Land parcelization in agrarian reform, a colombian example

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(1)LTC Reprinl No. 16. •. Land Parcelization in Agrarian Reform: A Colombian Example Dale W. Adams and L. Eduarda Maniera. LAND TENURE CENTER. University 01 Wi.consin Madi.on, Wisconsin 53706.

(2) Reprinted Irom. INTER·AMERICAN ECONOMIC AFFAlRS Vol. 19 No.3. Winter 1965. Land Parcelization In Agrarian Refonn: A Colombian Example *. •. ByDale WAdamr andL. EduardoMontero** It has l<>ng been argued that aceelerating changes in land tenure aro rangements is a pcerequisite foc rapid economic and social development in Latin America. As a result of this argumento ffiost of the Latín American countries have recently passed agracian reform laws which emphasize expropriation of Iands foc parcelization. 1 New agracian refoem institutions are Jinding it extremely diflicult, however, to implement these laws, and the eomplexity of procedure required is shiftiog ioterest away from parcelization. 2 In many countries leaders of agrarian reform have felt that division of eommercia!ly purchased lands could not be justiJied. As a result, they are focusing their attention on colonization projects. irtigation works, and specia! eredit programs etc. to eJfect an agrarian reformo The obstades to pareelization presented by existing laws have been reinforced by a number of arguments against division of privately held lands.'1 Sorne aegue, foc a variety of reasons, that parcelization will reduce the amount of produetion entering the marlcet. Others hold that parcelization projects will evolve, through land inheritanee customs, ioto units of uneconomie size(mirTif1lndio). Still others, at least in Colombia, .. This paper results Erom studies by the Land Tenure Center, University oE Wisconsin, undee a cooperative research and training program oE the Agency oE ]nternationa! Development, and the American Nations. The views herein expressed do not necessarily reflect those oE the supporung agencies . •• Assistant professoe and research assistant, respectively, of the Land Tenwe Centee. We appreciate the cooperation of personneI from the InslJiulo de Fometllo T ahaca/ero (INTABACO) in gathering information for this study, and the comments from Peter Dorner, William Thiesenhusen, Enrique Pefialosa, and Malcolm MacDonald on an earlier draft. 1 The word parcelization is used here te denote division of private landholdings which are under some agricultural production. 21n Colombia,. foc example, the Agrarian Reform Institute (INCORA) has Eouad !hat up tO two years oE ver)' complicated procedures are required te expropriate land under present laws. s Many oE these argu.ments are camouflaged opposition to any change.. 67.

(3) 68. INTER-AMERlCAN ECONOMIC AFFAIRS. argue that present landownership patterns are not a problem, and that other methods, distinct from parcelization must be used to achieve an agrarian reform. 4. We show in the brief discussion which follows, by the use of a Colombian parcelization example, tha! these arguments may not be well founded. Further, since attempts to expropriate land are meeting a nUInber oí dífficulties, we suggest that parce1ization of conunercially PU!-. chased land merits serious considera:tions within agradan reform programs. We go on to sketch sorne of the key points which need to be considered in setting up tactics for parcelization.. The Parcetization Project 01 Bócore. 5 Bócore 1S located in an area of Colombia where tobacco has been produced intensively for over three eenturies. Almost 80 pereent of the tobaeco producers in the region are share-renters (aparceros) who give the landowners one-quarter to onehalf of their production. Housing, health, and eduealional conditions are very poor for aparceros, and few opportunities exist for individuals to migrate or find employment outside of agriculture. Large landholdings, sorne with more than 50 aparceros, control mueh of the good land. Rarely does an aparcero accumulate sufficient capital under this system to pur· ehase land, or to provide his ehildren with more than two years of formal education.. In order to solve sorne of the problems associated with this type of tenure system, the Colombian T obacco Development Institute (INTABACO) purchased several large landholdings for pareelization. The Bócore project, one of these, is made up of about 1,500 acres divided into 98 pareels. Before pareeIization, the Iand provided pasture for sorne 400 head of eattle. Ten families, totaling about 60 people, Iived on the land as aparceros in tobacco. The annua! net cash income from the land before pareeIization averaged the equivalent of approximateIy 16 thousand dolIars.' The original 98 settlers (paree!eros) were selected from more than 500 applicants on the basis of age, health, experience in farming, and personal recornmendations. During a several·year test period the parce7ero 4 For a discussion of this argument see Dale W. Adams, "Landownership Patterns in Colombia", [nter-American Economic Affairs, Vol. 18, No. 3, Winter 1964, pp. 77-86. G Bocore is located in the Municipio of Cabrera, Deparf,1.mento of Santander. Data in this section were assembled from direct interviews with farm operators. 6 Dallar figures were converted {ram pesos by using average annual rates oE exchange published by the Banco de la Republita. Net cash income includes value oE total sales by landowner and sharecroppers, less the total cost oE purchased inputs.. •.

(4) .. A COLOMBIAN EXAMPLE. 69. paid INT ABACO the traditional one-quarter oí his tobacco proouction. If he "proved out"' his past payments were applied as a down payment, and he was given a formal contract for purchasing the pareel.. Because. of careful selection, only hve paree/eros of the original 98 have left the project. In 1964, six years after Bócare was begun, there were over 850 people living in the project. Since inauguraúon of the project, farm production has rapidly increased. In 1964 over 270 metric tons oí tobacco were. proouced, and over 470 head 01 cattle were included in the farm units. Almost al! pareeleros had planted fruit trees, and nearly every farm unit had a number of goats, pigs and poultry. Excluding produetion for home consumption in 1964, total net cash income was equal to 130 thousand dollars. After subtraeting the 16 thousand dollar> of eash income produced by the land befare parcelizatiofl, we can attribute a 114 thousand dollar inecease in production to the parcelization project in 1964. On. the basis of the 573 thousand dollar eost of the projeet, this is an annual rate of returo of approximately 18 pereen!.' Including the value of the inerease in home-produced and consumed-goods would inerease the rate of return to well over 20 pereent. The average time-in-project for Bócore's paree/eros is only a little more than 4 years, but they have been able to- pay almost one-half of their total debts to INTABACO for their pareels. Several individuals hnished paying for their parcels in 1964. lf present rates 01 payment continue, almost all paree/eros will be paid-out when the project is eight years old.. A better-than-average large farm not far from Bócore, further illustrates the possibilities for cornmercial land paree1ization_ It is approximately the same size as Bóeore, but has much better land. Only 230 people derive a living from it. Although this farm is principally a eattle raneh with sorne tobaceo. it has 50 head of cattle ¡ess than Bócore. Aparceros are not allowed to grow permanent crops, and almost no goats or pigs are found on the farm. In 1964, the production of tobaceo was less than one-quarter that of Bócore, and total net farm ineome was less. than 40 pereent that of Bócore.. .. This large farm, like several other> in. 7 We here assume tbat the marginal productivity of labor in the general area of Bocore is near zero. That is, a number of families can be transferred from existing farm units ta parcelization projects without significantly diminishing agricultural production 00 existiog units. There are few employment opportunities outside of agriculture for people in this general area. Therefore, no retucn to labor was subtracted before calrulating retoro ta investment..

(5) 70. INTER-AMERICAN ECONOMIC AFFAIRS. the acea, would be very diHicult to explOpriate undec present Colombian Iaw, but the owner is willing to seH the land. 8 Comparative Results. The crucle measures of performance presented foc Bócore suggest the economic results from commercial parcelization, in terms of rapid repayrnent, a high cate of retuen on investment, and improvement over traditional systems of tenuce can be quite. by us. favorable.. At this point, we would like to present comparative eco-. nomic results from otber types of agracian reform activities to show how parcelization ranks. Unfortunately, we can only hint at this. With respect to icrigation, for example, the first: large seale irrigation project. in Colombia, begun in 1948, only had a little over half of the potentia! lands under irrigation by 1964.' Repayments by landowners are not as great as maintenance costs. A similar situation exists in Venezuela where a 250 thousand acre irrigation project started in the mid-1950's. only had abaut 15 pereent af the potential land under irrigatioo by 1964." Agaio repayment of project eos!s have been very slow. The Avicure Colonization Project in Colombia, begun in 1959, established. several hundred settlers (colonoJ) on the fertile hut heavily wooded lands. As of 1964, few of the colonoJ have been able to begin repayment of the sizable loans granted to them at the beginning of the project, and their marketable surplus of products is very small. Even though far from concIusive, these examples suggest that cornmercial land parceliza. tion might compare favorably with other agrarian reform investment. Tactics for Pdrcelizdtion. Although agrarian reform in general, and parcelization in partirular, are primarily political processes, it is possible to indicate some useful welfare and production guidelines for selecting. PlOject areas.. We have a!ready suggested that rapid repayment of. project costs is desirable. Projects whieh are quick to mature inerease the flow of funds available for future projects. In this regard, plOjects that emphasize the annual crops which are labor intensive and require. little capita! sbould be given priority.. PlOjects that require the coo-. struction of costly infrasl:ructures should be deferred. Moreover, in order. to protect the rea! va!ue of the original investment, planners should systematical1y adjust the principal and/or utilize ao interest rate which reflects the country's inflationary processes.. On the human side, pareelization planoers need to focus 00 rura! areas where large numbers of landless families are only partia!ly productively 8 The marketability of Jand in Colombia is demonstrated by the fact that this ownet has bought and sold 1:5 to 20 large pieces of land in his lifetime. 9 Saldana-Coello near Espinal, Tolima. 10 Project nea:r Calabozo, Guarico..

(6) A COLOMBIAN EXAMPLE. 71. occupied. Initial preference should be given to areas where large numbers of sha.rc operators have already developed sorne managerial skills. This may neccssitate division of medium sized landholdings. Where possible, as shown by the case of Bócore, careEul selection of paree/eros will en hance the (hances oE project success, The adoption oE traditional tenure . arrangements for paree! repayment, and the use of a test period before grantrng land titles, can also be helpful. To help avoid future subdivision of parcels through inheritance customs, it will be necessary tú install adequate educational facilities in the projects to he1p induce out· migration of the parcelero/ children, 4. w. .. On a general level, the tirst parcelization should be "show projects" with the best (hances oE establishing viable farm units that can sub· stantially inerease production. Priority should be given to developing production for import substitution first, and diversifying exports second. Fewer marketing problems will be encountered if this is done. Where possible, expropriaüon procedure, though curnbersome, should be pushed for the desirable secondary effects which resulto Increased land evaluations, growth of local tax revenues, and more intensive usage of lands, can be expected from this threat. Expropriation procedures will, in sorne cases, hasten comrnercial sales to reform agencies. In this regard, projects should be concen'trated to reduce adrninistrative expenses.. ConcluIÍons. Cornmercial land parcelization is oot a cure-aH for agrarian problems in Latin America. It may, however, be a useful tool until laws are modified to speed-up expropriation. The study of Bócore shows that commercial parcclization can result in: (1) a substantial increase in production, (2) a relatively rapid repayrnent of original project costs, and (3) a favorable cate of economic retum 00 the project investment. These results suggest that cornmercial parcelization can compete with alternative techniques of agrarian reformo.

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