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The poverty trap - The economics of communal land use
Dale
Doré, Sokwanele
June 05, 2012
http://www.sokwanele.com/the-poverty-trap
This paper is
part of the Zimbabwe
Land Series
Executive
Summary
This paper recounts
how the blossoming of smallholder agriculture in the mid-1980s began
to fade when unsustainable costs began to mount. It tries to show
that no amount of donor funds to support state-driven agricultural
development will reduce poverty while households are entrapped in
the current system of agriculture. At the system's core lie the
limited rights to land. Without the right to buy, sell, rent or
otherwise transfer land, and when land and other natural resources
are free for all, the system becomes beset by market failure, perverse
incentives, waste and environmental degradation. The paper explains
how, under the pressure of population growth, people's livelihoods
and the environment have been systematically decimated. A subsequent
paper will show how modifications to the system can, over time,
commercialise smallholder agriculture and emancipate rural Zimbabweans
from a life of grinding poverty.
The
rise and fall of smallholder agriculture
Hundreds of
thousands of poor rural families struggle to subsist on smallholdings
in the communal areas, much of it in semi-arid areas with poor soils.
At Independence it was estimated that there were nearly three times
as many people living in the communal areas than the land could
sustain. The Zimbabwe Government therefore prioritised programmes
to decongest the communal areas and reduce poverty. These included
intensifying agriculture, resettling families, and encouraging families
to migrate and settle in towns and cities.
Vindication
for Zimbabwe's agricultural intensification programme seemed to
come when national smallholder maize and cotton production surpassed
commercial farm production in 1985 and 1986. Rukuni and Eicher (1994)
dubbed the country's success 'Zimbabwe's second agricultural
revolution'. Yet, by the close of the 1980s the rate of resettlement
had slowed to a trickle, the expected migration of households had
failed to materialise, and the costs of the smallholder agricultural
miracle were being counted.
The problem
started when the government offered generous producer prices to
support smallholders, which created an oversupply of maize. The
Grain Marketing Board (GMB) not only had to pay smallholders above
the market price for all their produce, but its maize handling and
storage costs soared. Moreover, it had to absorb the heavy costs
of expanding its network of maize depots and collection points into
areas that were not economically viable. To make matters worse,
the government's decision to subsidise urban maize consumption left
the GMB with a burgeoning and unsustainable budget deficit.
The government was suddenly forced to back-track, announce more
realistic maize prices, and restrict credit to those who had repaid
their loans. Inevitably, smallholder production declined. It turned
out that the short-lived rise in smallholder production had been
unsustainable and only achieved on the back of unpaid AFC loans
and producer subsidies, and at the expense of GMB's huge deficit.
But there was another disturbing feature of the 'maize miracle':
broad-based poverty reduction had proved illusionary. Research showed
that three-quarters of smallholder maize sales came from only 10
percent of smallholder farmers who were located in the better farming
areas (Rohrbach et al., 1990). Disturbingly, it also "deflected
attention from the extensive and consistent reliance of a large
proportion of smallholders on public food distribution programmes"
(ibid:106).
By the mid-1990s,
less and less was heard of efforts to address overcrowding and poverty
in the communal areas, and the Rukuni Commission's recommendations
for communal land tenure reforms had been quietly shelved. As the
communal areas stagnated as pools of poverty, resources were poured
into the politically expedient resettlement programme. By then,
the population in the already overcrowded communal areas had swollen
to over one million households.
The
perpetuation of poverty
As population
growth reduced the availability of good arable land, farming households
had two basic choices: families could either subdivide their good
land into smaller and less viable plots, or they had to look for
more marginal land elsewhere.
The first option
entailed established farmers subdividing their good land between
their married sons. Often this meant that the new farming family
had too little land to both produce enough food to eat and market
a surplus to earn cash. Without the surplus production, the new
smallholder family would struggle to earn additional income to educate
their children, maintain their family's health and, crucially, buy
fertilizer for the following year's crop. In the event of poor weather
or drought, the family would not even be able to feed itself. Inevitably,
it would be added to the growing list of recipients of international
food aid.
When rainfall
is erratic, as it was during 2002/03, one in every three Zimbabweans
- 5.5 million people - needed food assistance.1 As a
result, Zimbabwe had to import 62 percent of its food requirements.
Even when weather conditions improved, such as the 2009/10 season,
1.9 million Zimbabweans remained food insecure and 650,000 communal
farmers were supported with agricultural inputs by the international
community. The UN Office for the Co-ordination of Humanitarian Affairs
(OCHA) noted that smallholders were "becoming increasingly
dependent on emergency aid, losing self-reliance and the capacity
to manage their own development in the future."2
Consider a household's
second option. Unable to find land locally, a young family decides
to look for better opportunities elsewhere. They soon discover that
the traditional process of land allocation has been subverted by
unscrupulous state and party officials. After paying them for allocating
and demarcating marginal land that is unsuitable for cultivation,
the family does not have insufficient means to buy fertilizer. Nor
is it willing to make risky investments in farm improvements where
returns are likely to be limited. A few years after clearing and
cultivating the land, the soils are inevitably exhausted. The family
then moves on, opening up still more land, setting in motion a debilitating
process of deforestation, extensive cultivation and environmental
degradation (Lele and Stone, 1989).
This migration
into the more marginal, semi-arid communal areas, especially Gokwe,
became apparent after the 1982 population census (Zinyama and Whitlow,
1986). Bruce (1990) later showed that the opening up of new areas
for cultivation, rather than higher per hectare yields, accounted
for almost all increased crop production in the communal areas.
During my own research in the 1990s, the same patterns of movement
into marginal areas were plainly evident in Uzumba and the Matabeleland
forests, as well as Nyaminyami, where the communities own game fences
proved no barrier to extensive cultivation. Today, driven by the
current political and economic crisis, fragile wildlife habitat
in the Cheredzi Conversancy and elsewhere is unlikely to survive
the latest wave of land invasions.
The
tragedy of the commons
The problem
goes much deeper however. As more and more land is used for growing
crops, cattle have to survive on ever-dwindling communal pastures.
It was estimated, for example, that over a 10-year period the grazing
areas had shrunk by 700,000 hectares (World Bank, 1985).
To make matters
worse, grazing areas are a communally shared resource where the
grazing of livestock is free. This means that each household has
an incentive to maximise their own benefit by grazing as many of
their livestock as possible. And, conversely, households try to
minimize their costs by 'externalising' the environmental
costs of overgrazing and erosion. Built into the system, therefore,
are perverse incentives and processes that quicken the pace towards
environmental decline, and which undermines the very resource base
on which the livelihoods of families depend (Hardin, 1968).
All this results
in what Drinkwater called the cattle paradox: far too many cattle
for the available grazing areas, but all too few cattle to meet
the households' requirements for draft power. He observed, for example,
that one area was 300 percent over-stocked in terms of its environmental
carrying capacity; yet in terms of draught power needs, it was 53
percent under-stocked (Cliffe, 1986). The end result is that cattle
- the smallholders most valuable form of capital - are
gradually squeezed out of the agricultural system. About 45 percent
of households own no cattle at all, and they are reduced to toiling
with inefficient hand-held implements.
The
inefficient allocation of productive resources
The defining
feature of the system is that land cannot be officially bought,
sold, rented or transferred. It cannot be owned. Rather, it is an
intrinsically 'free good' that is acquired by the household
for agricultural use. Basic economics tells us that as the price
of a good goes down, its demand goes up. Thus, if land is a free
good, then demand will be almost limitless and insatiable. Almost
everyone will want it. Indeed, custom dictates that every married
man is entitled to a free plot of land. But since land - especially
good quality land - is in limited supply, the system of traditional
land allocation eventually breaks down as households scramble to
access whatever land is available.
This situation
is bad enough, but the absence of a land market is made even worse
by its knock-on effects on the labour and capital markets (collectively
known as factor markets). Consider this. When the population grows,
a relative scarcity of land develops. The expectation, therefore,
is that agricultural production will be intensified by substituting
land for labour. However, in the absence of price signals from a
land market (which would show the price of land increasing relative
to labour) households will continue to demand more land -
even in the face of dire land shortages. Moreover, since labour
itself becomes relatively cheap (due to the growing population)
compared to capital (e.g. farm investments such as equipment and
fertiliser), households will have an incentive to apply more labour
to land rather than capital. Over time, these factor market distortions
gradually squeeze vital capital requirements - especially
the use of fertiliser - out of the agricultural system.
But the problem
does not stop there. As it is relatively expensive for households
to maintain the fertility of their soils, they would rather apply
their relatively cheaper labour to clear woodland and open up more
marginal land for cultivation. It is this process that sets in motion
a system that perpetuates extensive cultivation, leaving in its
wake exhausted soils, overgrazed pasture, erosion and silted dams.
Two further
points deserve attention. The first is that the infusion of capital
into an agricultural system is usually made possible by using land
as collateral for loans for pay for farm investments. But, because
the communal area farming system does not ascribe any underlying
transferable value to land, even this opportunity is denied to the
smallholder. The second point is that because land cannot be transferred
or rented, the system offers no mechanism through which more efficient
farmers can acquire more land. Better farmers are thus unable to
consolidate their holdings into larger, more viable units to realise
economies of scale and improve their farm income.
Conclusion
In analysing
Zimbabwe's smallholder agricultural system one is reminded of Myrdal's
concept of 'circular and cumulative causation'. He described
this as a process "continuously pressing levels downwards,
in which one negative factor is, at the same time, both cause and
effect of other negative factors" (1957:11). More recently,
this concept was poignantly echoed by Leared: "Both the people
and the environment", he said, "suffer in an incessant
spiral of despair" (2009:2).
Campbell and
his team concluded "that the current processes of intensification
and diversification are not leading people out of the poverty trap
in semi-arid regions" where the majority of communal households
live (2002:125). By almost any measure, most communal families remain
chronically poor and trapped in an inefficient and Malthusian agricultural
system. They survive only by the largesse of the international community
and at the expense of the taxpayer and the environment.
The challenge
is to start formulating a long term strategy of empowering smallholders
by land reform programmes that create opportunities, incentives
and pathways out of poverty. Land tenure reform that grants farmers
stronger, more secure and tradable property rights will the lynch-pin
for increased factor productivity, and the commercialisation and
transformation of smallholder agriculture. How this can be achieved
will be the subject of a subsequent paper.
Notes:
1. FAO/WFP Crop
and Food Supply Assessment Mission to Zimbabwe, 19 June 2003.
2. The Zimbabwean,
'UN halves Zim Humanitarian Appeal', 30 November 2009.
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