A theoretical perspective of the problems of adopting a market based approach to Zimbabwe s land reform

Abstract

In Zimbabwe due to the skewed distribution of land in favour of the large-scale commercial farmers the topic on land redistribution has always been high on agenda since the country gained its Independence. The major arguments in support of the land reforms are the historical grievance that the native population was disposed off their ancestral land. This argument has been the major issue in almost all political circles. Other arguments that have been raised for land reforms in Zimbabwe include the need to reduce population pressure in the communal areas and the need to economically empower the indigenous population. Recent developments in Zimbabwe s land question has also shown that the land reforms can be used as a survival strategy by serving governments during critical election times. All these issues point to the idea that the land reform in Zimbabwe is of paramount importance given its various political dimensions.

Since 1980 the Government of Zimbabwe has attempted to deal with the land inequality. The main land reform policy the Government has relied on is trans-location resettlement of the communal farmers. This policy is broadly divided into two parts the land acquisition stage, which is followed by the land allocation process. In both stages the government s efforts has yielded poor results given that set targets. Much of poor progress of the resettlement programmes has been attributed to the legal framework governing the land acquisition stage. The Government s capacity to acquire land from the large-scale commercial farmers has limited by legal framework that provides that any land acquisition is supposed to be on a willing-buy-willing-seller basis. This has seen several constitutional amendments to enable the Government to achieve its goals.

The poor performance of Zimbabwe s land reform has also been attributed to the fact that the Government has been caught up in a situation where it has to satisfy different economic groups with diverging interest. While the Government realises the need to redistribute the land from the large-scale commercial farmers this is compromised by the idea that it strongly doubts the ability of the beneficiaries of the land reform to efficiently utilise the land. Proceeding with land reform on this note would adversely affect the agricultural sector, and would dent the confidence the large-scale farmers have in the government.

While there are several reasons that could explain the poor performance of the land reform this study tries to identify the problems that would arise if the land reforms were pursued on purely market basis. It gives a theoretical perspective of trying to implement the land reforms on the willing-buyer-willing-seller basis. The main result is that the two farming sectors, the large-scale commercial farmers and the communal farmers have different values for the same piece of land. The value of agriculture land to communal farmers is below the reservation price for the large-scale commercial farmers and the study looks at the possible economic justification of this phenomenon. The argument central in this study are that the large-scale commercial farmers receive some benefits from the land use and ownership that do not accrue to the communal farmers.

Firstly, the large-scale commercial farmers because they have title of ownership over their agriculture land they can use the land to secure the granting of credit on the financial market. This feature is not observable on communal agriculture. As a result the large-scale commercial farmers have preferential access to productivity enhancing inputs compared to the communal farmers. The result is that the large-scale commercial farmers are more productive, and receive more income from agriculture land compared to the communal farmers. The extra income the communal farmers derive due to their exclusive access to credit is referred to in the study as the collateral income premium.

Secondly, the large land holdings of large-scale commercial agriculture enables the commercial farmers to use some technology that is not applicable on communal farming land. This is because there either spatial limitations to using the technology, or it would not be profitable for the communal farmer to invest in such technology due to the small land size. This suggests the large-scale commercial farmers receive some economies of farm size income premium since they are more productive because of this technological advantage. The economies farm size income premium is also explained by the idea that large-scale commercial farmers have some monopsony power in the agriculture labour market through their affiliation as the Commercial Farmers Union. The monopsony power enables them to collect some economic rent, and this adds to the economies of farm size income premium.

Lastly, the large scale commercial farmers receives some non-pecuniary benefits from the their land ownership. Being an important sector in the economy they tend to have some economic power, which is a source of political power from which they derive some political rent. Also being in the class of landowners should give them some class status and privileges that yield some utility and they place some value on this utility. Thus the large-scale commercial farmers have some non-pecuniary income premium that do not accrue to the communal farmers due to the size of their land holdings and nature of tenure modelling.

Given the three issues raised, it is evident that the large-scale commercial farmers get more income from agriculture land compared to the communal farmers. Assuming that the two farming sectors formulate their land values using on basis of the income capitalised in the land, the large farmers will value the land more than the communal farmers will. On this note it will not be possible for the communal farmers to purchase land from the large-scale commercial farmers.

If the market system can not redistribute land due to the disparities in land values for the two farming systems, the study proposes a solution in which there could be some intervention by subsidising the communal farmers. What is important is that the amount of subsidy negatively depends on the size of the small farming units that result from the petitioning of the large-scale farms. There is also need to reconsider the laws that govern sub-division of farms as these prevent the large scale commercial farms from selling off the less intensively used portions of their farms if these command a higher price to the smaller farmers.