Land Lease Markets and Agricultural Efficiency: Theory and Evidence from Ethiopia

In this paper, we develop a theoretical model of land leasing that includes transaction costs, risk pooling motives and non-tradable productive inputs, and investigate the empirical implications of land contracts using data collected from four villages in Ethiopia. We show that sharecropping is the dominant contract if transaction costs are negligible, but that a rental contract may arise if transaction costs decrease with increasing the tenant’s share of output. When this is the case, the theory predicts that area operated by tenants will be an increasing function of their land endowment and that fixed rental contracts will be more likely in situations where transaction costs are higher. We find empirical support for these predictions in the villages studied. We also find that input of labor per hectare is about 25% lower on sharecropped than on other land tenure types, but that the differences in total value of inputs, outputs and profits per hectare are statistically insignificant and relatively small in magnitude. These results support the Marshallian argument that sharecropping reduces labor effort, but also support the “New School” perspective since the magnitude of the inefficiency is relatively small. A bigger source of inefficiency (and inequity) in the study villages appears to be the limited lease market for oxen services, together with credit constraints that limit the ability of land and oxen poor households to purchase oxen.land lease markets, land tenure, sharecropping, agricultural efficiency

Determinants of smallholder commercialization of food crops: Theory and evidence from Ethiopia

"In this paper, we develop a theoretical farm household model of food crop production and marketing decisions, derive testable hypotheses concerning the determinants of these decisions, and test these hypotheses, using data on cereal production and marketing collected from a nationally representative survey of 7,186 farm households in Ethiopia. Focusing on production and marketing decisions for teff and maize, the two most important crops in Ethiopia, we find that most producers of these crops are either autarkic or net buyers (especially for maize) and that net buyers and autarkic households are poorer in many respects than net sellers. This implies that interventions to increase cereal productivity will favorably affect distribution for most producers. The econometric analysis shows that increasing production of teff and maize is the most important factor contributing to increased sales, and that increased smallholder access to roads, land, livestock, farm equipment, and traders is key to enabling increased smallholder production and commercialization of these crops." from Authors' AbstractSmallholder production, Small farmers, household consumption, Market access, Commercial behavior, Market participation, Cereal crops,

Land Lease Markets and Agricultural Efficiency: Theory and Evidence from Ethiopia

In this paper, we develop a theoretical model of land leasing that includes transaction costs, risk pooling motives and non-tradable productive inputs, and investigate the empirical implications of land contracts using data collected from four villages in Ethiopia. We show that sharecropping is the dominant contract if transaction costs are negligible, but that a rental contract may arise if transaction costs decrease with increasing the tenant’s share of output. When this is the case, the theory predicts that area operated by tenants will be an increasing function of their land endowment and that fixed rental contracts will be more likely in situations where transaction costs are higher. We find empirical support for these predictions in the villages studied. We also find that input of labor per hectare is about 25% lower on sharecropped than on other land tenure types, but that the differences in total value of inputs, outputs and profits per hectare are statistically insignificant and relatively small in magnitude. These results support the Marshallian argument that sharecropping reduces labor effort, but also support the “New School” perspective since the magnitude of the inefficiency is relatively small. A bigger source of inefficiency (and inequity) in the study villages appears to be the limited lease market for oxen services, together with credit constraints that limit the ability of land and oxen poor households to purchase oxen.land lease markets, land tenure, sharecropping, agricultural efficiency

Impacts of programs and organizations on the adoption of sustainable land management technologies in Uganda:

The government of Uganda is currently decentralizing many of its services including those directly related to agriculture and the environment. Non-government organizations (NGOs) and community-based organizations (CBOs) are being asked to take the lead in the provision of government services such as agricultural extension during the transition to demand driven fee-for-service. This paper explores the role of government programs, NGOs and CBOs in the adoption of land management technologies. We find that government programs were better distributed throughout Uganda and were more likely to operate in poorer areas than NGOs and CBOs. This raises the question of whether or not incentives should be provided for NGOs and CBOs to locate or evolve in less-favored areas. Our analysis of household level involvement in organizations between 1990 and 2000 indicates that female-headed households, households with higher proportions of women, and households with higher levels of natural resource dependence were more likely than other households to be involved in organizations whose main focus was not agriculture or the environment. We also found that social capital is an important determinant of organizational participation. The results of our analysis indicate that the presence of an agriculture or environment focused program or organization at the community level had a negative effect on the adoption of animal manuring and a positive affect on the adoption of pesticides. This suggests that spillover effects of programs and organizations may be greater for technologies that have short-term benefits, and which require some degree of coordination to be most effective. Household level involvement in an agriculture or environment focused organization had a positive effect on the adoption of inorganic fertilizer and mulching. Adoption of land management technologies such as manuring that yield longer-term benefits apparently do not spill over to non-participants in local programs and organizations. Thus, direct involvement of households in programs and organizations that promote such technologies may be necessary to ensure technology diffusion throughout communities. This information may be taken as an indicator of the effectiveness or impact of agriculture and environment focused organizations in Uganda, and should be considered in the broader context of the government devolution of services to NGOs and CBOs. Our findings indicate that careful consideration needs to be given to the potential for NGOs and CBOs to fulfill the roles traditionally filled by government programs in the context of land management. The limited impact of agriculture and environment focused organizations on technology adoption is discouraging though may be linked to the limited profitability of technology adoption in the short-run.Human capital, technology, Gender, Natural resource management, Agricultural technology, Agricultural growth,

Evaluating the impact of land tenure and titling on access to credit in Uganda:

"The theorized impact of land tenure and titling on access to credit has produced mixed results in the empirical literature. Land tenure and titling is hypothesized to increase access to credit because of the enhanced land security provided and the newfound ability to use land as collateral. Using land as collateral and obtaining access to credit are paramount concerns in Uganda and in all of Africa, as greater emphasis is placed on the need to modernize the agricultural system. This paper uses a new approach in evaluating whether land tenure and titling have an impact on access to credit for rural households in Uganda. The new approach includes comparisons across four categories: (1) households who have customary land with versus without a customary certificate, (2) households who have freehold land with versus without a title, (3) households with a title or certificate having freehold versus customary tenure, and (4) households without a title or certificate having freehold versus customary tenure. Each comparison is then evaluated for the impact on access to any form of credit, formal credit, and informal credit. This analysis allows for an in-depth look into which element, tenure or title, is impacting access to credit and to which type of credit, formal or informal. To conduct this analysis, matching techniques are used, including propensity score matching and the Abadie and Imbens matching method. These two methods contain both strengths and weaknesses that allow the results to support to one another. The only significant finding of the matching was a positive impact on access to credit of freehold without title over customary without certificate. Results imply that tenure, not title, impacts credit access for rural households in Uganda." from authors' abstractLand tenure, Land titling, Rural credit, Land management,

Impacts of the Hutan Kamasyarakatan Social Forestry Program in the Sumberjaya watershed, West Lampung District of Sumatra, Indonesia:

"This paper investigates the impacts of a social forestry program in Indonesia, Hutan Kamasyarakatan (HKm), based on analysis of a survey of 640 HKm and comparable non-HKm plots in the Sumberjaya watershed of southern Sumatra, and of the households operating those plots. The HKm program provides groups of farmers with secure-tenure permits to continue farming on state Protection Forest land and in exchange for protecting remaining natural forestland, planting multistrata agroforests, and using recommended soil and water conservation (SWC) measures on their coffee plantations. Using farmers' perceptions, econometric techniques, and propensity score matching, we investigated the impacts of the HKm program on perceived land tenure security, land purchase prices, farmers' investments in tree planting and SWC measures, and plot-level profits. A significant fraction of HKm group members are not aware of the program or fully aware of its requirements. Although farmers who are aware of the program perceive its strong effects on tenure security and land values, we found insignificant impacts on the actual purchase prices of plots. Nevertheless, our survey revealed that the HKm program has contributed to increased planting of timber and multipurpose trees. We did not find significant impacts on investments in SWC measures or on soil fertility management practices. HKm has had mixed impacts on profits, with timber trees reducing profitability because timber harvesting is not allowed and multipurpose nontimber trees contributing to increased profits. The policy implications of these findings are also discussed in the paper." from Author's AbstractRewards for environmental services, Land tenure contracts, Social forestry, Impact assessment, Land management,

The role of trees for sustainable management of less-favored lands: the case of eucalyptus in Ethiopia

In recent years the planting of eucalyptus trees in Ethiopia has expanded from State owned plantations to community woodlots and household compounds. In an environment suffering from severe woody biomass shortages water scarcity, erosion and land degradation, fast growing and resilient eucalyptus species perform better than most indigenous woodland and forest tree species (as well as most crops). In addition to increasing biomass and providing ground cover, the sale of eucalyptus poles and products has substantial potential to raise farm incomes, reduce poverty, increase food security and diversify smallholder-farming systems in less-favored areas of northern Ethiopia. Despite the potential for eucalyptus to improve rural livelihoods in northern Ethiopia in 1997, the regional government of Tigray imposed a ban on eucalyptus tree planting on farmlands. The regional government promotes planting of eucalyptus and other species in community woodlots, and has recently begun to allow private planting of eucalyptus on community wasteland and steep hillsides. In this paper, we review the debate about the ecological impacts of eucalyptus trees, as well as the economic factors that influence whether smallholders invest in these trees. Ex ante benefit-cost analysis based on community level survey data from Tigray illustrates that under most conditions planting eucalyptus trees yields high rates of return, well above 20% under most circumstances. The effect of variable harvest rates, the costs of decreased crop production when eucalyptus trees are planted on farmlands, and differences between administrative zones are considered relative to our base case in our rate of return estimates. The importance of fast growing tree species that can accommodate the high discount rates associated with smallholders in this region is emphasized.Tree planting., Ecology., Ethiopia., Land degradation.,

LAND LEASE MARKETS AND AGRICULTURAL EFFICIENCY: THEORY AND EVIDENCE FROM ETHIOPIA

This paper develops a theoretical model of land leasing that includes transaction costs of enforcing labor effort, risk pooling motives and non-tradable capital inputs. We test the implications of this model compared to those of the "Marshallian" (unenforceable labor effort) and "New School" (costlessly enforceable effort) perspectives using data collected from four villages in Ethiopia. We find that land lease markets operate relatively efficiently in the villages studied, supporting the New School perspective. Land contract choice is found to depend upon the social relationships between landlords and tenants, but differences in contracts are not associated with significant differences in input use or output value per hectare. We find that other household and village characteristics do affect input use and output value, suggesting imperfections in other factor markets.Land Economics/Use,

STRATEGIES TO IMPROVE LAND MANAGEMENT, CROP PRODUCTION, AND HOUSEHOLD INCOME IN THE HIGHLANDS OF TIGRAY, NORTHERN ETHIOPIA

This paper investigates strategies to improve land management, crop production and household income in the northern Ethiopian highlands based upon econometric analysis of household and plot level survey data collected from 500 households. We find that several profitable opportunities exist to improve land management, agricultural production and incomes.International Development,

Land lease markets and agricultural efficiency: theory and evidence from Ethiopia

This paper develops a theoretical model of land leasing that includes transaction costs of enforcing labor effort, risk pooling motives and non-tradable productive inputs. We test the implications of this model compared to those of the “Marshallian” (unenforceable labor effort) and “New School” (costlessly enforceable effort) perspectives using data collected from four villages in Ethiopia. We find that land lease markets operate relatively efficiently in the villages studied, supporting the New School perspective relative to the other two models. Land contract choice is found to depend upon the social relationships between landlords and tenants, but differences in contracts are not associated with significant differences in input use or output value per hectare. We find that other household and village characteristics do affect input use and output value, suggesting imperfections in other factor markets. These results imply that interventions to improve the functioning of land lease markets are likely to be of little benefit for agricultural efficiency in the villages studied, whereas improvements in other factor markets may be more beneficial.Land use Ethiopia., Agriculture Economic aspects Egypt.,