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Leasing and renting 

Who has land free to lease?

    Like share farming, leasing and renting of land by small farmers has been seen as exploitative.

Again it is dependent on the power relations between the land owner and the farmer that count not the lease or rental itself.

In Italy the renting of land before the 1950s period of land reform favoured the landowner.

Farmers were often exploited.

After the land reforms of the 1950s and 1960s tenant farmers were given many additional rights. The balance swung decisively in favour of the tenant farmer who could claim the land he leased after ten years of occupancy.

Most landowners are not prepared to rent land because they feared it would be claimed by the working farmer.

It was simply abandoned for agriculture.

Some owners rent the land to farmers for nine years.

Then they have a complete break for a year when no farming takes place to ensure that the court will recognised the lack of continuity.

They then signed a new agreement for a further nine years. All in all a complex and wasteful procedure.

 I have argued in relation to share farming that the exploitation of the past should not be used as a model for the present and future and new arrangements can be made that balance the rights of the owner and the tenant.

Such arrangements to encourage flexible land use and can benefit both the land owner and the farmer.

    In the WANA region changes to the social fabric of farming means that land is available for rent.

    The land is available from the following sources:

    * Upon the death of a farmer the land will pass to the widow and children who may be working in the city and not wish to return to the farm.

They may not wish to sell the land.

The widow may not wish to work the land or may not wish to carry out all the farming operations.

Renting the land on an annual basis or better still a longer term lease is a good option.

    * A farmer may decide to work in the city or overseas.

He may not wish to sell the farm. Leasing to a neighbour would be a good idea.

    * A person working in the city or overseas may decide to buy a farm as a hobby or to live on in retirement. In the interim leasing is the best option.

    If this land can be leased by other small farmers it gives them the opportunity to expand their operations and benefit from economies of scale. The power relations between owner and farmer are roughly equal but other arrangements enforced by law can provide protection to both parties.
 

Important points in lease agreement.

        Governments need to encourage renting (usually short term) and leasing ( longer term) to allow existing small farmers to expand their operations and avoid the mistakes of the Italian land reform program.

Model agreements need to be developed as well as simple and cheap means of arbitrating disputes.
 

    * Leasing the land for a period of five years or more is better than an annual arrangement as it allows the farmer to develop a rotation.

There are however times when an annual agreement for a farm or even for a field or area of pasture is more suitable.

    * The agreement needs to provide security to the farmer for the period of the lease and either a fixed rent for the period or one that is indexed to an official index for prices of grain and livestock. 

Climatic risk is carried by the farmer but agreements can include a clause that allows the rent to be reduced or rolled over in an exceptional drought.

    * The agreement needs to make it clear that the farmer does not have residual rights of occupancy or use of the land after the lease has expired.

    * The lease agreement should encourage the farmer to farm the land well. Without placing too tight a control, the agreement should indicate the rotation and minimum amounts of fertiliser to be applied.

    * At the end of the lease the farmer should be compensated by the land owner for the residual value of the fertiliser if the lease is not renewed. This can be done on simple formula basis for phosphate fertiliser. The residual value of nitrogen is small and is usually excluded from the agreement.

    * The lease should specify the buildings and other non land assets to be included, how they will be maintained and compensation for the farmer's additions and improvements.
 

Government role

    Various government agencies in the WANA region can play an important role in encouraging equitable leasing and renting arrangements.

They should learn from the mistakes made in Italy where the prohibition on leasing and share farming had the opposite effect to that intended.

It was done to protect the rights of the tenant but helped to freeze the pattern of land use.

The former tenants were not interested in farming at the previous poverty levels.

To make a decent living they required more land. 

Purchase was beyond their reach in most cases.

The land owners did not have the skills or the desire to farm the land themselves.

They simply abandoned it. 

In some instances Sardinian sheep farmers purchased land and grazed sheep. The transformation from subsistence cereal and livestock farming to more extensive grazing with sheep for milk production (for sale to cheese producers) would have been more rapid and more efficient if there had been flexible arrangements for leasing and agistment in place.

In fact the change could only take place with the purchase of the land.

    Governments can develop model agreements for long leases, short term renting. share farming and agistment.

They can establish an arbitration service so disputes can be settled quickly and easily without expensive court proceedings.
 

Share farming 

    Share farming has been described in a number of chapters on this site as a means by which small farmers can reduce risk.

They can share farm an area of cereals rather than employ a contractor who is paid in cash.

Alternatively share farming can be regarded from the view point of the farmer who wants to access more land.

Instead of purchasing additional land he can farm it on shares.

Obviously a farmer without a tractor will seek out a share farmer.

A farmer with a tractor will seek areas to share farm and use his tractor over more land.

The arrangement can be beneficial to both sides.

They both reduce their risk.

The owner does not outlay as much cash (only inputs such as fertiliser and seed).

The share farmer outlays tractor fuel and other direct costs but not the overhead costs of ownership which have to be paid anyway nor of family labour which is also an overhead cost.

Agistment OUT

     Agistment is a better means of renting a pasture.

Renting pastures and cereals stubbles is common in the WANA region but means they are grazed to destruction.

The flockowner pays a fixed rate per hectare and naturally wishes to obtain every last leaf or stalk from that area.

Agistment is a renting system based on the number of livestock.

The flockowner pays a price per head per week.

Once the output of the pasture or the stubble declines he will no longer wish to pay and will take the livestock elsewhere.

The owner of the land is able to manage the pasture without conflict as the flockowner has no desire to graze the pasture into the ground.

Once the production from the pasture falls he will be paying high fees for a limited amount of feed.

Bringing sheep into a farm on agistment reduces the risk for a farmer.

Instead of having more sheep that may need expensive feeding in a drought he can sell his surplus pasture through agistment and still retain control of grazing management.

On the other side of the equation farmers can expand their flocks by buying grazing on agistment. There are of course risks but they can be reduced if for example the farmer also has a hay for sale enterprise.