5. Land Reform Comparison between Taiwan and Peru
5.1. First Phase of Evaluation: Land Reform Effects
5.1.1. Effects of the Land Reform in Taiwan
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CHAPTER 5
LAND REFORM COMPARISON BETWEEN TAIWAN AND PERU
5.1 First Phase of Evaluation: Land Reform Effects
In this section, we will study the effect of the land reform implementation in Taiwan and Peru, according to its performance in each economic and social indicator. Those indicators are the ones considered in the definition of land reform success in the theoretical framework section.
5.1.1 Effects of the Land Reform in Taiwan
As we mentioned before, with land reform in Taiwan, about 140,000 hectares of land were sold to 195,000 new owner-farmers, which generate the increment of the proportion of owner-farmers from 56% to 86% of the total farmland between 1948 and 1959. Apart from this new land distribution, the following economic and social effects were observed in the development of Taiwan.
5.1.1.1 Economic Effects
Production
According to Yu Kang & Schive, during the runaway inflation after the war period, food prices in relation to general prices increased rapidly. This situation generated the increment in farm prices, which accompanied with a constant supply of input, generated the increment of farm production by 19.2 % annually between the years 1946 and 1950.
There were three main factors that contributed to the rapid agricultural reactivation
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during the period 1946-1950. Firstly, the rapid increase in labor input, crop area, and multiple-crop diversification; secondly, the introduction of better production techniques, rehabilitation of irrigation facilities, and reorganization of farmers' associations; and finally, the implementation of a land-rent reduction program in 1949, which encouraged tenant farmers to increase production. The rise in the crop from 832,000 hectares to 874,000 for cultivated land, and from 975,000 to 1.5 million for total crop area, increased the multiple cropping indexes from 117 to 172 over the period 1946-1950 (Yu-Kang & Schive, 1995).
Productivity
According to Chen, land and labor productivity continued to grow rapidly in the initial stage of agricultural development in Taiwan, when land resources were limited and farm labor was abundant, since the increase in capital investment could raise both land and labor productivity. During the period 1960 -1970 and thereafter, the industrial sector absorbed many of the farm labor, which improved the labor productivity even more. As a result, the annual growth of labor productivity (5.7 %) was higher than the percentage of land productivity (4.9 %). During this period, the cultivated area remained constant, the consumption of chemical fertilizer showed a continuous increment, and the number of agricultural workers and man-days of agricultural labor increased until 1965 and then started to fall. This situation of decreasing inputs reflects the growing use of mechanical energy instead of human and animal energy. In conclusion, the increase in Taiwanese agricultural production in the postwar period was due to a rapid increase in capital investment and a reduction in surplus labor. As a consequence, the capital-land and capital-labor ratios increased significantly, creating an increment of land and labor productivity (Chen & Wang, 1980).
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43 Income
According to the estimates of Koo, one major economic consequence of land reform has been the increase in the income of tenant farmers. Between 1949 and 1960, the production of paddy rice increased by about fifty percent, while the net income of the farmers tripled during the same period. The reason behind this different increments on production and income is related to the rent reduction. The increase of production in 50% is also confirmed with the aggregate net farm income, which increased from T$305 million in 1950 to T$450 million in 1960, both expressed in the constant purchasing power of the 1935-37 monetary unit. However, the net income estimate of the tenant farmers should be taken with caution, because the calculation is based on paddy rice field. Farmers who cultivated dry land have seen less benefit in increasing their income. Furthermore, much depends upon the size of the land holdings. With the public land sale program, 83 % of the purchasers bought under 0.1 ha. The two above qualifications taken together means that for a representative farm household the percentage increase of his income cannot be as high as indicated, as his holdings would probably include some dry land (Koo, 1966).
Employment
Since land reform encouraged to the farmland owner to accept new technology and invest more capital in their lands, productivity tended to increase and therefore create that landholding in each class interval has to move up to the next larger interval. In this way, land reform reduced unemployment, but not underemployment. The only solution to reduce underemployment was out-migration. The people with more education level started to move to the cities in order to find a better job opportunity. The post-reform environment provided the conditions that encouraged the expansion of family mobility
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strategies, increasing family entrepreneurship, which promoted a certain pattern of macroeconomic and demographic change. This pattern implied relatively rapid economic growth, diversification, and a rural-urban equilibrium in response to changes in the requirements of families' socioeconomic success (Greenhalgh, 1989). So, as a consequence, of the land reform in Taiwan, the employment in the agrarian sector decreased, to move to other sectors as the industrial sector.
Investment
Between 1951 and 1960, as the new landowners increased their production and income, the proportion of savings from agriculture, with regard to the total savings of the economy, grew from 26% to 59% (Koo, 1966). With the increase in saving, tenants were willing to invest more money in agricultural equipment and improved farming methods. This new situation of the farmers, with the provision of land ownership and a higher income, encouraged farmers to start making long-term investments and improvements in their land (Chang, 1965).
In conclusion, the effects of the land reform in Taiwan reflected on the previous economic indicators, showed that Taiwan developed its agricultural sector. The guaranteed ownership over the land produced an increase in the agricultural output, farmers’ income, and the long-term investment in their land. Moreover, the government support through technical assistance and provision of agricultural infrastructure generated an increment on the labor and land productivity. However, due to the development of the urban area which absorbs labor from the rural area, the employment in the agrarian sector decreased to move to the manufacturing industry.
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45 5.1.1.2 Social Effects
Political and Social Stability
Ho argued that farmers, who own the land they cultivate, even if they are poor, tend to support more the existing political order than do tenants and the landless, and so a rural society based on the owner-cultivator system is likely to be more stable. The land reform of 1949-1953 contributed to the country's political stability, by increasing the number of owner-cultivators. As land reform improved the economic welfare of a large number of rural families, it became politically feasible for the government to introduce, in the following years, an efficient mechanism to extract the surplus from the agricultural sector (Ho, 1987). Another result, according to Cheng, is the impact of land reform on social stability. After the peasants acquired ownership of the land, they showed more interest in maintaining peace and order in the community. As a consequence, the peasants increased their productivity and improve the economic development of Taiwan (Chen, 1961).
However, it’s necessary to specify that, according to Ho, during the colonial period in 1945, the rural sector of Taiwan enjoyed of stability and agricultural growth, being a well-organized society with little signs of social unrest or disintegration. The decision to carry out a land reform was more in response to the crisis on the mainland China than to rural problems in Taiwan itself. It is for that reason that KMT wanted to establish a solid political base among the Taiwanese peasants, giving priority to agricultural development and social justice, in order to help its own political survival (Ho, 1987).
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46 Decision making and Peasant Participation
With the land reform, peasant participation in civil society was much enhanced. By having an organizational structure with the rent committee and the establishment of an efficient local tenancy, land reforms encouraged the emergence of a greater voice for the peasantry in local and national affairs. According to Smith, the success of the Taiwanese land reform on the peasant participation seemed to be due to the combined pre-war conditioning by the Japanese military government, post-war quasi-governmental required participation in farmers' associations, and extensive programmed efforts by the JCRR (Smith, 1973). This integral reforms of Taiwan involved that peasants acquired control of the land in the form of family farms (Janvry, 1981).