Posts Tagged ‘Ethiopia Economics African Agriculture Politics’

Land Reform is an emotional issue.

April 8, 2008

It is a topic in which the diverging concerns about fairness, rights, order, justice, merit, efficiency, solidarity and yes, history of the distribution of productive resources have been colliding openly. Because for the majority of human history, agriculture has been the most important economic activity, land has been the most important means of production (one could argue that it’s even older but hunter-gatherers invested less in their territory and therefore had less attachment to it). One just has to look at how long the debates about the French, Russian and Cuban revolutions lasted to grasp the emotional importance of it. Or the heated discussion everyone has about what should be done in South Africa, Zimbabwe, Bolivia or Brazil. However, because in those places racial and ideological divides collide with a simplistic colonial narrative and very little has been actually done, the debate tends to be incredibly uninteresting. The case of Ethiopia, however, doesn’t give a big role to racial and colonial narrative and therefore doesn’t generate as much passion, outside of Ethiopia that is.

Ethiopia, an old, isolated and diverse country that hasn’t been colonised, started its modern history with a complex, diverse and arguably archaic land tenure system. When after WWII Haile Selassie started rapidly modernising the country, land could be either communal, owned by clans with unalienable and inviolable plots assigned to members, owned by the powerful church, state-owned and assigned to state employees as a form of payment and pension, directly state-owned, feudal and owned by the provincial rulers of recently conquered regions, formally owned by feudal rulers but granted to their employees as payment or pensions, complex arrangements among nomadic pastoralists and even some commercial concessions. The complexity of the claims, the limits to the ability to buy and sell, the insecurity of tenure, the existence of quasi-servitude and tenant farmers barred from buying land, tragedy of the commons-caused conservation issue were all reasons why some land reform became supported be it for justice, equality or efficiency reasons. The Emperor’s attempts to simplify tenure and modernise agriculture by introducing co-operatives and freehold (along with fertiliser and equipment subsidies) were argued down by the aristocrats, tribal leaders and other interested players on the grounds it was communism. The backwardness of agriculture was viewed as one of the major causes of the famines of the early 70’s that led to the 1974 Ethiopian Revolution.

One of the most dramatic moves of the DERG, the Marxist junta that took over, was the March 1975 Land Reform. All land and cattle were nationalised, tenancy and wage labour abolished, and both collectivisation and redistribution experimented with nationwide. While the hunger for justice and equality was more or less satisfied (the satisfaction varied depending on which part of the old system people lived under), the new system only failed to resolve many issues but may have made productivity worse. For instance, the desire for equality led to fragmented holdings; co-operatives had even poorer incentive structures, access to inputs was made harder as in a planned economy the regime gave priority to state-operated cash-crop farms and tenure security was worsened by constant redistribution and several (forced) resettlement experiments. Those problems once again were made evident in the worse possible way: the 1984-1986 famine(s) that killed one million people, affected 8 million, associated Ethiopia with starvation in the world’s imagination and gave us “We Are The World”, Live Aid and humanitarian pornography. While factors like locusts, short rainy seasons, insurgencies and counter-insurgency measures were mentioned as causes, land was a major factor. While opponents and western critics of the government argued for privatisation of land, the government responded with villagisation (even more radical collectivisation and resettlement) and some measures regarding the prices of goods. However the damage was done and the insurgencies intensified and the DERG was overthrown.

The odd part about the new guys in charge was that it was a coalition of ethnic-based Marxist movements. Before Mengistu’s defeat, they were often described as radical groups, to the left of the DERG, who viewed the regime as a degenerated worker’s state and fought for a deeper, decentralised, democratic, “true” revolution. Surprisingly, the Ethiopian People’s Revolutionary Democratic Front and its leader, Meles Zenawi, quickly installed de jure democratic institutions in a country (I do not wish to discuss the reality of Ethiopia’s democratisation) that only ever experienced feudalism, monarchy and military rule. They worked with the IMF and the World Bank to modernise the economy through privatisation and orthodox macro-economic policies, gave more power and the right of cession (which led to Eritrea’s independence, another emotional issue) to provinces (this one is not surprising coming from a coalition of ethnic based parties) and generally behaved like a social-democratic leadership (once again, generally and in context, I do not wish to discuss the reality or the completeness of Zenawi’s achievements). But on the land issue, the government hasn’t departed from its socialist roots.

Officially, the land is still nationalised. But perhaps because of that same pragmatic approach, some details have been changed. Farmers get long-term (from 25 to 99 years) leases that are unalienable but inheritable within the nuclear family and the state is supposed to act as a custodian. A registration process, supported by the World Bank, formal land titles and the length of the term were supposed to increase the security of tenure. The clear inheritance rules are an obvious social improvement to most have seen extended families fights over succession or the dispossession of widows all too common in Africa. The state “custody” aims to prevent loss of land by desperate farmers or through debt. Yet, chronic food insecurity, heavy dependence on food aid and the poverty of the rural areas are still there. Yes, I think the fact that the UN-organisations’ food aid is enough to avoid famine while an incredible worldwide humanitarian effort couldn’t sort of implies that there has been an improvement. Still, it wasn’t enough and the debate over land has far from died out.

At current, there are few people arguing in favour of the old order. The most sane of them argue that while undesirable it was superior to the current one or they use Burke-an arguments about organic reforms. The loonies fantasise about an imaginary perfect tribal order or return to religion by arguing that the Emperor’s, and therefore their right to be tyrants, was god-given (I’m discussing “rights” here, not the actual behaviour of anybody’s ancestors). I, therefore, believe that for all intents and purposes, the possible choices and the debate is limited to capitalist private ownership or something similar to the current system (variations on the amount of privatisation or the authority granted the custodian role are possible).

This long introduction leads me to explain why the topic is emotional.

Proponents of privatisation are basically the opposition. They include (those categories do not always coincide) urban Ethiopians, a big part of the Diaspora, Amharic nationalists often linked to the former aristocracy, liberals, free-marketers, and, yes, Western Agribusiness corporations (which, as an aside, adds up to my belief that US alliances with foreign regimes are more often based on weird grand foreign policy ideas and intelligent manipulation of those by said regimes than the economic interest of US corporations). This post by Samuel Gebru could be an overview but I’ll strongly recommend Ethiopundit’s “The Creation of a Nation of Serfs” which is lot better once you get past the recurrent Mises, Hayek, Trotsky, Stalin quotes, the libertarian slogans, and annoying repetition of the word “communist religion” (which is ironic considering he mentions how the use of the Red Bogeyman shut down reform attempts in imperial times and wonders if it hasn’t caused the eventual communist take-over).

Moral and efficiency concerns are behind the arguments made. To them, the current system is a tool of oppression by which the current regime punishes its opponents, a scheme allowing the regime to consolidate their support among the peasantry by creating patron-client relationships (through subsidies, stores etc..), an anti-democratic idea imposed on poor helpless peasants by feudal communist lords, a collective punishment by jealous and paranoid losers, a serious limitation of freedom but also an efficient system that limits productivity gains by reducing security of tenure, by preventing access to inputs by cancelling access to credit (since land cannot be a collateral), by not resolving the fragmentation problems, by making economies of scale impossible, by discouraging innovation or hard work, by failing to prevent the tragedy of the commons behind erosion and the lack of preservation.. etc.. Other points those two don’t make (I think) but that I’m pretty sure others do (or should) raise are the unfairness of the urban population paying to support rural folks through taxes or higher food prices (since the government views the system as a way to provide a safety net in rural areas while urban areas develop) and the fact the artificial inflation of both rural and urban wages (if all the peasants have land titles, you’d have to pay them more to work your land or in your factory) retards the eventual of industrialisation and meaningful improvement of living conditions.

The most eloquent support for the current system comes from the government (which I think does command a lot of support among leftist and rural populations), particularly the very talkative Prime Minister. He doesn’t shy away from debating his position with journalists or academics. This quite frank and open Q&A is, I think, a good example. Here too you have moral and efficiency arguments, with what seems to be an acknowledgement that there may be trade-offs and a differentiation between short-term and long-term benefits. To him, the current system provides a fair and equitable distribution of land and through the long-term inheritable lease provides tremendous tenure security, prevents an undesirable “differentiation” between peasants, stabilises the country by slowing down the rural exodus thus making land speculation impossible and the peasants happy, maximises the use of labour, prevents social unrest (I guess being a former guerilla fighter makes one very aware of rural insurgencies) and absentee landlord-ism etc.. The whole view is a bit confusing but the most important point is that Zenawi disagrees on the effect of the current system on tenure security and access to credit and states at length why the State must retain the option of future land distribution.

Meanwhile the international organisations involved, mainly the World Bank and FAO, have somehow mixed views. As far as I know, most reports suggest that the biggest impediment to growth are tenure insecurity and lack of access to inputs (through credit). On how to achieve those, the recommendations seem agnostic. As I mentioned before, the World Bank supported Land Registration as a way to improve security of tenure and regularly pressures the government to repel the Redistribution Provision for the same reason. Government-sponsored distribution of fertiliser and other inputs through co-operatives and the mortgaging of future harvest also had their support. I guess they decided privatisation is a political mine-bomb and concentrated on ways to strengthen the incentives within the current structure. Similarly this FAO study concludes that farmers are less concerned about the form of ownership than about the actual security of tenure.

It is that weird mix of moral, political and efficiency arguments on both sides that make me think the debate is emotional. An impression only reinforced by the use of straw-men to describe the alternative and myriad paranoiac views on the other side’s hidden intentions. A non-emotional debate would somehow entail discussing incentives, trade-offs with a healthy dose of realism (about the past) and pragmatism (about the present and the future).

On moral/political issues for instance, one could easily think that it’s impossible to get a reasonable balance between the concerns freehold supporters have about the state’s abuse and the benevolent role of the state defenders of the current system advocate in matters of “exploitation” (private abuse). To make it clear, freehold in and by itself, particularly in a weak country would not protect peasants, successfully or not from being dispossessed. Rent-seeking wouldn’t disappear but only change in nature. The allocation wouldn’t necessarily be perfect and the equality of opportunity may be reduced. And the existence of absentee landlord-ism and the resentment it generates, has motivated most leftist rural uprisings. On the other hand, banning private ownership and farmers’ ability to lease, sell and buy land is a bit of an extreme solution to prevent non-farmers from acquiring land (here I loosely define farmers as agricultural companies or individuals with big exploited estates and only those who don’t do anything but own and rent the land are non-farmers) just like the enforcement of equality of outcome is not the greatest way to guarantee equality of opportunity. And the land redistribution provision, by empowering the government to reallocate land as it sees fit has a serious potential for politically or financially motivated abuse (the keyword is potential, whether they use it or not is irrelevant). So what can be done to find a compromise between two absolutist solutions ?

Well, it just happens that during the post-WWII occupation of Japan, a little-known and interesting land reform was enacted. In short, land was distributed to farmers and only farmers as private property. They were free to sell, buy and I think use it as collateral (I could be wrong about the last one as, not surprisingly, very little info can be found on this unemotional solution). While strict equality wasn’t maintained, the initial allocation was almost equal and an upward limit to the possible size of one’s land holdings was defined. The government’s custody role was limited to a buying obligation is some precise cases: when a farmer reached the size limit or when the owner wasn’t or stopped being a farmer (a status defined by primary residence, sources of income of individuals and legal status of companies). And the obligation existed only when said land couldn’t be sold to another farmer. In practical terms, the government had to buy land from someone who inherited a farm and had no interest in farming and couldn’t sell it to another farmer. I assume that both the size and the sources of income limitations have been modified to reflect Japan’s industrialisation and the diversification of farmers’ activities.

Few believe the Japanese land reform had any impact on agricultural productivity. Instead the gains that came from technological progress and a very active agricultural policy had to offset the losses caused by the relative land fragmentation. However, the intent was social and political and it is in that light that it was clearly a success. The stated aim was to weaken the last remnants of a feudal and militaristic class that the Americans blamed for Japan’s belligerence while empowering the peasants and possibly counter the communist threat. Oddly enough, just like Ethiopia, the pre-land reform situation wasn’t nearly as universally exploitative as described. Both land-less peasants and absentee landlords were a minority and most farmers both rented and leased land in an environment where holdings were extremely fragmented and selling land frowned upon. For the majority of the peasantry, the reform was merely a re-organisation of their holdings. All of a sudden their plots were compact and they didn’t have to lease distant plots or rent closer ones. In general, Japanese rural areas became both increasingly modern and economically conservative in their views, overwhelmingly voting for the ruling Liberal-Democratic Party and been driven away from the communist or (fascist) neo-traditionalist movements that had been very popular in the past.

On the efficiency side, there is more agreement than it seems, at least, on the diagnostic. There is also a certain amount of bad faith in how the solutions are judged. For instance it would be nice if the freehold proponents were more forthcoming on acknowledging the problems of the pre-land reform archaic situation instead of insisting so much on putting all the blame on reform. It is indeed confusing to see how quickly the widespread support for a land reform (not necessarily a communist one) is swept to the side or how factors like a demographic boom are not considered when thinking about the increased frequency of famine and famine alerts. In the same light, it should be evident, beyond political and ideological biases that the land registration effort has been one of the strongest attempts at improving the security and freedom of peasants. Whether its a lease or an ownership title, having a registered and formal document proving a claim (and rules about how it could be transferred) protects one more from state, local, familial, private dispossession than the stated intentions of a politician. And it is naïve to believe that private ownership alone, by opening the possibility of using land as a collateral would resolve all the problems related to the availability of credit and access to inputs. While Zenawi does make an interesting point about long-term leases providing security, his defence of the land redistribution provision actually provides serious disincentives to productivity. Even the simple possibility of a reasonable government having the option to redistribute land to “correct unfair and inefficient allocation” probably does not encourage farmers to invest their sweat and their savings into improving their plots. Especially when the Prime Minister seems to say having to hire a labourer, even let’s say during harvest by a family that saved seed and money and invested it or more labour in improving their production, is in essence private ownership and proof of misallocation of land (I have to say that this story suggests informal exchange of labour and rights to land actually exist. It describes the case of a widow who by breaking taboos on how to plough her land improved her productivity and not only hired help during harvest but also used or taught how to use her technique in exchange for part of the usufruct of land). Furthermore that long term scenario he describes, in which the decision to consolidate (or not) land allocation depending on the availability of non-farm employment, contradicts the historical economic evidence that land consolidation and the effect it has on food prices or rural exodus is as much a cause as a result of industrialisation. By choosing to wait for that “event” to happen before allowing some of the cause to happen, Ethiopia may be killing its chances to develop.

The lack of sincerity and pragmatism and the excess of ideological hang-ups of both sides are the main obstacle to overcome in order to eventually have a real debate on incentives, allocation and efficiency and the design of a “more perfect” land tenure system that would finally allow Ethiopian agriculture to fulfil its potential. It would probably involve strengthening private gains and risks in the current system or mitigating the excesses of a freehold system. But, for a such a compromise to happen, the debate would really have to do without the strong emotions responses humans have about systems of ownership.

Note to readers: Not being Ethiopian, not having visited Ethiopia, not even having Ethiopia friends currently, I don’t claim any first-hand knowledge of the actual situation on the ground. Everything I know was learned from reading about it. Furthermore, aside from a taste for Ethiopian coffee and food, my initial curiosity comes from a wonky interest in land issues in general and the way Ethiopia synthesises many of problems. So it is the political and economic abstractions that really interest me. And of course, the hidden agenda of EPLF, CUD, DERG or the Imperials is an non-issue. So yeah, I only consider what people actually say or do and nothing more.