How do informal farmland rental markets affect smallholders’ well‐being? Evidence from a matched tenant–landlord survey in Malawi

We estimate the efficiency and equity returns to farmland rental markets in Malawi using a matched tenant–landlord survey of smallholder farm households in four districts. Our sample allows us to more fully observe the landlord side of the rental market, which is almost always missing in previous studies. Our results suggest that land rental markets promote efficiency by facilitating a net transfer of land to more productive farmers. We also find that land rental markets promote equity as conventionally defined in the land markets literature, that is, by transferring land from land‐rich households to land‐poor households, and from labor‐poor to labor‐rich households. However, our study identifies some important challenges for land rental markets in this context. First, we find that tenants in our sample are wealthier than their landlord counterpart on average in all dimensions other than landholding. In addition, most landlords report the motive for renting out their land as either the need for immediate cash, or the lack of labor and/or capital to cultivate the plot that was rented out. These findings align with concerns about potential “stress renting” by poor landlords and suggest the value of defining equity along a broader set of dimensions other than simply equalizing the distribution of farmland and labor.     

Renters,landlords, and farmland stewardship

Are farmers better stewards of the land they own than the land they rent from others? We answer this question using a data set that identifies Ontario farmers’ conservation practices on their own land as well as the land they rent. Using a fixed‐effects regression approach, we find that the role of tenure varies for different types of conservation practices. Farmers were found to be just as likely to adopt a machinery‐related practice such as conservation tillage on their rented land as that land which they own. On the other hand, farmers were found to be less likely to adopt site‐specific conservation practices such as planting cover crops on rented land. However, this effect diminishes as the expected length of the rental relationship increases when the landlord has a farming background.     

Tenants’ land access in the rental market: evidence from northern Ethiopia

The purpose of this study is to investigate the allocation efficiency in the tenancy market, and thereby the potential of the market to facilitate operational farm size adjustment that can help land‐poor tenant households to transform into smallholder commercial farms. We analyzed three rounds of balanced panel data for the production seasons 2005–2006, 2009–2010, and 2014–2015 collected from 320 smallholder farms in Tigrai region in northern Ethiopia. Random effects dynamic probit and tobit models are used to assess how land‐poor tenants’ access and extent of access to land are affected by state dependency (earlier participation in the market), kinship ties, climate shocks, and legal restrictions. The results indicate that state dependency and kinship ties with the landholder had strong positive effects on participation and intensity of participation. Climate shocks significantly affected the intensity of participation of tenants already in the rental market. Tenants’ overall access to rented land had not improved from 2005–2006 to 2014–2015. The amount of land accessed by those already in the market was insufficient for them to become commercial farmers. The important policy implication is that orchestrated interventions at community level are needed to reduce transaction costs and thereby improve land access of entrepreneurial tenants.     

The use of rented farmland in an area of intensive agricultural production in Norway

The amount of rented farmland in Norway has increased steadily since the 1950s. Concerns have been raised questioning whether farmland is treated less well by tenants compared to landowners. This study aims to investigate how farmers perceive their treatment of rented farmland, which factors impact their decision-making related to this and if farmers are concerned about farmland elements that are less important for productivity but mainly of interest for cultural heritage or environmental management reasons. Semi-structured interviews with a group of randomly selected farmers were carried out in an area dominated by intensive agriculture. Independent of, for example, amount of rented land or duration of the rental agreement, all farmers agreed that rented land was treated well. A strong competition for farmland in combination with farmers being dependent on renting land was the most important reason. Results from this study may be transferrable to other farming areas, at least where competition for farmland is comparable. We do suggest, however, that any further research on treatment of rented farmland in Norway should take a regional approach, since national statistics may cover significant regional differences.     

中国农户在农地流转市场上能否如愿以偿?——流转市场的交易成本考察

农地流转是实现规模经营的重要途径,尽管中国农地流转市场发展迅速,但农户在流转市场上能否转入自己想要转入数量的土地尚无人关注。本文利用全国6省1200户2000年和2008年追踪调查数据实证分析农户的流转意愿多大程度上可以在流转市场上得以实现,进而考察流转市场交易成本的存在性、对称性和动态性。研究表明,中国农地流转市场存在明显的交易成本,因此流转市场是不完善的。具体结论:第一,流转市场存在明显进入门槛,进入市场后农户也无法实现完全调整,转入户2000年和2008年分别能实现调整意愿的24%和37%,高于转出户的19%和18%;第二,流转市场的交易成本存在非对称性,转入户比转出户面临的交易门槛高,但进入市场后转入户调整意愿实现程度高于转出户;第三,从2000年到2008年,流转市场的交易门槛显著降低了,但进入市场后调整意愿实现程度并没有显著提高;第四,农资设备和劳动力等要素市场的不完善程度更严重,因此农地流转市场发挥了将土地这种"不能移动"的要素移动起来以迎合那些"本该移动"的要素功能,提高了资源配置效率。政府应进一步提高农地产权稳定性,降低流转市场交易成本,加快农业生产社会化服务业发展,完善农村劳动力市场。     

Land tenure and rental in Western Sudan

This paper reports on aspects of land tenure in western Sudan, especially the nature of tenure insecurity and the functioning of the land rental market. The active land rental market accounted for about one-third of cultivated land. Patterns of land rental transactions, and tests of the importance of insecurity in renting land, where the owner may not be able to reclaim land rented out, do not support the presumption that rental markets perform poorly. The role of the sheikh as administrator of village land, and the claims of large landowners to vast tracts, are, however, important political problems that must be resolved before attempts at ‘rationalizing’ land tenure.     

Land Tenure,Tenure Security and Farm Efficiency: Panel Evidence from the Philippines

This article tests the relationships among formalised property rights, land tenure contracts and productive efficiency in farming. Using four rounds of panel data from 230 rice farms in the Philippines, we measure the effects of land tenure arrangements on farm efficiency using a stochastic production frontier model. We test for the allocative efficiency of observed land rental markets. We also test how land tenure security affects farmers' investment decisions. Results suggest that, despite the presence of formalised titles, the rental market remains inefficient at allocating land. In contrast, the unformalised tenure contracts used by farmers appear to provide tenure security.     

The roles of risk preferences,selection, and uncertain returns on land contracts

Using panel data on a statistically representative sample of Iowa farmland parcels from 1997 to 2017, we analyze the factors determining whether land is farmed by the owner or rented out under a cash rent or crop share contract. The landowner's decision to rent or operate the land depends on the distribution of expected net returns to the land, and so estimates of the factors affecting rental terms will be biased if the sample only includes rental contracts and excludes the owner-operator. Land with higher mean and/or lower variance of expected net returns is most likely to be rented out. Participants in the rental market will include the most risk-averse landowners and the least risk-averse tenants, while the least risk-averse landowners operate their own land. Our empirical results suggest that the rising use of cash rent contracts and declining incidence of owner-operation and crop-share rental contracts is consistent with falling coefficient of variation in expected net returns per acre.     

Tenants, Landlords, and Soil Conservation

It has long been argued that tenants tend to overexploit land, but this conventional wisdom has been derived largely without consideration of landlords' actions. We examine what happens when landlords can invest in durable conservation measures in addition to choosing rental contract terms. When tenants are risk neutral, landlords overinvest in conservation under cash rental contracts but can achieve first best levels of output and protection against land degradation when conservation investment is combined with share rental. When tenants are risk averse, the first best is unattainable. In this case, conservation investment combined with share rental results in output levels below the first best, while equilibrium conservation investment may be greater or less than the first best. These results suggest that contract form and conservation investments are likely made simultaneously, so that econometric studies of conservation practice adoption that treat rental status as exogenous are likely subject to bias.     

Drivers of transaction costs affecting participation in the rental market for cropland in Vietnam

Farm incomes in rural Vietnam are tightly constrained by very small farm sizes. Stringent limits on the area of cropland that individuals may own means that farmers need a well‐functioning rental market to consolidate land parcels, grow their farm enterprises, adopt new technology and increase incomes. This research investigates the efficiency and equity impacts of the rental market in rural Vietnam and attempts to identify transaction costs impeding the market. A generalised ordered logit model with shifting thresholds allowing transaction costs to impact lessors and lessees differently was specified and estimated using data extracted from the Vietnam Household Living Standards Surveys. The findings show that rental transactions reduced imbalances in factor endowments, transferring cropland to households that were relatively land‐poor but more willing and able to farm. However, the market is constrained by transaction costs that affect lessors and lessees differently. It is recommended that government should complete its land registration program and relax restrictions on the use of wetlands to grow crops other than rice. It should also improve access to all‐weather roads as this encourages participation on both sides of the rental market, whereas better access to communications infrastructure was found to promote only the supply side.     

Heterogeneous Risk Preferences,Discount Rates and Land Contract Choice in Ethiopia

This paper analyses the role of risk and rate of time preference in the choice of land contracts. The analysis builds on the risk‐sharing and imperfect market explanations of contract choice. Unique data from Ethiopia, which contain land contract information and experimental risk and rate of time preference measures on matched landlord–tenant partners, are employed in the empirical analysis. The results show that landlord and tenant time preferences are significant determinants of contract choice. For landlords (but not tenants), risk preference is also significant, indicating the importance of financial constraints and production risk in the determination of contract choice. The results are of particular relevance to land market policy in Ethiopia, where production is risk‐prone, financial markets are imperfect, and where there is a major need for the development of vibrant land rental markets.     

Factors affecting entry and intensity in informal rental land markets in Southern Ethiopian highlands

Informal land transactions, particularly rental land markets, are emerging in rural Ethiopia in response to the inadequacies of the administratively based land distribution system to meet the growing demand for land and correct imbalances in factor proportions at the farm level. These informal land markets provide a vehicle to equalise factor proportions at the farm level and to improve productivity and hence households' welfare. Among the farmers who lease out land, those who live in the highland‐areas, where land is scarce and unequal, are more likely to engage in these markets. Increases in the size of land holdings relative to labour and livestock ownership, the number of non‐working household members and pressure for subsistence increase the likelihood of leasing out land. On the other hand, increases in the number of working adults, improved nutritional status and greater wealth affect negatively the supply of land into these markets. The potential exists for these markets to improve factor equalisation, reduce inequality in land holdings, and shift the income position of participating households. However, success depends on whether other factor markets are functioning to thwart forced disposal of land to meet subsistence. Public policy has pivotal role in fostering the growth of these markets and their land transfer and factor equalisation functions by ensuring their legally enforceable status, and removing legal restrictions that constrain choices of contracts and trading over greater distances. In addition, both long and short‐term policy measures are needed to reduce the extent to which poor farmers engage in distress transactions.     

Variation in Output Shares and Endogenous Matching in Land Rental Contracts: Evidence from Ethiopia

We investigate the extent of variation in output sharing in land rental contracts and alternative hypotheses to explain this variation. Close to half of the rental contracts in our study in northern Ethiopia have output shares that deviate from the dominant 50–50 equal sharing. Variation in land quality, the relative bargaining power of landlords and tenants, production risks and shocks are hypothesised to influence output shares. Matched data of landlords and tenants are used. The importance of endogenous matching of landlords and tenants is investigated by assessing how endogenous tenant characteristics are correlated with landlord characteristics. We find evidence of negative assortative matching for key resource characteristics. A control function approach is used to control for endogenous matching in the output share models. The results reveal that production risks, as well as relative bargaining power, affect output shares in the reverse tenancy setting where tenants are relatively wealthier and more influential than landlords.     

Determinants of agricultural land rental market transactions in Bangladesh

Land rental market transactions have been the norm in land scarce rural Bangladesh mainly due to the inadequacies of the governmental land distribution system to meet the growing demand for land and to correct imbalances in factor proportions at the farm-level. The present study jointly determines the socio-economic factors underlying decision to rent-in land and/or rent-out land by the Bangladeshi farmers in the land rental market using a bivariate Tobit model. The model diagnostic reveals that the decisions to rent-in and/or rent-out land is significantly correlated, implying that univariate analysis of such decisions are biased, thereby, justifying the use of a bivariate approach. Results reveal that a number of socio-economic factors affect farmers’ participation in the land rental market and work in opposite directions regarding the decision to rent-in or rent-out land. The likelihood of renting-in land is higher for farmers with inadequate cultivable land but with higher levels of livestock and other farm capital asset ownership, and also for those located in areas with developed infrastructure and fertile soils. On the other hand, the likelihood of renting-out land is higher among farmers with higher levels of cultivable land but inadequate farm capital and livestock resources, higher levels of education, less subsistence pressure, and poor extension contact. Geography does matter, as the likelihood of land transactions is higher in agriculturally intensive and/or developed regions. Government policy has an important role to play to improve the factor equalisation role of these land rental markets through, for example, investment in education, agricultural extension, rural infrastructure and the livestock sector.     

Livestock and land share contracts in a Hindu society

This article examines factors related to a livestock rental market in western Nepal and assesses whether this market is associated with caste differentiation and land rental market participation. Theoretical models for asset‐rich (i.e., high‐caste) households, rich in land and livestock, and asset‐poor (i.e., low‐caste families) households are presented to provide logical explanations for the existence of a livestock rental market and the synergy between livestock and land rental markets participation. A combination of double hurdle models and bivariate‐ordered probit models were used to test the implications of the models. Consistent with the theoretical models, land‐ and livestock‐rich high‐caste households were more likely to rent out land and/or livestock, whereas land‐ and livestock‐poor and credit constrained low‐caste households were more likely to rent livestock and land from others. Participation in the two markets was positively correlated, indicating a synergistic relationship that may be due to production and transaction costs reducing benefits. Policies that can enhance the allocative efficiency of livestock and land rental markets can improve equity as well as efficiency of land use in Nepal. Provision of livestock credit to land‐poor low‐caste households is also crucially dependent on their access to more long‐term contracts for land.     

Land rental market legal restrictions in Northern Ethiopia

This study assesses the de jure and de facto land market legal restrictions in the Tigray region in Ethiopia and the extent of implementation of the new land rental restrictions that were introduced in 2006 that state that not more than 50% of a farm can be rented out. The knowledge, perceptions and attitudes regarding the law among local Land Administration Committee (LAC) members, local conflict mediators and a sample of rural households are investigated. We find that the rented area restriction is commonly violated and not enforced. The law is circumvented by framing sharecropping as something other than land rental, although sharecropping is the dominant land rental contract in the region. When it is made clear that the law may hurt weak and vulnerable (often female-headed) households that are unable to farm their land themselves and therefore rent it out, the large majority of LAC members, conflict mediators and rural households are against the law.     

Property rights in a very poor country: tenure insecurity and investment in Ethiopia

This article provides evidence from one of the poorest countries in the world that the institutions of property rights matter for efficiency, investment, and growth. With all land state‐owned, the threat of land redistribution never appears far off the agenda. Land rental and leasing have been made legal, but transfer rights remain restricted and the perception of continuing tenure insecurity remains quite strong. Using a unique panel data set, this study investigates whether transfer rights and implied tenure insecurity affect household investment decisions, focusing on trees and shrubs. The panel data estimates suggest that limited perceived transfer rights negatively affects the long‐term investment in Ethiopian agriculture, contributing to the low returns from land and perpetuating low growth and poverty.     

Are medium‐scale farms driving agricultural transformation in sub‐Saharan Africa?

This study presents evidence of profound farm‐level transformation in parts of sub‐Saharan Africa, identifies major sources of dynamism in the sector, and proposes an updated typology of farms that reflects the evolving nature of African agriculture. Repeat waves of national survey data are used to examine changes in crop production and marketed output by farm size. Between the first and most recent surveys (generally covering 6 to 10 years), the share of national marketed crop output value accounted for by medium‐scale farms rose in Zambia from 23% to 42%, in Tanzania from 17% to 36%, and in Nigeria from 7% to 18%. The share of land under medium‐scale farms is not rising in densely populated countries such as Kenya, Uganda, and Rwanda, where land scarcity is impeding the pace of medium‐scale farm acquisitions. Medium‐scale farmers are a diverse group, reflecting distinct entry pathways into agriculture, encouraged by the rapid development of land rental, purchase, and long‐term lease markets. The rise of medium‐scale farms is affecting the region in diverse ways that are difficult to generalize. Findings indicate that these farms can be a dynamic driver of agricultural transformation but this does not reduce the importance of maintaining a clear commitment to supporting smallholder farms. Strengthening land tenure security of local rural people to maintain land rights and support productivity investments by smallholder households remains crucial.     

Impacts of tenancy arrangements on investment and efficiency: evidence from Pakistan

In this article, we use farm‐level data from the Punjab Province in Pakistan to analyze the impact of three tenancy contracts on investment in soil‐improving and productivity‐enhancing measures and farm productivity. A multivariate tobit model that accounts for potential substitutability and complementarity of investment options, as well as endogeneity of tenure arrangements was employed in the empirical analysis. Our empirical results indicate that land tenure arrangements influence farmers’ decisions to invest in soil‐improving and productivity‐enhancing measures. In particular, owner‐cultivators with secured tenancy arrangements were found to be more likely to invest in soil‐improving and productivity‐enhancing measures, compared to those on leased contracts. We also find that output per hectare was highest on land cultivated by owners and lowest on land under sharecropping tenancy, lending support to the Marshallian inefficiency hypothesis.     

城市近郊区农户土地投入行为绩效评价及障碍因子诊断 ——耕地多功能价值视角下的多群组对比分析

研究目的:基于耕地多功能价值的视角研究农户土地投入行为绩效并诊断其障碍因子,以探索当前形势下城市近郊区农户"既不愿意种地,又不愿意将土地流转"的深层原因.研究方法:在构建农户土地投入行为绩效分析框架的基础上,通过农村入户调查获得样本数据,采用熵权TOPSIS法和障碍度模型,对不同性别和年龄阶段农户的土地投入行为展开绩效分析.研究结果:总体上,城市近郊区农户的土地投入行为绩效水平为"良好";多群组对比分析显示,男性绩效水平高于女性,青壮年绩效水平高于老年;补贴标准偏低和职业认同感差是制约土地投入行为绩效的主要障碍因子,而满足就业和养老需求依然是耕地资源的核心价值功能.研究结论:耕地在农户认知层面发挥着"弱保障"功能,"存而不用"的保守心态在事实上导致家庭承包地处于闲置、撂荒状态,这便是当前形势下城市近郊区耕地资源低效利用的底层逻辑.