Land privatisation is not imperative for socio-economic growth and development: subsistence mode of economy is the problem!
By: Kassahun Embaye
I am neither a politician nor an economist, I am a forester whose professional duty is to find and promote a mutual relationship for economic growth and sustainable forest development. I, therefore, apologise from the outset if I tend to be parochial in my selection of bamboo farming to illustrate commercialisation of subsistence farming in China, where land is under government control and the people have only use-right for 50 years or so.
We have a country where almost all the population (85 %) entirely depends for survival on farming the ever diminishing and degrading landholdings using primitive technology. This subsistence farming is the root cause of our poverty as the government has made it abundantly clear. Bad governance in the past that also (to some extent) lingered on to the present, war, and natural vagaries such as drought and flood aggravated the destitution and quickened the downward spiral of socio-economic and environmental conditions of the rural population. Subsistence farming at best produces just enough food for the survival of the farmer and his family members, leaving none for saving and investment. The markets of subsistence economy are also rudimentary that lack organisation (co-ordination), structure and financial capacity to absorb surplus production in years of good harvest and to buffer the adversity of natural vagaries in bad years. It is, therefore, impossible for socio-economic growth and development to perpetuate under subsistence mode of economy.
The efforts of the government to boost production of the subsistence farming through various inputs (fertiliser, improved seeds, rain harvest at household level, etc.) and technology packages are necessary to improve the condition. They could surely reduce the need for emergency aid in the short term if properly implemented, but will never solve the fundamental problems that have caused the vicious circle of poverty. Furthermore, it will be impossible in the long run for the government to supply inputs on sustainable basis for a system that does not generate savings to cover its costs mainly due to its poor production efficiency and for lack of markets for its meagre surplus in good harvest years. The finance that has been used to propel the modest economic growth and to fund the considerable infrastructure construction we are witnessing has not been generated by the subsistence economy, it was obtained from external sources as aid or loan and hence is not sustainable. Thus, a rational approach to break the poverty trap of Ethiopia should ultimately focus on commercialisation of the subsistence farming, i.e., production of crops for sale that best grow on the available landholding and live on the finance (revenue-expenditure) obtained by selling the commodities. This presupposes an efficiently working market, which the government should endeavour to create by exploring internal and external market niches for each commodity, expanding infrastructure and promoting industries. This is a daunting task that is easily said than done, but it is a crucial one that must be accomplished to break the poverty trap in Ethiopia.
Commercialisation of the subsistence farming does not necessarily require land privatisation, but presupposes a secure tenure system for sufficiently long period of time. The situation in China has been cited many times by the status quo proponents of the present "land use-right", and it is true that China has registered a staggering economic growth rate under such a system. The market is functioning very well there, motivating for new industries to flourish in thousands and old ones to be renovated and expanded. Thus, renewable natural resource (agriculture, forestry, etc.) production, processing (manufacturing), distribution and marketing are mutually growing and sustaining by reinforcing each other in China. The government is keeping the momentum through various incentive structures. This is the approach we should follow in Ethiopia as well.
It is true that agricultural commercialisation could benefit from "economics of scale" if land was allowed to be sold and bought as a free commodity. This would enable the use of higher technology for faster generation of wealth by relatively few tycoons. This is, of course, the objective of capitalism, which our country is striving to achieve. But, this process should not work to the detriment of the rural population. A well thought out strategy has to be designed that eventually uses the rural labour as essential resource to propel commercial farming and agriculture based industries. This requires time and thorough preparation. Thus, the argument of the government on the future of the 85 % population if and when they lose their land through sell before the industry sector is sufficiently developed to absorb a good portion of them is tenable. It is prudent to create a favourable condition for industry to expand and develop before land privatisation, which could be done through commercialisation of the subsistence farming. The experience of China in commercial bamboo farming at household level with the support of the government and bamboo-based industries could serve as a model that could be adapted and adopted by Ethiopia.
Bamboo and rattan are the backbone economies of South and Southeast China. They account for more than 70 % of the GDP of some counties, which means that almost all the population in those counties depend on bamboo and rattan cultivation, management, harvesting, processing, manufacturing, distribution and marketing. The Chinese revenue from bamboo alone is in billions of USD, while the people employed in bamboo based activities are in hundreds of millions. Bamboo production is by and large carried out by households on a land provided to them by the government according to "use-right" land policy of the country. The success is attributed to the government's approach to support integrated development of bamboo production, processing and marketing systems. They did this by establishing a stirring unit composed of members from different pertinent ministries, companies and other stakeholders in all bamboo growing counties. The task of the stirring unit has been to create awareness on the economic potential of bamboo and to bring together pertinent government ministries, farmers (producers) and companies and would-be companies to work together and support each other for mutual benefits. The government plays a facilitator and promoter role through policy and strategy arrangements and incentive structures as well as information exchange. The incentive structure includes financial support for emerging bamboo-based companies with good intention and workable plan in their initial phase, tax concessions and provision of land and buildings (if available) free of charge for some years. The government also supports farmers by providing land for planting bamboo, supply of bamboo seedlings and by giving them assurance that their produce will be sold at least at pre-set minimum price. The government also promotes information flow so that industries produce based on market demands and farmers grow trees based on company requirements. The industries buy the bamboo stems and/or shoots, mostly after semi-processed by the farmers, in centrally located village markets once a week after thorough inspection for quality. The government also encourages companies to explore and create new markets inside and outside the country. Technical support for both farmers and companies is also provided based on strategic research by research and higher learning institutions. A research project is complete and the researcher is credited for it after the research result has been successfully demonstrated in field situation by the researcher to the users of his research result (e.g. farmers or companies depending on the nature of the research). The government collects tax after the whole scheme is well established and the companies have passed the economic take-off.
The success in China is a staggering one, while land is still under government control on "use-right" system. The economy of farmers, company and government is accelerating at very high speed. Demand for bamboo raw material and its corresponding price is always higher than the preceding year despite the ever-expanding bamboo plantations. Market for bamboo products is always outpacing supply as a result of new designs and applications. In this way the whole system of bamboo cultivation, processing and marketing is growing in China at increasing speed. The Chinese strategy of bamboo cultivation and utilisation should be studied in relation to the objective realities in Ethiopia and a workable strategy and procedure need to be established to promote bamboo-based economic institutions in Ethiopia. It is befitting to indicate here that Ethiopia has the richest bamboo resource in Africa (ca. one million ha) that could contribute to poverty alleviation if properly used as the Chinese have done. The bamboo forests of Ethiopia are now being converted to agricultural land and burned to promote tender grass growth for grazing and for other various reasons (Embaye, 2000).
ReferenceEmbaye, k. 2000. The indigenous bamboo forests of Ethiopia: an overview. Ambio 29(8): 518 - 521.
[Opinions in this article are solely that of the writer.]