A study of land rental markets and institutions in communal areas of rural KwaZulu-Natal.

Abstract

Most rural households in KwaZulu engage in wage employment and have little incentive to make good use of their arable land for crop production. Crop incomes are low relative to off-farm incomes and many households find it cheaper to buy food than to grow it themselves. However, this does not explain why - despite intense population pressure and acute poverty - arable land is left idle in KwaZulu. The anomaly arises because there is no rental market to transfer unused arable land to people who can and would farm it. A rental market offers farmers an opportunity to expand their operations for either subsistence or commercial production while other households, unwilling or unable to farm, earn rental income from land they previously left idle. More important, these efficiency and equity gains are not achieved at the expense of creating a landless class. Initially it was hypothesised that land rental in K waZulu was constrained by high transaction costs, including risk. It seemed that potential lessors were reluctant to lease land out as they risked losing their land permanently. Institutional changes were introduced in the Upper Tugela Catchment to promote an active land rental market. Tribal authorities agreed to support the market and to uphold rental contracts in customary courts. Despite this assurance, households were reluctant to enter into lease agreements. Many households were willing to lease land out, but few were prepared to farm additional land. The fundamental problem was insecure land tenure. Survey data gathered in the Upper Tugela Catchment and at Tugela Ferry revealed that livestock were invading arable lands during the summer and damaging crops. In effect, crop farmers had lost their exclusive rights to arable land. The first step taken to improve tenure security in the Upper Tugela Catchment was to reinstate customary rules, particularly those assigning exclusive rights to arable land. Tribal councillors agreed to the establishment of a representative 'Rules Committee', whose initial task was to define an annual 'planting date' after which all livestock had to be removed from arable lands. Dispute procedures were also clarified and compensation rates set for crops damaged by stray livestock. Results the following season were encouraging as the numbex of respondents suffering crop damages caused by stray livestock declined from 71 to 31 per cent. Overall, efforts to reduce risk perceptions and to improve tenure security raised the number of rental transactions from three to 17 - an increase from four to 25 per cent in the number of households engaged in rental transactions. The average area rented increased from 0.63 hectares to 1.71 hectares. Lessees farmed their land more intensively than lessors. They applied inputs at five times the rate that lessors did, made greater use of contractor services, and invested much more in tractors, ploughs and planters. Equity also improved. Land transferred from larger to smaller farmers, while income transferred from wealthier to poorer households.