Sharecropping Deal: Catalyst for Growth? A Step Backward in Agri Reform?

May 25 , 2024
By Mekonnen Solomon

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Sharecropping, deeply rooted in Ethiopia's agricultural tradition, accounts for 88pc of temporary land transfers in some seasons in Tigray Regional State. Studies show its prevalence in various regions, notably in Amhara Regional State, where it is the predominant contractual arrangement. Despite its widespread use, sharecropping remains contentious among scholars and policymakers, who debate its impact on productivity and efficiency.

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Parliament recently approved a landmark piece of legislation transforming the agricultural sector this month. The law governing rural land management and use introduces sharecropping contractual arrangements. It formalises a long-standing practice allowing landholders to lease their land to another individual for a share of the crops produced. Under this system, sharecroppers pay their dues after the harvest by giving a portion of their yield to the landowner, with the share typically ranging from one-fourth to one-half of the crop, depending on land quality and other input-sharing agreements.

The primary intention behind this proclamation is to enhance tenure rights, enabling landholders to legally lease and sharecrop their land. Sharecropping is not a new phenomenon. It has been a deeply rooted practice with a long history in the country’s agricultural tradition, accounting for 88pc of the total temporary land transfers in some cropping seasons in the Tigray Regional State. Numerous studies have also documented the prevalence of sharecropping in various crop-producing areas across various regions. Amhara Regional State stands out as the predominant form of contractual arrangement.

Despite its widespread use, sharecropping remains a contentious topic among scholars and policymakers, particularly concerning its impact on productivity.

Critics of sharecropping view it as a form of surplus appropriation, a relationship between agents with unequal access to production means. These critics argue that sharecropping represents pre-capitalist production relations, which should theoretically dissolve with the emergence of agrarian capitalism. Inequality in the ownership of production means and labour power influences sharecropping relationships.

The debate over sharecropping dates back to the 20th century, with many arguing that it is inherently an inferior contractual arrangement compared to a pure cultivator-owned system. The primary argument against sharecropping is based on the assumption that the landowner cannot accurately monitor and enforce the sharecropper's application of inputs, such as labour. Suppose the landowner cannot effectively monitor and control the sharecroppers' efforts. They are incentivised to undersupply their effort, as part of the output produced is siphoned off to the landowner.

In a scenario of accurate monitoring, the specific form of the contract would be irrelevant to productive efficiency because the landowner would dictate the efficient use of labour, regardless of the sharecropping contract. The assumption of high monitoring costs leads many to conclude that sharecropping results in inefficient resource allocation. Since the sharecropper receives only a fraction of their marginal labour product as marginal revenue, their incentive to supply labour or other inputs at the optimum level is limited.

However, others would argue that sharecropping could be as efficient as owner-cultivated and fixed-rent systems if the effort could be costlessly enforced. The theoretical puzzle of why sharecropping remains popular despite the presumed prominence of fixed-rent arrangements from both a social efficiency angle and the landowner's rationality persists. The question can only be answered through empirical studies.

One theoretical explanation for sharecropping's persistence is its role as a risk-sharing instrument between the landowner and the sharecropper.

Agriculture in developing countries is fraught with uncertainties, and scholars argue that despite its higher output potential, fixed-rent arrangements are less preferable to sharecroppers. Under fixed-rent contracts, the sharecropper bears the full burden of risks associated with natural shocks, while the landowner is free from this burden. Landowners can exploit this preference by adjusting the sharecropper's share slightly, ensuring the sharecropper still prefers the sharecropping contract.

This makes sharecropping a rational choice for both parties.

The monitoring approach presents another theoretical rationale for the existence of sharecropping arrangements. Contrary to the inefficiency arguments, proponents of this approach argue that sharecropping can be as efficient as other contractual arrangements. They base their argument on the assumption that landowners can monitor sharecroppers' activities effectively and inexpensively. They can define the intensity of labour input per unit of land and devise effective monitoring mechanisms to optimise the benefits of their land.

Sharecropping has proven to be one of the most robust rural agrarian institutions, with geographic diffusion in many crop-producing areas of Ethiopia. Whether sharecropping impacts farm efficiency and agricultural productivity remains a useful inquiry and an ethically sensitive issue. Many would argue that despite improved land access rights, simply lifting restrictions on rental and sharecropping may not guarantee agricultural transformation unless the land market and customary land tenure systems are adequately regulated.

Does sharecropping stimulate agrarian transformation in Ethiopia?

The new law seeks to provide a framework for addressing these concerns, aiming to balance the benefits and drawbacks of sharecropping.

The impact of formalised sharecropping arrangements on productivity, efficiency, and rural livelihoods should be closely watched. Empirical studies and ongoing debates will shape understanding and future direction for sharecropping in agrarian transformation. The legislative move to formalise sharecropping contracts illustrates the complexity of land tenure issues and the need for nuanced solutions considering economic and social dimensions.

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PUBLISHED ON May 25,2024 [ VOL 25 , NO 1256]

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