b Additional cash payments by those tenant and owner-cum-tenanthouseholds reporting share payments.
Source: Jannuzi and Peach (1980) Table 0.6 p. 104. - 88 -
Table A.7
BANGLADESH: DURATION OF TENANCY RELVATIONSHIPS AS REPORTEDBY TENANTS a
Years 1977 1978 Percentage of: Percentage of: Households Area Households Area
Less than I year 7.0 4.4 26.3 17.6 1 23.8 17.5
2 24.5 26.0 20.4 17.2
3 15.5 18.4 15.8 17.7
4 6.4 6.1 7.9 9.8
5 5.6 6.1 6.4 8.0
6 2.5 4.1 3.5 5.9
7 1.5 2.4 3.0 4.0
8 3.0 4.1 3.4 6.0
9 0.6 0.6 0.9 1.3
10 and above 9.6 10.4 12.5 12.7
Total 100.0 100.0 100.0 100.0
(a) Data are for both tenant and owner-cum-tenant households. When an individual respondent possessed multiple tenant holdings, the response recorded was for holdings for which the tenancy relationship was of greatest duration.
Source: Jannuzi and Peach (1980), p. 105 and 113. Tnbl A.8
FUKISUN: DSi f LI ZIICF ) IUE.I UT lIYN Y SWZAD I'S, 1972
Size Groups of Farm OkI" FARiMS __ *ER TDANTFMA*t_i IENANr F'M* (Acnes) *aiber Area Number Area tiber Area HI. Pb. S. 1k. Pb. S. Pk. Pb. S. 1k. Pb. S. Pk. Pb. S. Pk. Pb. S.
Ibder 5.0 41.4 39.4 27.4 7.4 7.5 4.4 13.9 11.9 9.3 2.7 2.4 1.7 21.9 20.6 17.8 5.0 4.2 5.5
5.0 - 12.5 28.6 32.9 36.3 20.2 21.8 18.0 42.5 43.3 45.4 21.1 22.6 21.4 47.9 43.6 58.9 '36.0 31.3 49.3
12.5 - 25.0 15.8 16.8 21.8 21.1 22.9 23.7 27.9 29.4 29.9 28.2 31.0 28.7 22.8 26.2 20.3 32.5 34.6 32.8
25.0 - 50.0 7.1 7.4 9.0 18.1 19.7 17.7 11.0 11.4 10.3 21.8 23.3 19.7 6.1 8.3 2.5 16.5 21.0 8.1 0, 50.0 - 150.0 3.2 3.0 4.5 18.8 18.2 20.8 4.0 3.7 4.1 17.6 16.1 15.2 1.2 1.5 * 7.5 7.7 2.9
Over 150.0 0.6 0.5 1.1 14.4 10.0 15.4 0.6 0.3 1.0 8.7 4.5 13.4 * * * 2.5 1.2 1.4
All Sizes 10(.0 100.0 103.0 0.11.01M0.0 0. 100.0 1(0.0 I(O.0. 10.0 103.0 1.0 100 .0 100.0 100.0 100.0 100.0 100.0
ND. of Farus (millions) 1.57 1.01 0.18 - - - 0.90 0.68 0.10 - - - 1.30 0.68 0.47 - - -
Area of Fares (millions acres) - - - 19.40 11.95 2.91 - - - 15.16 11.05 1.7b - - - 14.5 8.03 4.79
Source: Compiled frnuML R. KIt.n (1981), Tables 3.19 and 3.20 using "Census of Agriculture, 1972" data.
NDte: Pk. - Pakistan Pb. - Punjab S. - aSid - 90 -
Table A.9
INDIA: TENANTS SHARE IN INPUTS AND OUTPUTS (SEMI ARID TROPIC VILLAGES) 1975-76 TO 1978-79.
Proportion of leased out areab under: Village Share of Tenant's % share in Input(I)/Output(O) Total
Fixed I-100% 1=50% I-50 co 75% rental 0-50 to 75% 0-50% 0=50 co 75%
(t) (x) (M) (x)
Kanzara Area 17C 42 32 9 100 Transactions (23) (33) (31) (13) (100)
Kinkheda Area 2 96 -- 2 100 Transactions ( 4) (92) ( 4) (100)
Kalman Area 4 4 90 2 100 Transactions ( 7) ( 6) (81) ( 6) (100)
Shirapur Area 1 96 1 2 100 Transaccions ( 1) (96) ( 1) ( 2) (100)
Aurepalle Area 76 19 -- 5 100 Transactions (73) (24) ( 3) (100)
Dokur Area 3 -- 94 3 100 Transactions ( 3) (93) ( 4) (100) a. Based on details from the 240 panel households and their partners in tenancy transactions in six villages. For Kalman and Kinkheda villages data relate to first 3 years only. b. Includes all cases of leased-in and leased-out land of panel respondents that existed at the beginning of the field work, as well as new cransactions that took place during the 4 years of field work. This table excludes the land transfers resulting from termination of leases. c. The top figure relates to percentage of area covered while the bottom figure in parentheses relates to the percentage of transactions covered under the respective categories.
Source: N. S. Jodha (1979). - 91 -
Table A.10
INDIA: PERCENTAGE ADOPTERS AND AREA UNDER ADOPTION TO MODERN RICE VARIETIES BY SIZE AND TENURE, PEDUPULLERU,ANDRRA PRADESR, INDIA, 1971-72
MV growers (%)
Kharif Rabi
Tenure Below 4 ha and All farms Below 4 ha and All farms 4 ha above 4 ha above
Owners 3 29 15 35 67 51 Pure tenants 4 20 7 32 30 31 All farms 3 27 12 34 61 45
hV area (%)
Kharif Rabi
Tenure Below 4 ha and All farms Below 4 ha and All farms 4 ha above 4 ha above
Owners 2 10 9 33 51 48 Pure tenants 3 13 9 28 25 27 All farms 2 11 9 30 48 44
x2 significance test on adopters of MV in Pedapullera, India, 1971/72
Size (ignoring tenancy) Significant at the 1% level Tenancy (ignoring size) Significant in rabi at the 5% level Tenancy within 4-ha size group Not significant Tenancy in 4-ha and above size group Significant in rabi at the 5% level Owners with regard to size Significant at the 1% level Tenants with regard to size Not significant Below 2 ha and above 2 ha (ignoring tenancy) Not significant
Source: Parathasarathyand Prasad (1976) - 92 -
Table A.I1
BANGLADESH:USE OF NUTRIENT(NPK) INPUTS HY7 ADOPTIONAND IRRIGATIONON OWNEDAND RKNEEDLAND, AMANSEASON 1974
Sample (N)
1. Nutrient use on own land (Kg/Ha of NPK) = 39.37 (1053) 2. Nutrient use on rented land (Ig/Ha of NPK) = 13.96 (1053) 3. Nutrient use on all cultivated land (Ig/Ha of NPK) = 34.78 (1053) 4. % of HYV users = 43 (686) 5. % of owned land in HYV = 17 ( 686) 6. % of rented land in HYV = 10 ( 686) 7. x of farms with irrigation - 11 ( 686) 8. x of owned land irrigated = 5 ( 686) 9. % of rented land irrigated = 2 ( 686)
Source: I.F.D.C. "Equity Effects of Fertilizer Use in Bangladesh,"Tables 7 and 8 districtwise data weighted by number of sampled farms.
Table A.12
BANGLADESH:USE OF NUTRIENT(NPK) ON OWNEDAND RENTED LANDBY SIZE GROUPOF LANDOWNED - AMANSEASON 1979
Levels of NPK Use (Kg/Ha) Size Group (a) (b) (c) of Owned Land On Owner-Operated On Rented-in On All Cultivated (Acres) Land Land Land
Landless - 35.85 35.85 0.0 < 1.0 43.20 21.14 31.25 1.0 < 2.5 39.53 12.87 33.09 2.5 < 5.0 41.36 4.60 38.61 5.0 < 7.5 34.93 6.43 32.17 < 7.5 28.50 2.76 26.66 All Sizes 39.53 13.79 34.01
Source: I.F.D.C. "Equity Effects of Fertilizer Use," Table 13. Table A. 13
PAKISTAN: FArM CHARACTEIISrIcS BY SIZE AND 7rDANCY IN liRJAB, I974-75
Average Cropping "Bullock" "Family/ Casual Percent Chemical Irriga- X Water Cultivated Intensity: Hrs. per Perm. Lab. Hired Area Fertili- tion from Cases Land All Crops Acre Hrs./Acre Lab. Ferti- zer Used (Acre Tube- (Acres) Hrs./ lized (N) per lnches/ wells Under Acre Crop- Cropped All ped (lbs/ Acre) Crops Acre)
Owners 12.56 14b 75.1 158.7 53.7 63.6 32.6 24.2 36.5 (240)
0-6.25 Acres 4.01 158 86.5 204.1 39.4 62.5 36.8 23.4 29.0 (70)
6.25-12.5 Acres 9.08 147 77.4 157.9 56.4 61.7 32.3 24.6 41.2 (87)
12.5-25.0 Acres 17.08 136 68.9 130.0 62.7 65.5 30.3 24.5 37.4 (58)
Over 25.0 Acres 38.09 133 49.6 I00.8 63.2 68.6 26.7 24.1 39.0 (25)
Tenan Tenants 13.56 155 79.3 163.8 52.8 62.3 22.03 26.4 37.9 (34)
All Farms 12.68 147 75.6 159.3 53.6 63.4 31.3 24.4 36.7 (274)
Source: A. S. Haider, et. al., "An AgrononLic Sturvey and Analysis of Factors Affecting Farm Production and Income in Selected Areas of Punjab, Pakistan," 1977. Table A.14
PUNJAB: AVERAGE CROP YIELDS BY FARM SIZE AND TENANCY TENANCY, 1974-75 YIELDS (Mds/Acre CROPPED) 1/
Owners Sugar Cane Cotton Fine Rice Irri Rice Wheat
Under 6.25 Acres 355.0 8.0 19.9 32.6 20.7
6.25 - 12.5 Acres 355.3 8.4 18.2 25.5 18.9 12.5 - 25.0 Acres 359.4 7.7 19.4 23.4 19.2 Over 25.0 Acres 345.6 7.8 19.9 23.9 18.3 Tenants
All Sizes 294.4 5.1 18.4 24.4 16.8
1/ Yields are weighted by average cropped areas of each crop 'in each region.'
Source: A. S. Haider, et. al. "An Economic Survey and Analysis of Factors Affecting Farm Production and Income in Selected Areas of Punjab, Pakistan," 1977. Table A.I5
PAXISTAN: INDUS BASIN - AGGREGATEtCROPPINC INTENSITY BY FARMSIZE AND TENANCY. 1976-17
SIZE GROUP (Acres) TENURE 0.0-1.0 1.0-2.5 2.5-5.0 5.0-7.5 7.5-10.0 10.0-I2.0 12.5-15.0 15.0-20.(1 20.0-25.0 25.0-5(1 50 TOTAL
OWNER FARtSit 1.77 1.55 1.34 1.31 1.27 1.24 1.17 (.2(1 1.15 1.16 1.01 1.25
OWNER-TEVMT FARMS- * * 1.42 1.42 1.39 1.12 1.19 1.16 1.2h 1.07 1.05 1.27
______- _-- _- _ _- _ _-_-_- _ _-_- _ _ _-_- _ _-_- _ _ _ -_- _ -_-_-_------t U-I PURE TENINT FARMSS 1.47 1.71 I.55 1.52 1.43 1.28 1.10 1.25 1.20 1.11 0.34 1.34
Al.L FARMS 1.74 1.58 1.41 1.4t) 1.35 1.20 1.22 1.24 1.1(0 1.14 1.00 1.27
Source: World Bank and Water and Development Auithority, "Extended Agroeconomic S,trvey of the Indus Basin" 1966-77.
Note: a) Wholly owned land; b) Part owned .iud part leased-In land; c) Wholly leased-in land.
* - Too fev observations. Table A.16
PAKISTAN: INDUS BASIN - YIELDS FOR HYV WHEAT BY FAKM SIZE AND TENANCY (KG/HA.) 1976-77.
SIZE GROUP (Acres) TENUEE 0<5.0 5.0<7.5 7.5<10.0 10.0<12.5 12.5<15.0 15.0<20.0 20.0<25.0 25.0<37.5 >37.5 TOTAL
OVNER a/ 3940.17 3597.48 3701.80 3382.38 3695.00 3344.65 3493.88 3447.64 3734.71 3606.60
OWNER- TRUANT b/ 4439.80 3175.49 3237.00 3823.94 2897.59 3929.82 3579.71 3609.47 4101.64 3629.74
PURE TEKANT C/ 3733.42 4649.83 3748.15 3532.58 3249.38 3047.92 3192.88 3156.95 4320.61 3596.30 oh
SHARE- CBOPPERS 3192.06 3428.34 3728.75 2908.54 3725.15 3293.10 2686.81 2881.93 2682.75 3257.23
ALL FARMS 3874.70 3569.91 3631.57 3287.44 3597.50 3410.22 3335.59 3348.72 3734.68 3526.63
Source: World Bank/WAPDA -Extended Agroeconowic Survey of the lQdus Basin,- 1976-77.
Notes: a) Wholly-owned land; b) Part-owned, part leased-in land; c) Wholly leased-in land on fixed rental basis; d) Wholly leased-in land on sharecropped basis. Table A.17
PAKISTAN: INDUS BASIN - k'ERTILIZER USE PER HECTARE PLANTED WITH HYV WHEAT BY FARM SIZE AND TENANCY (N+P IN KG) 1976-77
SIZE GROUP (Acres) TENURE 0<5.0 5.0(7.5 7.5<10.0 10.0(12.5 12.5<15.0 15.0<20.0 20.0<25.0 25.0<37.5 >37.5 TOTAL
OWNER a! 124.73 127.08 128.08 189.90 117.25 135.41 235.01 396.76 779.42 323.61
OWNER- TENANT b/ 124.96 144.12 108.09 103.05 121.39 140.53 115.80 322.08 935.49 274.59
PURE TENANT c/ 158.74 145.49 132.39 148.97 128.91 154.99 133.31 112.58 1476.67 206.73
-1
SHARE- CROPPER Al 126.01 108.03 125.48 116.82 136.48 250.88 142.14 315.05 1385.31 214.28
ALL FARMS 127.92 125.80 124.60 155.08 125.97 185.88 171.87 346.63 845.92 281.47
Source: World Bank/WAPUA "Agroeconiomic Survey of the Indus Basin," 197b-77.
Notes: a) Wholly-owned land; b) Part-owned, part leased-In land; c) Wholly leased-in land on fixed rental basis; d) Wholly leased-inl land on sharecropped basis. - 98 -
Table A.18
ALL INDIA: 2 ADOPTERSOF HYV SEEDS BY FARM SIZE AND TENANCY(1970-1971)
Size Group of Tenants PT-Owners Owners All Net Cultivated N (%) N (%) N (%) N (%) Land (Acres)
O - 0.5 3 (0) 0 (-) 51 (12) 54 (11) 0.5 - 1.0 9 (22) 2 (0) 86 (16) 97 (16) 1.0 - 2.5 28 (14) 16 (25) 418 (22) 463 (22) 2.5 - 5.0 18 (33) 58 (29) 487 (28) 563 (29) 5.0 - 7.5 9 (33) 37 (30) 412 (32) 458 (32) 7.5 - 10.0 2 (100) 14 (43) 239 (42) 255 (42) 10 - 15.0 6 (16) 31 (35) 353 (41) 390 (40) 15 - 25.0 4 (25) L6 (56) 323 (46) 343 (46) 25.0 + - - 7 (57) 197 (42) 204 (43)
ALL 79 (24) 181 (34) 2,566 (34) 2,827 (33)
Source: N.C.A.E.R. Additional Rural Income Survey. 1970-71.
Note: N - Number of total observations in the cell. Table A.17
INDIA: AVERAGE NUTRIENT USe ON ALL CROPS BY FARN SIZE AND TENANCY, 1970-71 (KGA. OF NPK PER ACRE OF FERTILIZED LAND)
SIZE GROUP (Acres) MEAN TENURE COUNT 0<0.5 0.5<1.0 1.0<2.5 2.5<5.0 5.0<7.5 7.5<10.0 10.0<15.0 15.0<25.0 25.0 TOTAL
PURE TENANT/ * 62.19 80.78 71.90 57.67 * 28.62 35.15 * 66.25
OWNER-TENANT b/ * * 56.95 54.01 56.40 56.37 90.58 81.71 25.75 50.52
27.58 44.52 OWNER c/ 82.45 47.57 53.11 47.13 46.76 45.14 40.88 38.39
ALL FARMS 82.58 49.32 51.35 46.44 46.14 43.80 44.64 40.46 27.44 45.52
Sources: N.C.A.E.R. Additional Rural Income Survey Data.
* Too few observations available in coil. Notes: a) Wholly leased-in land; b) Partly-owned and partly leased-in land; c) Wholly-owned land. - 100 -
Table A.20
INDIA: PERCENTAGIINCREASES IN INCOMESPER CULTIVATEDACRE EXPERIENCEDBY TENANTSAND OWNERSBY FARMSIZE, 1970-71
Region Sample Size Group (N) (A)
Pure Tenants
0.0 1.0 2.5 5.0 7.5 10.0 15.0 > <1.0 <2.5 <5.0 <7.5 <10.0 <15.0 <25.0 25.0 All
All India (60) (19) -15 100 123 280 A 178 46 - 58
North (6) (4) N 4 A 936 - N 10 - 134 West (7) (-) - N N N - N N - N South (38) (14) -29 92 87 158 A 250 N - 35 East (4) (-) - N N - - - - - N
Part Tenants
All India 119 (62) N -21 17 46 241 27 57 5 19
North (17) (25) - N A 54 293 26 31 68 56 West (24) (5) - - N 289 N N 89 -58 35 South (29) (10) N -48 0 74 - 86 N -62 5 East (13) (10) - -80 49 26 - -41 - - 8
Owners
All India (1705) (862) 100 56 64 73 76 50 49 44 42
North (83) (267) -42 17 17 19 23 24 29 71 20 West (719) (229) 126 14 52 17 31 -3 8 -19 7 South (452) (131) 98 101 57 73 97 51 40 49 59 East (288) (132) 108 46 36 41 64 12 21 74 36
Source: NCAER, 'ARIS, 1970-71" SPSS crossbreak tabulations. Net crop incomes per cultivated acre for HYV adopters over those of non-adopters. (-) indicates no observations, (N) indicates that only non-adopters were found and (A) that only adopters were found for that cell. Table A.21
AVERAGE NET BENEFITS OF FERTILIZER USE TRANSFERRED AS RENT TO LANDLORDS AND REDISTRIBUTION OF RENT AMONG FARM-SIZE GROUPS (Bangladesh, Aman Season,1979)
Net Benefits Net Benefits Transfer of Rent Distribution of Net Farm Size to Farms, Less Rent, _ To Landlords Redistribution Benefits to Farms (acres) TK TK TK % of () X of Total of Renta TK % of Total
(1) (2) (3) (4) (5) (6) (7) (8) F. Size < 1.0 24,359 7,926 16,433 67 70 707 8,633 18 I < F. Size < 2.5 15,869 11,213 4,656 29 20 3,299 14,512 29 2.5 < F. Size < 5.0 3,954 2,725 1,229 31 5 1,650 4,375 9 F. Size > 5.0 5,460 4,213 1,247 23 5 17,909 22,122 44 H
All Sample 49,642 26,077 23,565 47 100 23,565 59,642 100 a. Assuming that the transfer to landlords is distributed among farmers in the sample in proportion to the distribution of rented-out land among farm size groups. This implicitly asstimes that landlords are just other farmers of which this sample is representative. b. After redistribution of benefits resulting from sharecropping arrangements is accounted for. Col (7) = Col (2) and Col (6).
Source: IFDC, (1980) Table A.22
PAKISTAN: P8RCINTAGEINCREASE IN CROP INCOMESPER ACRE BY ADOPTION, TENANCY AND FARM SIZE, 1976-77
Farm Size Sample (Acres) N A Sharecropper Tenant Pt-Owner Owner All
0 < 5.0 (1) (58) 51 A A A 17 5 < 7.5 (1) (91) A A A 492 676 7.5 < 10.0 (2) (88) A A A 190 258 10.0 < 12.5 (9) (121) 397 A 24 147 162 12.5 < 15 (1) (97) A A A l13 1ll 15.0 < 20.0 (7) (135) 223 302 A 503 449 20.0 < 25.0 (5) (93) 504 A 5 110 93 25.0 < 37.5 (1) (148) A A 710 A 717 37.5 + (4) (128) 82 A A -4 11
Source: IBRD "Extended Agroeconomic Survey of the Indus Basin 1977," SPSS Crossbreaks, (N) indicatesobservations of non adopters and (4) indicatesobservations of adopters. - 103 -
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