Innovating with land leasing

Innovating with land leasing

René Mendoza Vidaurre *

Where water passes, there is life (E. Valdés S.J.)

In a previous article we invited people to search for alternatives for the so-called “Central American dry corridor”, a zone that is an expression of the effects of climate change and social injustice in the region, part of it being low quality soils and populated by peasant families expelled from another area dominated by monocropping haciendas (cotton, sugar cane, peanuts…) on historically high quality land and used for extensive ranching (See: http://peacewinds.org/the-drought-social-injustice-and-the-opportunity-for-change/ ). This search for alternatives is even more urgent on learning that, according to the 2015 Climate Risk Index, between 1994 and 2013 Honduras, Nicaragua and Guatemala are among the 10 countries most affected in the world by climate events (See: https://germanwatch.org/en/download/10343.pdf). In this article we discuss one of those options that is applicable to all the areas of the country and valid for Latin America. Based on the innovative work of the Rural Development Commission (CODER), supported by the Irish Catholic Agency for Development, TROCAIRE, in the dry municipalities of San Francisco, Cinco Pinos, Santo Tomás and San Pedro in the Chinandega Province (Nicaragua), we contend that a change in the rules of the leasing system as a result of the organized advancement of rural families would help to improve the efficiency, equity and agricultural and non-agricultural sustainability, and in the long term revert the drought.

Leasing system

Para-phrasing R. Fallas S.J., peasant families without land are like beings without souls, land is accessed via the family (e.g. inheritance), community, state and the market. According to Deere and León (2003, “The Gender Asset Gap: Land in Latin America” in: World Development 31.6), women acquire land more through inheritance, while men do so via the community, state and market. The leasing market is a way of accessing the land, of increasing efficiency in agriculture, and equity in terms of small producer access; so 41% of all the land in Europe is leased, 41% in the United States, 32% in Africa, 16% in Asia and 12% in Latin America (de Janvry, Marcours y Sadoulet, 2002, “El acceso a tierras a través del arrendamiento” in: IADB, El acceso a la tierra en la agenda de desarrollo rural). The experience of France stands out, with more than 60% of their land areas leased, with a stable leasing law since 1946 that allows whole farms to be leased for periods of up to 18 years, transferable rights (in the case of the death of the spouse and/or children), and with leasing prices set each year by a provincial commission; and it is a legislation that protects family agriculture, for example, with an egalitarian law on inheritances. These accomplishments in France are primarily due to decades of effort on the part of the peasant movement to access land without having to buy it, nor wait for an agrarian reform. (See: http://www.agter.org/bdf/es/corpus_chemin/fiche-chemin-333.html; http://www.agter.org/bdf/es/corpus_chemin/fiche-chemin-55.html).

Following de Janvry, Marcours and Sadoulet (2002), leased land tends to be used by families who have little land and by family workers who voluntarily are more productive, that is the reason for their greater efficiency; mostly the transfer is from large land owners to small scale leasers, that is the reason for the poverty reduction; while the very imperfect and biased land markets favor the large producers who buy land off of the small ones, who have less possibilities of buying land (de Janvry, Platteau, Gordillo y. Sadoulet, 2001, “Access to Land and Land Policy Reforms”, in: de Janvry, Gordillo, Platteau and Sadoulet, Access to Land, Rural Poverty and Public Action). Why then is leasing in Latin America at only 12%? From the perspective of the owners, property rights are weak, the laws frequently change and their application (and conflict resolution) is costly; information is inadequate to do a good selection of renters, the local social capital is weak for honoring the leasing contract, and frequently agrarian reforms happen that later do not have registered titles, and when they have titles, their leasing is prohibited. From the perspective of the renters, their few resources limit their access to the market, they lack animals and credit, the opening of roads makes food production for their own use less necessary, even though the higher quality land is in demand for intensive crops (e.g. tobacco) from producers with more capital; and we would add, the producer families have weak organizations and their influence over policy is controlled.

These factors generate lack of confidence among the owners to lease their land for a number of years, and even less to the same people, and makes them resist transacting with people outside their circle of trust; and the same with the renter who is afraid of the abuses of the owner. The low level of leasing means a lot of land gets left unused or is used for extensive livestock raising. Even this low percentage of leasing is done for a year or less, which is why it is only for basic grain crops; both situations, extensive livestock raising and only annual crops, in the long term, contribute to soil erosion and the factors that contribute to the drought, in addition to increasing poverty.

Nevertheless, in the last 10 years there is a new context that could invigorate the leasing systems: drought is reducing the amount of feed and the water for the cattle herd, the large ranchers are not getting into farming because of the high costs of supervising the labor force; people who are migrating from dry zones, are leaving their lands in the hands of some relative; and more and more the end of the agricultural frontier is being felt, many times even with increasing violence on the Caribbean Coast. The reduction in the profitability of extensive agriculture is also felt due to the fact that the land is already “worn out”, which requires intensive and ecologically sustainable agriculture and ranching. What is the response to this new context?

The experience of CODER, an innovative seed

The four municipalities (San Francisco, Santo Tomás, San Pedro and Cinco Pinos), founded over more than 100 years ago, illustrate the description of Latin America and this emerging context. The large rancher is seeing their grazing land dry up, and calculates that the costs of supervision are high if he decides to hire labor to raise basic grains, while the peasant families with little or no land see themselves forced to migrate to ensure food for their families. In the face of this situation the leasing system offers some relief, which, improved through the mediation of CODER, indicates a path with good transformative potential. See the Table.

 

  Land Owner Leasing family
Traditional leasing -provides land for one agricultural cycle (4 months) for C$1000, and whether the harvest is good or bad, he gets the post harvest stubble for his cattle, valued at C$1000, in addition to the fodder that grows on the rented manzana.

-can hire labor of the leasing family to weed or do domestic work

-grows corn (10qq, C$3000) and beans (10 qq, C$4000); 60% of production costs

-assumes 100% risk if the harvest is bad.

-the land is left ‘worn out” and the following cycle he seeks out another “hill” to plant

-leadership is assumed by the male

Improved leasing (with the mediation of CODER) -provides land for first planting for 3 years at C$1300/yr (a roll of barbed wire each year that costs C$900, in addition to 4 days of work that adds up to C$400).

-good rows for fodder and living and dead barriers (prevents soil erosion due to rain), estimated value of C$1000/mz/yr

-whether the harvest is good or bad he gets the use of the stubble valued at C$1100; it is better stubble

-grows corn (12qq, C$3600) and beans (12 qq, C$4800); 65% of the production costs. In year 3 production increases and 60% of production costs.

-stays on the same area for 3 years

-assumes 100% of the risk if the harvest is bad, but risk of bad harvest is lessened.

-leadership is assumed by the female.

“Traditional leasing” produces economic advantages for both, but only for one year, then the land is left in poorer shape and continues to be exposed to erosion; neither the leaser nor the owner want to continue with this relationship in the same area; in fact, in other municipalities like Palacagüina the ranchers see themselves forced to lease out their land without charge, under the condition that they leave them the stubble from the crop, even though the power asymmetry persists and many times the property owner forces the renter to harvest their corn early. The “improved leasing” creates greater advantages: year after year both earn more economically, the land also improves its quality and erosion is prevented; there is a smaller risk of a bad harvest because of the soil conservation works, which also means better post harvest stubble for the rancher; the corn or beans are better used because the leasing families led by women, in addition to ensuring food for their families, transform the corn into tortillas to sell, and the beans they sell by the pound and also cooked; relationships of trust are built between renting women and land owners, which could augur negotiation processes that would further improve the leasing system.

The key to this “improved leasing” is in the fact that the arrangement is for 3 years instead of only 1, which allows investing in soil quality, that benefits the leaser (more production), and the owner (soil quality and better post harvest stubble). This is possible thanks to the fact that CODER, a local association, has leadership that comes from a peasant-farmer background, and have had interchanges of experience with French agronomists around leasing (See: http://www.agter.org/bdf/es/corpus_chemin/fiche-chemin-355.html), which has given them legitimacy to be able to be guarantors of the notarized, signed leasing agreement,  mediators in conflict resolution, and providers of technical assistance to BOTH actors.

Introduction of changes to the leasing system

“Improved leasing” shows us a path that, changing the rules and including coordination among various actors, can have a better economic, social and environmental impact. This path speaks to us of the urgency of expanding it, because 3 years are not enough for adding permanent crops like citrus, coffee, cacao, fruit or wood or energy trees, which also would contribute to the cattle feed and protecting areas of water replenishment. When the 3 years come to an end, the actors go back to the pre-leasing situation, including its consequences for soil erosion, scarcity of cattle feed, and human migration. The same happens with the gender relations that tend to regress. How can sustainable changes be generated in the leasing rules? We propose what we are calling “leasing plus”: reform the agrarian law to permit 15 year and even 20 year leases, ensuring legal stability so that those contracts are respected, and include reform of the law so that inheritances be given equally to sons and daughters, which would allow for those children who might not want to work the land to lease it out; these reforms, especially their sustainability, will be possible to the extent that producer families organize and promote them.

These results require inclusive processes. Local organizations like CODER, in coordination with DIRAC (Alternative Conflict Resolution Office of the judicial branch), could facilitate negotiations between renters and owners, and conflict resolution that gets beyond the abuses toward more lasting social arrangements and more adequate laws. Research institutions could study the various forms of leasing, including sharecropping, and think about leasing to groups, leases with the option to buy, community or cooperative supervision of the leases. Financial and technical and organizational assistance institutions could contribute to awakening in the landless families and the owners a long term vision and an effort and transformation awareness.

This leasing plus could contribute to efficiency, social and gender equity, and environmental sustainability, strengthening the peasant and farmer forms of production. And with this, the drought would give way to diversified zones with protected water sources, understanding that truly where water passes, there is life. Under this umbrella, the biggest challenge will no longer be accessing land, but being a farmer and being an organized farmer.

* René (rmvidaurre@gmail.com) has a PhD in development studies, is a collaborator of the Winds of Peace Foundation (http://peacewinds.org/research/), an associate researcher with the IOB-Antwerp University (Belgium) and of the Nitlapan-UCA Research and Development Institute (Nicaragua).

** I am grateful to P. Merlet and J. Bastiaensen for their comments and suggestions for improving the article.

 

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