LAND LEASE MARKET AND ITS EFFECTS ON CROP PRODUCTION IN ENUGU STATE, NIGERIA

LAND LEASE MARKET AND ITS EFFECTS ON CROP PRODUCTION IN ENUGU STATE, NIGERIA

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ABSTRACT

This study empirically assessed the effects of land lease market on crop production in Enugu State, Nigeria. The specific objectives were to: describe the socio-economic characteristics of crop farmers; identify the land tenure systems available in the study area; identify and describe the structure and conducts of land lease market; ascertain factors influencing land lease market; determine the influence of land lease forms and practices adopted by farmers on their net farm income; and identify the constraints facing farmers participation in land lease market. The study was guided by the following null hypotheses: socio- economic characteristics of crop farmers do not significantly affect farmers participation in land lease market; and land lease forms adopted by farmers do not significantly affect their net farm income. A multistage simple random sampling technique was used in the selection of the respondents. Data for the study were collected from a sample of 120 crop farmers whose responses were sought on the type of land tenure systems, structure and conducts of land lease market and constraints facing them in participating in land lease market through the use of well structured questionnaire. Descriptive statistics, logit regression model, multiple regression model and likert scale rating technique were employed in data analysis. The study revealed that majority (63.3%) of farmers in the study area fell within 50 years and below which is an active age for farming activities. Educational attainments of the respondents were mostly secondary and tertiary education. About 75% of the respondents were married and 74.2% of them were males, while 78.35% had a household size of ten persons and less. The study further showed that 67.5% of the respondents had communal land tenure system while 68.3% participated in other forms of land lease market with fixed rental market being a dominant form of land lease market. Furthermore, logit regression analysis indicated that farm size, transaction cost and farming experience were found to have played significant role in influencing farmers ’ participation in land lease market. Multiple regression result showed that area of land rented, share of output, cost of input and educational level were significant in determining the influence of land lease forms and practices on farmers’ net farm income. High transaction cost, unavailability of land, crop failure, distance of land from home, fear of family intervention, lack of security, and poor land improvement were identified as the major constraints faced by crop farmers in participating in land lease market. The study therefore, recommended that a good tenancy system be developed to guarantee adequate security of tenure to the occupants (the person actually cultivating the land). This will no doubt, contribute to both agricultural development and land resource conservation.


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CHAPTER ONE

INTRODUCTION

1.1         Background Information

The land of any nation is the most valuable natural resource. It supports all human activities and it is from it that all other economic resources are derived (Olusola, 2011) .More still, the economies of all countries, no matter their status are bound up with the land, for all countries exist through direct or indirect exploitation of land in one or more forms. This assertion holds with even more force for Nigeria where at least 70 percent of the working population is dependent upon agriculture for their livelihood (Famoriyo, 1979).

Land is a fundamental factor of production in the agricultural sector. It has an essential role to play in increasing as well as sustaining agricultural production. The extent to which this role is performed is determined in part by methods of land acquisition and arrangements for the ownership, control and use of land (Arua and Okorji, 1997).

In developing countries, land can be acquired through various ways ranging from inheritance, lease and purchase. Inheritance which is an aspect of customary land tenure syste` m is related to family and is based on the concept of group ownership of absolute rights in land, with individuals acquiring usufructuary rights. Customary land rights establish the basis for access to land resources and the opportunity to use the land for productive purposes (Famoriyo, 1980). Under this system, each individual member of land holding family is entitled to a portion of land enough to feed himself and members of his family. Lease on the other hand means a contract by which one party lets land, property, etc to another for a specified time.

Arua and Okorji (1997) noted that the most common mode of land acquisition in eastern Nigeria is through inheritance, followed by leasing or purchase in some areas and pledging in


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others. Acquisition through gift is less common, and even less common is acquisition through marriage or borrowing. In a community, the right to inherit land is the major form of social security. Land acquisition by inheritance is usually patrilineal, but in rear cases a matrilineal system is practiced. The amount of land inherited depends on position in the family and number of wives and brothers. In monogamous families, the eldest son (Okpara) has a preferential allocation of land and inherits his father’s home as a new head. Consequently, as population increases, land fragmentation occurs to the level that in most cases, no longer support a meaningful agricultural production.

Land becomes scarce under the impact of population growth and agricultural commercialization. Rights in land are increasingly individualized along two dimensions, namely the range of rights held and the extent of autonomy afforded by the landholder in exercising these rights. Individualization along the first dimension involves the gradual extension of use rights (for example, the increasing recognition of the rights to plant trees and to bring other improvements to the land) and the addition of transfer rights (Jean-Marie, Frederie, Frank & Jean- Philippe, 1999). The right to rent out or to sell land parcels are seriously circumscribed by the requirement that land ought to remain within the family or lineage. At first, sales were sanctioned only among members of the group of common descent or residence, later to outsiders with approval of the group or its head ,still later without such consent.( Bruce 1986).

According to John and Marcel (2001), the means of acquiring access to land are land gifts, fixed rental and sharecropping. Gift fields are given free of any explicit charges for an indefinite period. Gift lands are usually provided by relatives, often parents providing land to newly married children. Although, there is no explicit charge, many tenants contribute labour to the land owner.


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Fixed rental involves a cash payment paid in advance to the landlord. The tenant pays for all the inputs, reaps all the benefit and bears all the risk from his production. The landowner is usually not related to the tenant, the contract is almost always for only one year or as specified in the contract arrangement. Share cropping agreements provides a share of the harvest to the landowner, usually one-half or one-third. The landowner is usually not a relative to the share tenant. In contracts in which the landowner receives a one-half share, the landowner often provides a share of the inputs in production and harvesting, including purchased inputs and harvesting labour, though the term or terms vary significantly across contracts.

Incidentally, markets are the key economic mechanisms for efficient resource allocation and economic growth. Under institutional settings where imperfections exist in markets for credit and insurance, transfers of land use rights usually take place through the land rental market. For sustainable land use, it will be desirable for land to be transferred from less productive to more productive producers. Equalizing the marginal product of land across producers with different land-labour endowments is essentially for efficient and equitable land allocation and for productivity growth in agriculture (Carter and Yao, 1999; 2002; Carter and Olinto, 1998; Deininger, 2003; Deininger and Zegara, 2003; Faruqee and Carey, 1997; Yao, 2003).

The development of land lease market can enhance allocative efficiency and crop productivity because it will bridge the gap between the land owner and landless farmers and hence improve land investment or improvement for better agricultural growth and development. Land lease market is regarded as an efficient way to bring about efficient resources allocation (Binswager and Deuninger 1995; Carter, Fletchner, and Olinto 1996). However, in Enugu State land rental arrangements are generally informal, short term and between households living in the


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same village and in some cases among friends. Rented lands are therefore subject to tenure insecurity, which may discourage land investment and reduce agricultural productivity.

1.2       Statement of Problem

The inaccessibility of land for purposeful agricultural production in certain areas in Nigeria is as a result of the customary land tenure system whereby land belongs to the family and is based on the concept of group ownership of absolute rights in land with individuals acquiring usufructuary rights (Famoriyo, 1980). Otsuka and Place (2001) noted that individual land rights are restricted under community ownership. User rights are shared often on the basis of informal rules. Tenure security and transfer rights of land are usually restricted by the informal rules in the community.

Traditional tenure system placed a major constraint upon the achievement of efficient agricultural production and physical development, which led to land use act- promulgation by the government in 1978 (Olayiwola and Adeleye, 2006). This land use act promulgation 33 years ago failed to take into sufficient consideration the modifications that have taken place in the traditional tenure system by treating land as a free good (Ukaejiofor, 2007, as cited by Onyido, 2011). He observed that most elements of the act are disregarded by the majority of the landowners. Sale of land, forbidden by the act has been reoccurring un-diminishingly.

Land use Act in Southeastern Nigeria has served to increase the marginalization, dislocation and fragmentation of small agricultural holdings and has also rendered access to land more difficult for landless farmers. It has not improved security of land lease and has therefore only intensified environmental degradation.

In spite of the agricultural policy for Nigeria of 1989 recognition of land as a major factor in crop production, it is evident that land is not readily available, given the magnitude of the


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requirements both for agricultural and industrial development (Adedipe, 1991). For instance, due to socio-cultural bond on land in Southeastern Nigeria, it is almost impossible to acquire or gain access to a large enough tract of land, even on a leasehold basis, to embark on large scale farming (Onyido, 2011).

The inability to acquire such large and consolidated areas of land apparently makes land the most underutilized or misused natural resource. It was against this milieu that the National Agricultural Land Development Authority (NALDA) was established in 1991 by a decree to re-examine and address the land tenure problems of rural communities.

Incidentally, the emergence of land lease market was to grant access to land for farmers who are less endowed with land resources. Though, there are many constraints limiting the potentiality of land lease market as noted by Shipton (1988) that land lease market is severely restricted where kinship ties are strong and such land market is largely unregistered. The government does not have the resources to monitor let alone control the many kinds of land exchange that happen every season in farm neighborhoods. Land tenure insecurity has a significant but small effect on investment (eg green manure, organic manure) Yao (2003). The main explanation is that land investment plays a minor role in agricultural production compared to other agricultural inputs such as land, labour and chemical fertilizer. The issue is whether land reforms can contribute to enhance the allocative efficiency and thus enhance productivity and poverty reduction effects of land rental markets (Otsuka, 2007; Holden et al, 2008).

Few studies provide empirical evidence of the effect of land lease development on alloactive efficiency and agricultural productivity. Lohmar et al (2001) find that allocative efficiency and aggregate agricultural production is improved because the households that rent in land have a significantly higher marginal product of land than households that did not rent


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additional land. Gavian and Ehric (1999) found that the total factor productivity was somewhat lower on informally contracted land (whether cash rental, share cropping, gift or borrowing) than the owner- cultivated land.

Empirical studies have also revealed that the land rental market is good for poverty reduction because it enhances access to land for the poor landless farmers. Land lease market by farmers can only be understood correctly by finding answers to questions such as;

-                      What system of land tenure (ownership) is prevalent in the study area?

-                      What factors influence land lease market?

-                      What are the principal constraints of land lease market?

-                      Does it promote investments that enhance agricultural productivity?

-                      How do land lease forms adopted by farmers affect their farm income?

Thus, by finding answers to these and related questions, this study seeks to find out the effect of land lease market on crop production in Enugu State. Also, there is little or no information on land lease market in Enugu State. Against this backdrop, it becomes pertinent that these knowledge gaps need to be filled.

The broad objective of this study is to identify and assess the effects of land lease market on crop production in Enugu State Nigeria. The specific objectives are to:

(i)                 describe the socioeconomic characteristics of crop farmers in the study area;

(ii)               identify the land tenure systems available in the study area;

(iii)             identify and describe the structure of land lease market in the study area;

(iv)             ascertain factors influencing land lease market in the study area;


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(v)               determine the influence of land lease forms and practices adopted by farmers on their net farm income;


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