On May 14, 2024, the House of Peoples Representative approved the Rural Land Management and Use Proclamation and introduced the idea of sharecropping contractual arrangement. According to the draft proclamation, sharecropping is viewed as a contract where a landholder agrees for a definite time with another person to use his landholding in exchange for a share of the crop. In other words, it is arrangement in which a landholder allows other person or sharecropper to use the land in return for a share of the crops produced on that land.
Under sharecropping contractual arrangements, the sharecropper pays after the harvest in the form of a fraction of the crop harvested. The share paid to the land owner varies widely, generally between one-fourth, one-third and one-half of the crops, depending on the quality of the land and other input sharing arrangements. One of the basic intentions of the proclamation in this regard is to improve tenure rights system by allowing land holder to lease out and sharecrop their land.
In Ethiopia sharecropping contractual arrangement is not a new feature. It is deeply rooted and noted for its established form of property and production relationship in our agriculture landscape. Most recent studies show that in Tigray Region Sharecropping account 88% of the total temporary land transfer in some cropping seasons (Tesfaye, 1995). Numerous studies also witnessed the prevalence of sharecropping arrangement in different crop producing area of many regions. Sharecropping is the predominant form of contractual arrangement in Amhara Region.
Despite its importance, the existence and magnitude of its disincentive effects of sharecropping on productivity remains controversial. Many scholar views sharecropping as a form of surplus appropriation since it is a relationship between agents with unequal access to the means of production. This scholar viewed sharecropping relations as pre-capitalist production relations, which would dissolve with the emergence of agrarian capitalism. The extent and degree of inequality in the ownership of the means of production and labor power upon which sharecropping relations are based determines one party’s position relative to the other (Pearce, 1983).
The debate against sharecropping arrangements dates back to 20th century. Many scholars argue that sharecropping is inherently an inferior contractual arrangement when compared to pure cultivator-owned system. The argument for the inefficiency (or inferiority) of sharecropping relies on the assumption that the application of inputs by the sharecropper, such as labor, cannot be perfectly monitored and enforced by the land owner. If the effort of the sharecropper cannot be monitored and controlled by the landowner, the sharecropper has an incentive to undersupply his effort as part of the output produced by him gets siphoned off to the landowner.
If perfect monitoring was possible, the form of the contract would be irrelevant for our understanding of productive efficiency, because the efficient use of labor would be dictated by the land owner, irrespective of the particular choice of sharecropping contract. It is based fundamentally on the appropriate provision of incentives. Thus, argument assumes a prohibitively high cost of monitoring the sharecropper‘s activities will lead to the productivity inefficiency of sharecropping.
And thus, many scholars have concluded that sharecropping arrangements results in an inefficient resource allocation, since the share sharecropper receives, as marginal revenue, only a fraction of the value of his or her marginal product of labor, thus limiting the agent ‘s incentive to supply labor or other inputs at the optimum level.
On the other hand, a number of scholars have argued that if effort is costless enforceable, sharecropping arrangement can be as efficient as owner-cultivated and fixed-rent If a fixed rent system is reasonably superior to a sharecropping arrangement, not only from a social efficiency angle, but also from the point of view of the landowner‘s individual rationality, then what is the reason behind the enduring popularity of sharecropping in real world agricultural practice?
This is a theoretical puzzle which can be answered only through empirical studies. However, there are some theoretical speculations in this regard. Several theoretical reasons are given among which uncertainty in agriculture is the dominant one. In this regard, sharecropping is generally considered as a risk sharing instrument between the landowner and the sharecropper.
Considering agriculture in developing countries as full of uncertainty, scholars in this line reasoning argue that despite its high output advantage to both the sharecropper and the landowner, fixed-rent arrangement is less preferable to the sharecropper. This is because under the fixed-rent arrangements the sharecropper is the one who takes the full burden of risk associated with natural shocks that might adversely affect the level of production from the land under the contract while the landowner is free from this burden.
The landowner can play on this preference by cutting the sharecropper‘s share a bit more, but not too much, so that the sharecropper still prefers the sharecropping contract. This situation makes sharecropping to be rationally acceptable for both parties. Thus, sharecropping emerges as a way to share, not just output of the productive activity, but the risk associated to it as well‖.
The line of argument of the so-called monitoring approach forms the other theoretical reason for the existence of sharecropping arrangements. In contrast to inefficiency arguments, proponents of the monitoring approach argue that sharecropping is as efficient as form of contractual arrangements. Their argument is based on the assumption that the landowner can monitor the sharecropper’s activities effectively and inexpensively. According to these scholars, landowner can stipulate the intensity of labor input per unit of land and devise effective monitoring mechanisms to extract the maximum benefit from their land.
Sharecropping has proved to be one of the most robust rural agrarian institutions, with a remarkable geographic diffusion in many crops’ producing area of Ethiopia. The question of whether sharecropping arrangement has an impact on farm efficiency and agricultural productivity, therefore, an important academic question; it is also an ethical sensitive issue. Many scholars argue that despite land access rights, there continues to be a widespread perception that lifting extensive restrictions on rental and sharecropping may not guarantee agricultural transformation unless the land market and customary land tenure system properly regulated.
Today, the most important issue is there any conclusive answer for the question of “Does Sharecropping Stimulate or Deter Agrarian Transformation in Ethiopia?”.
BY MEKONNEN SOLOMON
(MoA-ehdaplan@gmail.com)
The Ethiopian Herald May 28/2024
