Land Policy & Resilience

Stephen DeAngelis

June 21, 2006

Bolivia, under the left-leaning leadership of Evo Morales, is making another attempt at land reform. An article in the Washington Post [“Two Views of Justice Fuel Bolivian Land Battle: Owners Dig In to Protect Turf as Peasants Push to Benefit From Reforms,” by Monte Reel, 20 June 2006], explores both the necessity and complexity of such reforms. According to the article:

The conflict in Bolivia is firmly rooted in the stark inequities that President Evo Morales says his “agrarian revolution” is designed to correct. About 90 percent of Bolivian land is owned by the wealthiest 7 percent of the population. Imbalances like that have helped make Bolivia South America’s poorest nation: About 63 percent of its citizens — and nearly 80 percent of its rural population — live in poverty.

The article discusses the plight of a Japanese immigrant who bought 1400 acres for $80,000 shortly after the Second World War. His land has been targeted by landless peasants for takeover (with nearly a quarter of his land already occupied by squatters). Prevented by the government from protecting it by use of arms, he sleeps with a pistol under his pillow and a shotgun near the door fearing for his very life. The problem with most reform efforts is that land redistribution often ends up destroying one of the bedrocks of society needed to attract foreign direct investment — property rights. Done right, land reform must be viewed as fair (offering fair market value for seized lands), legal (proper titles registered, liens cleared, etc.), and sustainable (new landowners must be capable of properly using the land). All this takes money, which is often the long pole in the tent when it comes to land reform.

Large-scale land reform has been tried in the past in Bolivia, and it failed miserably because of a lack of resources and political will. The country’s first agrarian reform plan was passed in 1953, and another was tried in 1996. After nearly $100 million was spent in an attempt to redistribute 250 million acres during the past 10 years, only 17 percent of the target areas changed hands. Venezuelan President Hugo Chavez — an ideological ally of Morales who has promoted smaller-scale land reform in his country — has pledged financial support. But Bolivia will have to find a lot more money to keep the current effort from joining the long list of failed agrarian reforms in Latin America.

The article points out that even if land is successfully and legally transferred, the new landowner needs money for a home, equipment, seeds, animals, and sufficient credit to get him or her through the growing season and harvest. Without proper initial investment, the old landowner often buys back his lost property at a reduced price; resulting in nothing changed except that the rich landowner is richer and the poor peasant is more depressed. Land reform and financial reform must go hand in hand. The disaster created by Robert Mugabe’s land reform should be a warning to any government attempting massive land reform. A New York Times article, written two years after Mugabe’s plan went into effect, detailed the problems [“After Zimbabwe’s Land Revolution, New Farmers Struggle and Starve,” by Rachel L. Swarns, 26 December 2002].

Another trend that could help make land reform successful is a willingness by some large corporations to pay a premium for certain crops. According to a Washington Post article [“For Wal-Mart, Fair Trade May Be More Than a Hill of Beans,” by Ylan Q. Mui, 12 June 2006], Wal-Mart, the 800-pound gorilla in the retailing sector, may join this movement.

Wal-Mart is in the midst of overhauling its tightfisted image to win over shoppers searching for more than low prices. That effort has taken the company that built an empire on the principle of high volume and low costs into previously uncharted territory, into the realm of trendy apparel and organic food.

The story focuses on a Brazilian co-op farmer named Rosevaldo Jose Pereira, who lovingly tends to six acres of coffee plants.

Pereira gets a premium for his harvest. His co-op is one of only seven in the country that is fair-trade certified, charging above-market price for beans because it meets certain social and environmental standards.

Wal-Mart, which, the article points out, is famous for squeezing suppliers for every penny, hardly seems the poster child for fair practices. As the article reports:

Supporting fair trade presents a paradox for Wal-Mart. It is a tacit admission that there is a point at which no more efficiencies can be squeezed out of the system without harming the people who make it work. Fair-trade beans are sold at a minimum of $1.26 per pound, compared with the world average last month of 90 cents. But Wal-Mart is still determined not to pay more than it must. The company has forged partnerships with hundreds of social and environmental groups to develop sustainability initiatives. TransFair USA, which certifies farms as fair trade, is working with it on Pereira’s coffee. The Rocky Mountain Institute is helping reduce the fuel consumption of its trucking fleet.

The article lists a litany of complaints that still remain against Wal-Mart, but for Pereira times are flush. He lives in a new home with tile floors and a spacious kitchen (his old house was converted into a storage shed for fertilizer). He watches TV, owns a cell phone, and can afford dental work for his daughter.

Over the past two years, the government has redistributed nearly all of the country’s white-owned farmland to about 300,000 poor black families and 50,000 aspiring black commercial farmers. Of the 4,500 white commercial farmers who once powered the economy by producing tobacco and wheat, about 600 are still trying to farm, mostly on smaller holdings. Mr. Mugabe, who has led this country since white rule ended in 1980, has hailed the sweeping change as the fulfillment of the black struggle for liberation in Zimbabwe. Many Africans praise him for undoing the legacy of British colonialism, which left a tiny white minority — less than 1 percent of the population — with more than half of the country’s fertile land. But the government’s chaotic and violent seizure of white-owned farms has come at a price. The economy is collapsing. The land program, coupled with severe drought, has left half the population in need of emergency food. And so far, Mr. Mugabe has failed to transform the agricultural sector into a viable system that can feed the nation and drive the economy. Vast stretches of previously productive farmland are no longer in use because about half of the aspiring black commercial farmers have failed to take up their allotted farms since August, when most white farmers were told to leave. The government, which seized the farms without compensation, still lacks title to most of the land. Many prospective black farmers are reluctant to occupy farms without title deeds because it is nearly impossible to get loans without them. Meanwhile, thousands of impoverished, resettled farmers are struggling to survive without seed, fertilizer, irrigation and plowing assistance, basic services that the government has promised. The United Nations says that more than half of the government’s tractor fleet — which was meant to plow fields for the poor — is out of service because of shortages of spare parts and fuel. Officials are so short of seed and fertilizer that many small farmers are sitting idle on plots of land they cannot plant. In Manicaland Province, only about 10 percent of resettled farmers have seed and 17 percent have fertilizer. When seeds are available, the government often provides unsuitable varieties.

Now, four years later, things haven’t improved much. Zimbabwe, once able to grow food sufficient for its own needs with enough left over to export, still suffers from famine. There have even been calls to give land back to white farmers to break this chronic crisis. South Africa, which has pledged to raise black ownership of farms from 4 to 30 percent by 2014 is finding out just how difficult land reform can be. A New York Times article last year [“South Africa To Take Farm From a White,” by Michael Wines, 27 September 2005] described the challenges that country is facing.

Many experts here say the prevailing approach to land redistribution, in which whites sell their farms to the government and the government subsidizes resale to blacks, has failed. In July the nation’s deputy president, Phumzile Mlambo-Ngcuka, said at a national meeting on land distribution that the government was at risk of being exploited by white landowners seeking to reap a profit.

Exploitation, it seems, is in the eye of the beholder. The farmer who is the focus of this article refused to sell his two farms (a total of 1275 acres) and a meat plant he had built on one for the $275,000 the government offered. A price he thought was way too low — in other words, he thought he was being exploited by the government. Similar problems have plagued land reform in Namibia [“Tensions Simmer as Namibia Divides Its Farmland,” by Sharon LaFraniere, New York Times, 25 December 2004] and Venezuela [“Venezuela Land Reform Looks to Seize Idle Farmland,” by Juan Forero, New York Times, 30 January 2005]. This appears to be an area ripe for a Development-in-a-Box, standards-based approach. Everything from property laws to land titles to estimating fair market value to microfinancing to credit availability to basic agricultural materiel requirements can be standardized and adapted to local conditions. Much of the resentment and perception that the other side is trying to exploit the situation can be mitigated as a result. Without a breakthrough of some kind, chronic poverty and social unrest will remain throughout large parts of Africa and South America.