2. Introduction
Access to land is crucial for farm production and
ensuring food security particularly in agrarian
societies like Nepal
Land serves as an effective instrument for obtaining
loans, building investments, accumulating wealth,
transferring affluence, and gaining social prestige
(Deininger and Binswanger 1999).
Owner cultivation, sharecropping, and fixed
rent are the most common tenancy forms
practiced in Nepal (Acharya and Ekelund
1998)
3. Tradition View on Tenancy
Among three land tenure systems, sharecropping is the
most inefficient mode of production.
What is Sharecropping?
• Sharecropping is a system of agricultural
production where a landowner allows a sharecropper
to use the land in return for a share of the crop
produced on the land.
• The crop sharing rules vary from country to country
but 50-50 division is more common. The cost of
purchased inputs such as chemical fertilizer is often
shared between landlord and tenant.
5. Landownership, Efficiency, and Equity
The major justifications for implementing redistributive land
reform policies are:
1. Smaller farms are more efficient than the large ones
(Benjamin 1995; Barrett 1996; Barrett et al 2010)
2. Unequal (skewed) distribution of land is socially unjust and
hinders economic development (Galor et al 2009)
Efficiency and equity
Efficiency – negative relationship between farm size and
productivity (Barrett et al 2010)
– Major problems with this observation
Omitted variables – land quality, irrigation, etc.
Technology – makes it possible to manage large farms
6. Landownership, Efficiency, and Equity
Equity – land reform can create a sense of equity but
it cannot substantially increase production efficiency
– Most farms in Nepal are too small to produce
enough to support farm families and ensure food
security throughout the year
– Agricultural technologies are lumpy and more
suitable for larger farms
– Historical trend – farm size tends to increase with
economic development (see graph in next page)
– Radical land reform policies are likely to fail in
increasing efficiency as well as equity in land
ownership.
8. Methodology
𝑑𝑋𝑖 = 𝛽 𝑚𝑖
3
𝑚=1
𝐷 𝑚 + 𝛼𝑖 𝑃𝑎 + 𝜑𝑗𝑖
2
𝑗=1
𝐸𝑗 + 𝜀𝑖
Input intensity between owned and shared plots
where dXi is difference in input intensity (seed, compost,
fertilizers, bullock, family labor, hired labor, and other inputs)
between owned and sharecropped plots; Dm measures the
difference in weighted average of soil fertility (D1= fertile,
D2=moderate) and crop variety between owned and shared plots;
Pa measures the difference in owned and sharecropped plot size;
and Ej are village dummies.
Similar model is used to evaluate the impact of tenancy and
plot size on farm productivity
11. Results and Conclusions
Tenancy effect, soil fertility, and plot size are the most
important factors in determining input and output
intensities.
Impact of plot size on farm production is much higher
than the impact of share tenancy, i.e., 17.49/6.87=2.55
times larer.
Land fragmentation is more serious problem than
sharecropping
Policies that promote land consolidation (increase plot size)
are likely to be more effective in increasing production
efficiency and enhancing food security in Nepal than those
that promote tenant ownership.
