69050 Tajikistan Agriculture Sector: Policy Note 1 Increasing the Benefits of Land Reform The Status of Land Reform in Tajikistan Tajikistan recognized the need for land reform soon after independence; a program to privatize land use rights1 was initiated in 1992 to break the sovkhoz and kolkhoz into smaller, collective (dehqon) farms and confer inheritable use rights to eventual owners.2 The scope of reform was extended in 1996, allowing individuals or groups in the dehqon to claim their share of land and to create a separate farming entity. Land privatization, however, was very slow until 2003, due in part to the delays caused by the civil war, but also to limited institutional capacity and political will. Progress was particularly slow in the main cotton growing areas. In 2004, a Presidential Decree accelerated implementation of the reform calling for privatization to be completed by the end of 2005 (Table 1). According to this Decree, not all agricultural land will be privatized, since the government will retain ownership of state crop and livestock breeding farms. Table 1. Land Privatization in Tajikistan: 2000-2006 Jan/2000 Jan/2002 Jan/2004 Jan/2005 Jan/2006 State Farms Number 508 342 267 239 193 Average Arable Land/farm (ha) 584 532 354 336 332 % of Total Arable Land 35.6% 21.9% 11.6% 9.8% 7.9% Collective Dehqon Farms Number 10,395 6,897 6,455 7,916 8,740 Average Arable Land/farm (ha) 7 29 21 19 18 Average Agricultural Land/farm (ha) 174 332 231 283 171 % of Total Arable Land 8.7% 24.4% 16.8% 18.2% 19.4% Individual and Family Dehqon Farms Number 1,141 4,779 13,110 15,406 18,300 Average Arable Land/farm (ha) 64 18 21 20 18 Average Agricultural Land/farm (ha) 501 280 231 159 171 % of Total Arable Land 8.8% 10.25% 34.1% 38.0% 40.6% Number Land Share Certificates Issued 95,693 243,781 465,476 515,144 615,225 Number Land Use Titles Issued 13,742 13,714 16,639 19,922 27,294 Source: State Land Committee While the land privatization program has led to a significant reduction in the average size of farms, it has not changed much else. Incentives for farmers to intensify production remain weak, for the following reasons: • Most of the new collective dehqon farms are run by former brigade managers, who continue to use management styles and incentive systems prevalent before independence. As a result, the majority of the new farm-owners continue to work for “wages�. Moreover, ownership of these farms is based on a “collective� land share certificate that names all members, but does not confer any of the individual use rights essential to change production incentives. Finally, few farmers have information on the implications of the reforms, either in theory or in practice. 1 Generally referred to as the “land privatization program� 2 The state retained land ownership however, according to the Tajik constitution. 1 • Families and individual producers who have moved into the second phase of the privatization process have been able to overcome this problem. They obtained permission to leave the collective dehqon farm, with their “share� of the collective’s land, and obtained a land use title which conferred the use rights needed to obtain the full benefits of ownership. However, local government authorities continue to exert de facto control of land use, based on legislation which allows them to confiscate land in the event that it is used “irrationally�. Hence, farmers lack the security and freedom needed to use their land as they choose, thereby enhancing productivity and investment. The Government provided a second, more potent impetus to land reform, through the transfer of 75,000 ha of state land to rural households in the form of small household plots. These plots, known as “presidential plots,’’ significantly increased the area of land traditionally allocated for household plots and have made a substantial contribution to poverty reduction by increasing the capacity of rural households to meet their own food requirements. Unfortunately, many local authorities treat these plots as a communal resource, shifting them back into arable use once fertility has been rebuilt and re- allocating poorer land back to the relevant households. The Institutional Framework The State Land Committee (SLC), together with its subordinate agencies, is responsible for the management of land resources – a mandate which includes land privatization and the issue of land titles and certificates. Limited funding, together with the loss of professional and technical staff and the heavy work load associated with land privatization, have made it difficult for the SLC to fulfill its mandate effectively. Land privatization is implemented through District Land Committees (DLC), which are dominated by local government representatives. Local government influence is further increased by its wide discretionary powers to specify how land should be used, and to confiscate land in the event that its use is considered “irrational�. The resultant administrative procedures are complex, costly, non-transparent, and subject to corruption. There is a need to change the roles, responsibilities and composition of the SLC and the DLCs. Local government involvement in decisions over land privatization and subsequent land use should be limited, and be transferred to the SLC. Local government membership in DLCs should also end, its discretionary powers to determine land use should be terminated, and the SLC’s corresponding powers to act independently in these matters should be strengthened. Land ownership laws and registration procedures have yet to fully adapt to the impact of privatization. Use and ownership rights are poorly defined and inadequately protected, and registration procedures are outdated, unreliable and inefficient. New legislation and administrative procedures are now being developed to address these problems. The Impact of Land Reform on Farm Structure and Agricultural Production Farm structure now comprises three systems of ownership and production: (1) larger, capital-intensive state and collective farms carried over from the Soviet system; (2) newly formed collective and individual dehqon farms, which confer inheritable usage rights to new owners; and (3) labor-intensive household plots that the government grants to all households. These three systems differ markedly in scale and factor intensity, as described in Table 2 below. Marked differences also occur in production incentives; the rights of individual producers to choose what they produce and to be able to appropriate the returns differs widely depending on which system they are in. State farms continue to pay a wage to their members, but they provide little opportunity for individual gain and few incentives. In principle, dehqon farmers provide more individual incentive to raise production and to benefit from labor and investment. In practice, however, old-style collective management systems persist, and continued government interference in land use limits these benefits. 2 Production on household plots is largely free of state interference. Households choose what they produce, and consume or sell their output as they wish. Some local authorities treat these plots as communal land, however, as noted above. The much higher productivity and returns/hectare of household plots shows that differences in incentives have a much greater impact on output than differences in farm size and/or factor intensity. Despite their small size and limited land base, household plots are not only the largest source of output but also the most productive (Table 2). Dehqon farms have yet to markedly improve their production and productivity relative to state and collective farms, due to the continuation of collective management systems and the limited improvement in individual incentives. Recent empirical evidence also shows that the issue of land share certificates has no impact on rural poverty, while the issue of land use titles results in a slight reduction in rural poverty. The impact of land use titles is small because farmers still lack the means and the incentives to raise output and incomes under current agricultural policy, particularly in cotton growing areas. Table 2: Characteristics of the Main Farm Categories in Tajikistan, 2003 Household Plots Collective and State and Total, All Individual Collective Farms Farms Dehqon Farms Average Arable Land Area 0.1-0.3 ha 21 ha 354 ha Na Arable Land (ha) 140,000 444,000 228,000 812,000 % of Total 17.2% 54.7% 28.1% 100.0% Irrigated Land (ha) 80,000 318,000 177,000 575,000 % of Total 13.9% 55.3% 30.8% 100.0% Crop Yields Cotton Na 1.85 1.82 Na Wheat 2.17 1.90 1.90 Na Number of Cattle 1,062,124 42,601 114,254 1,218,979 % of Total 87.1% 3.5% 9.4% 100.0% Number of Sheep and Goats 1,907,884 146,859 537,720 2,592,463 % of Total 73.6% 5.7% 20.7% 100.0% Gross Agric Output (thousand 540,267 197,483 271,119 1,009,229 Somoni) % Contribution 53.6% 19.6% 26.0% 100.0% GAO/hectare arable land 2771 Somoni/ha 822 Somoni/ha 600 Somoni/ha 1138 Somoni/ha Contribution to Sector Growth: 50.8% 36.9% 12.3% 100.0% (1999-2003) Sources: Goscomstat; Own calculations Agriculture sector growth has been strong since 1998, due largely to improved political and economic stability, a huge inflow of remittances from Russia, and favorable trends in world commodity prices. Sector output increased by 65% in real terms from 1998-2004, and is expected to continue growing at this rate for the next 2-3 years, provided that political and economic conditions remain favorable. Land privatization contributed little to this growth. Household plots were the major source of sector growth, and have now replaced state and collective farms as the major source of agricultural output (Table 2 and Figure 1). They accounted for 54% of sector output in 2003 and grew by 59% from 1999-2003, which represents 51% of observed sector growth. Their small size and inability to expand severely limits their capacity for continued growth, however. Much of the observed growth on dehqon farms is due to the transfer of land, labor and capital resources from state and collective farms, in association with land privatization. Increases in productivity have been modest, for the reasons described above. Dehqon farms will be the main source of production in the future, however, and will need to increase output and productivity more vigorously if current sector growth rates are to be sustained. 3 Land privatization has also contributed indirectly to the deterioration of irrigation and drainage infrastructure, and, consequently, to the lower production from arable land. Before independence, responsibility for the maintenance of secondary canals for irrigation was assigned to the kholkhoz and sovkhoz. Now that these farms have been broken up and privatized, a vacuum remains in the institutional administration of these canals, resulting in negligible maintenance. The consequent deterioration of these canals has contributed to the sector wide abandonment of irrigation systems and the increased salinization of arable land. Crop yields have fallen as a result, particularly for cotton. Figure 1: Trends in Agricultural Output by Farm Type (in constant 2000 prices) 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 All farm types Agricultural enterprises Dehqan farms Household farms Policy Issues Secure land use rights, which allow farmers to choose how they use their land, are a prerequisite for sustainable growth. They enhance the incentives to use land to its potential, to undertake investments which enhance its productivity, and to use it in an environmentally sustainable manner. Ownership rights, in conjunction with a well-functioning land market, promote more efficient allocation of land (from low producing to high producing farmers) and improve access to credit. These conditions have yet to apply in Tajikistan. Hence, the broad objectives of future land reform should be to: (1) Develop a system of land ownership, land use and land transfer rights which ensures that producers have full incentives to raise agricultural production and to use their land in a sustainable manner. This will require legislative and policy reform to create secure ownership and use rights, producer freedom to choose what is produced and whether to sell or consume the output, and the right to retain and use the income from product sales as they wish. (2) Ensure that these rights are fully transferred to all producers through the issue of land use titles; and that producers have the right to choose whether they operate as individual farmers’ or as collectives, formed according to their preferred means of association (family, village etc). This requires that producers are fully informed of the implications, laws and procedures associated with land reform; that the process of privatization is equitable, transparent and low cost; and that those farmers wishing to privatize receive adequate guidance and technical support. 4 (3) Develop a legal and institutional framework which ensures that land users and owners have clear, secure rights to own, use and transfer property; and which defines and supports the state’s role as ultimate land custodian. (4) Develop an active market for selling and leasing land and/or land use rights. The current land privatization program has been based on a more limited set of objectives, and so has resulted in a narrower set of achievements. Vaguely worded legislation has meant that inheritable use rights have been heavily circumscribed, which gives wide discretionary powers to state and local government to confiscate agricultural land in the event that it is used “irrationally�. Local government is now using these powers as an implicit or explicit threat to take land from farmers in the event that production targets are not met, particularly in cotton growing areas. As most farmers are poorly informed about the content of this legislation and have weak recourse to the courts, they have little choice but to accept this situation. Hence there is no security to the tenure of their newly acquired use rights. Moreover, most of the collective dehqon farms were formed with minimal explanation to their members, and have continued to operate under collective management. As a result, farmer decisions are still driven by central-planning style production targets and enforced by local government, despite new laws which specify producers’ freedom to choose. Privatization has thus occurred in name only and has not significantly enhanced farmers’ capacity to use their land as they choose. Measures to encourage long-term leasing of agriculture land are not yet an objective of land reform, and nor is the creation of a land market. Farmer access to, and understanding of, the privatization process is extremely low. Their ability to establish their own farms is severely compromised by a combination of (i) poorly written legislation, with an inadequate definition of individual rights and the means to protect these rights; (ii) minimal efforts to inform them of the content and implications of the privatization program and associated legislation; and (iii) limited guidance on how to tackle the complex administrative procedures necessary for privatization, and minimize the high cost of this process. A recent survey by Action Against Hunger (AAH) from five cotton growing districts shows that only 8% of farmers knew how to apply for a dehqon farm and many did not know what a dehqon farm was. When asked to rate their knowledge of land laws, 85% declared that they had no knowledge. Few of the collective dehqons have issued individual land share certificates to their members, despite specific provision for this in the law. Overall, the privatization process has created a perverse set of incentives and disincentives for land reform, which facilitates the acquisition of land by wealthier farmers, but preserves pre-independence collective management systems for the remainder and discourages them from establishing individual or family-based farms. Not only have land use and ownership rights changed little for these non- wealthy farmers, but they risk losing any land they do privatize if they resist the imposition of production targets. These disincentives and constraints are most pronounced in cotton growing areas. The land privatization program has established a platform for the creation of individual or family- based dehqon farms, nevertheless, and this process is now accelerating. Under legislation passed in 1996, individuals or groups within the collective dehqon farms have the right to claim use-rights to their share of the collective farm, and to create a separate farming entity. However, the procedure is complex, non-transparent and expensive (official fees plus “unofficial� payments), and is controlled by District Land Committees (DLC) under the control of the Hukumat. These constraints have limited the incentives for farmers to create their own dehqon farms, particularly when they know that their land can be arbitrarily confiscated afterwards. Initially, this second phase of land privatization was largely limited to wealthier, politically well-connected farmers who were well-informed about the privatization process, and able to take advantage of the non-transparency of the process and to influence DLC decisions. Many of these individuals used this opportunity to acquire significant areas of the best quality land. A number of donor and NGO projects are working to enhance the access of all farmers to the privatization process, with good results, but their activities lack the breadth to make a significant sector wide impact. 5 Priorities for Action (1) The immediate priority is to facilitate and accelerate the second phase of privatization, by allowing those farmers, who wish to leave the collective deqhan farms, to establish their own individual or group-based deqhans. Successful implementation of this objective will require the following actions: • The development of more accessible, transparent procedures for privatizing land. • A widespread program to educate farmers about the new legislation and relevant agencies, the land rights they will acquire as a result of reform, and the means to protect these rights. • Establishment of state and local level agencies to guide and support farmers in their efforts to privatize agricultural land. • Termination of local government control of land privatization, and expand the authority and resources of the State Land Committee to implement privatization. Farmers should be encouraged to choose the organizational form which best suits their needs, whether as individuals, or groups based on family or community links. As an adjunct to these reforms, government should support the development of modern forms of collective activity based on marketing, input supply, machinery use, and credit. This facilitates individual farm ownership for those who seek it, without foregoing the advantages of collective activity; and develops more appropriate forms of group activity than those used in the sovkhoz and kolkhoz. (2) Review and amend existing land legislation to ensure that it confers unambiguous use and inheritance rights on land owners; specifies clear, equitable conditions for state expropriation of private land; and clearly defines the administrative and judicial agencies responsible for administering land use and protecting public and private rights to land, and the procedures for accessing these agencies in case of dispute. Current legislation lacks clarity on these issues, and this lack of clarity is being widely exploited by those wishing to preserve the status quo. New legislation should be accompanied by the establishment of relevant administrative and judicial agencies that are independent, transparent and accessible. These measures will make the institutions responsible for land reform more transparent, independent and accountable. Further, medium-term initiatives are required to establish a legal and administrative basis for land leasing. (3) Finally, support is needed to strengthen and modernize the State Land Committee’s capacity to administer land privatization and for general land administration (cadastre, land registry etc), including institutional re-organization, the supply of new equipment and staff training. Future procedures and administrative structures should be low-cost, accessible by all, transparent and conducive to the efficient operation of land markets and secured credit transactions. 6