3. Land Reform in Taiwan
3.2. Process of the Land Reform in Taiwan (1949-1953)
3.2.2. Second Stage: Sale of Public Land
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about a future expropriation of land, so that they preferred to sell part of their lands at very low prices. This early sale of lands with prices below the market created an incentive for the tenants to start buying those lands. Those prices offered by the landlords were even below the prices that would be offered later in the “Land to the Tiller” program (Burisch, 1969).
As a result of this first phase of the land reform, it generated economic changes with the decline of the land value. According to a survey conducted by the China Institute of Land Economics, it revealed that in December 1949, the year of the enforcement of the rent reduction program, the average price of paddy fields dropped by 19.4% and by 42.4% the dry lands. However, the living standards of agrarian families were improved, without the need for radical changes in tenancy structure. Since extra production was now to be enjoyed entirely by the tenant, it increased the incentive to produce more for them and for the market (Chang, 1974).
As well as providing the farmers with a better quality of life, this first phase of the land reform created certain prerequisites for future phases of land reform. On the one hand, it generated an organizational structure with the rent committee and the establishment of an efficient local tenancy, with the help of the cadaster. And on the other hand, in the psychological aspect, the reduction of the land prices made the tenants be aware of future opportunities.
3.2.2 Second Stage: Sale of Public Land
The sale of public lands, previously owned by the Japanese, started in 1948. The majority of the public land was transferred to public enterprises, such as the Taiwan Sugar Corporation. But, this was stopped with the “Farmland Rent Reduction” program
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implemented in 1949. However, this project of public land sale was implemented again in 1951. Between 1948 and 1958, six sales were made, where two of the main sales were the national and provincial lands in mid - 1951, and the expropriation of the Taiwan Sugar Corporation in 1952 (King, 1977).
Before the sales of land, the tenants on public lands used to pay 25% of the annual crop.
But, after the sale of public lands, the financial burdens were higher. Even when the 20 semi-annual repayments to the government within ten years were equivalent to the rents of 25% of the annual crop, the taxes and other charges increased the farmers’ expenses According to the calculations of Koo, including all the taxes and other charges, the total rents were between the 25.5% - 32.5% of the standard annual crop yield, a proportion that was below the proportion paid by the tenants with the 37.5% law. This situation generated high expectations for the new landholders to have a complete right over their lands within ten years (Koo, 1968).
In the process of public land sales, the priority was directed to the former tenants or local farmers with insufficient land. As a result, an approximate of 130 000 tenant’s families bought a total of 70 000 hectares, giving an average of a ½ hectare per family.
It is also important to mention that this process was relatively slow. On the one hand, it was due to the care in the selection of the new landowners and the decisions about the repayment methods. But on the other hand, it also showed the obstructionism of public enterprises against the enacted law and the discomfort of the small-scale private farming (Koo, 1968).
Finally, as a result of the second phase of the land reform in Taiwan, by selling 40% of the public lands and transforming tenants into new landowners, this program served as a pilot stage before the final phase of the land reform “Land to the Tiller”.
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Through the Act of 1953, it empowered the government to expropriate the lands of the landlords with lands above a certain limit and to create new owner-farmers. The private landowners could have up to 3 hectares of rice field and up to 6 hectares of dry land, both types of lands of average quality. Rice was the most important agricultural product for Taiwan and the rice sector was influenced immensely by the land reform (Chen, 1994). The lands from above those limits were mandatory purchase by the government for about 2.5 times the standard annual crop yield, where 70% of the compensation was in form of land bonds linked to the prices of agricultural products and 30% where paid with the participation in stock shares of government enterprises (Chang, 1974).
The tenant had to pay 2.5 times the standard crop yield, plus a 4% of interest for over ten years in twenty installments, one payment after each crop yield. The payment in both rice and cash was less than the payment with the rent reduction program of 37.5%
during the last four years. Moreover, regarding governmental investment, the state made a considerable financial commitment in order to promote agricultural modernization. During the 1950’s, agricultural investment represented a fifth of the total national investment. Additionally, land reform was complemented with a strong program of agricultural extension directed by the Sino-American Joint Commission on Rural Reconstruction (JCRR), which promote the creation of associations of farmers.
Those associations developed new technologies, marketing and credit cooperatives, and participated in agricultural planning. As a result of the final stage of the land reform, 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 (Koo, 1968).
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According to Jolly, as was the case half a century earlier with the Japanese land reform, the expropriation of land was made easier by the fact that the government had no interest in the support of the landlords. The Kuomintang leaders, coming as they did from the mainland China, also felt no obligation to the local elite (Jolly, 2003).
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CHAPTER 4
LAND REFORM IN PERU
4.1 Background of the Land Reform in Peru
In order to understand the land reform in Peru is necessary to specify that Peru is divided into three main regions: the coast (Costa), the highlands (Sierra) and the jungle (Selva).
Each of these regions had different characteristics in its agricultural structure. For instance, in the highlands, the agrarian system was composed mainly by the hacendados, which were privileged with the arable lands; while the poorest lands belonged to the traditional communities. On the other hand, the agricultural system in the coast was characterized for having largely irrigated lands, which were specialized in the export of sugar, and where 65% of the sugar plantations belonged to foreign enterprises. Finally, the jungle was characterized for having extensive areas of forest, some of them inaccessible and others exploited because of its natural resources. So, due to the significant difference in the agricultural structure of these three regions, a very important issue discussed by the government was the land reform issue. If the government wanted to start a process of development and modernization, a change in the tenure system was fundamental (Carroll, 1970). In order to understand the situation of the tenure and agrarian system before the land reform, the following paragraphs will provide the most relevant aspects.
Regarding tenancy structure, in 1961 less than 4000 farm holdings (which represented 0.4% of the total) occupied 76% of the cultivated land. From these 4000 farm holdings,
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1000 belonged to large landowners with lands of more than 2500 hectares each, occupying about 62% of the total cultivated land. On the other hand, 700,000 smallholders, which represented 83% of the total farm holdings, had less than 5 hectares each and in total, they occupied about 6% of the arable land (Brodsky & Oser, 1968).
With respect to the incomes distribution, the lowest income was for those families composed of landless and tenant workers that lived in the highlands. The number of families that lived in this situation was 700,000 families, and it represented about 3 million people, equivalent to over a quarter of the total population of Peru. On the other hand, due to the development of the guano industry and the increasing export market for cotton and sugar, large plantations were consolidated in the coastal region. The oligarchy that existed during those times was associated with the commercial landlords of the coast, but not with the traditional landlords of the highlands (Cotler, 1967).
Between 1950 and 1960, the agricultural performance was not going well, due partially to factors related to the landlords. The variation of food production (2.5% annually) did not increase as the population growth (3.3% annually). As a consequence, the agricultural exports were reduced and the import of food started to grow. Between the periods of 1960 and 1970, the values of imports grew from 8 million USD to 67 million USD approximately. On the other hand, the other responsible for the food shortage was the little use of lands from large properties. Farms with more than 500 hectares cultivated only 10% of the total area, while properties below 10 hectares worked 66%
of the land. According to estimations, 1 million of those holdings could have been cultivated without significant investment on infrastructure and another 1.5 million hectares with regular investment (Carroll, 1970).
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Due to this situation, an agrarian reform was expected to come since the peasants began to reveal and even started to invade lands in 1950. Those rebellions took place mainly in the south and central part of the highlands (Craig, 1969). But the conflicts increased with the excessive demands of the landlords over the tenant workers, who had been working hard on their plantations. Peasants refused to work the lands for the landlords and organized groups to defend themselves from dislodgement attempts. As a consequence of this conflict between landlords and peasants, the army was sent to those areas, where many acts of violence took place. The peasant’s movement was extended to 300,000 members, considered as one of the largest in the history of Latin America.
But, since this movement produced the expulsion of many landowners, the government of the President Belaunde enacted a special decree in 1964 with a local land reform in order to stop all these conflicts (King, 1977).
4.2 Process of the Land Reform in Peru (1963-1975)
In the case of Taiwan, every stage of the land reform had a specific program enacted by the government. However, it was not the same case in Peru. The land reform law under the Belaunde and Velasco’s government took place in a nonspecific program as Taiwan did. So, in order to have a clear understanding of the land reform implementations, we will divide it according to a chronological order, which is not a formal one. But for the purpose of the study, it will be helpful to have a better understanding of the procedure of the land reform in Peru.
4.2.1 Land Reform under Belaunde Government (1963-1968) 4.2.1.1 First Stage: Public Land Distribution
Fernando Belaunde Terry, the President of Peru, after taking the power in 1963 decided to introduce a new law regarding land reform. After listening to the other parties'
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proposal, the result was a complicated and extensive law, enacted in 1964.
Unfortunately, this law was not mandatory, which protected and secured the land of many large landowners.
In the land reform process, the public lands were distributed first. Three regions of the highlands (Cuzco, Puno, and Pasco-Junín) were prioritized by the government since those areas were the ones where the peasants’ movement started. While, in the region of the coast, the sugar plantations were excluded from the law. These plantations were very efficient agricultural landholdings, managed by corporative properties and agro-industrial operations. The last fact reflects the oligarchy that prevailed in Lima (the capital of Peru), giving priority to the coastal region characterized by a more agricultural wealth. At the same time, it also reflects the indifference of the government with the remote areas of the highlands, whose landowners had only local political power, but not national, and whose land expropriations were considered by the government
“acceptable” in order to avoid peasant movements (Carroll, 1970).
4.2.1.2 Second Stage: Farmland Rent Reduction
Another aspect of the Belaunde’s land reform was the rent reduction limited up to 20%
of the annual crop yield and the extension of rent contracts up to 6 years. The tenants had the opportunities to become legal landowners up to 15-30 hectares, where the new landowners could pay their lands in 20 annual payments with a grace period determinate by the ONRA (National Bureau of Agrarian Reform), with a maximum of 5 years.
However, the administrative process for expropriation used to take an average of 18 months. This reflects the inefficiency and the lack of rigor of the reform (Medina, 1970).
The compensation for expropriations was in one part paid in cash and the other part in bonds.
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According to Russell King, data on the land reform achievements are scarce and contradictory. However, the author provides some facts that could help us to understand the effects of the land reform under the Belaunde administration (King, 1977).
Between 1964 and 1968, an approximately 2.7 million of hectares seems to be acquired, but in reality, only 300,000 hectares were distributed with 100,000 beneficiary families.
The provision of title deeds for the tenants was also a problem. About 128,000 tenant families, from a total of 160,000 tenant families, applied for registration of lands, but only 55,000 families received provisional certificates of property rights, very few received permanent certificates.
The majority of the occupied plots were very small areas of poor land, an average size of 6 hectares, which frequently created more minifundistas.
Finally, many of the landlords dislodged their tenants to prevent any kind of claims from the tenant to have more secure and guaranteed rights under the new law.
4.2.2 The Land Reform under Velasco Government (1968-1975)
4.2.2.1 Third Stage: Land Expropriation
In 1968, a military party lead by Juan Velasco Alvarado took the power of the Peruvian government; and even though he was not directly involved in the agricultural conflict, decided to implement a more radical land reform. In 1969, the land reform of Velasco was enacted, which represented a continuation of the reform of Belaunde in 1964, but this time much stronger (Carroll, 1970). The coast was no more an exception for expropriation and the barriers for ownership implementation were quickly removed.
The limits of landholding size were different according to the region. In the coast, the landlords were allowed to have a land size up to 150 hectares for irrigated lands, 300
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hectares for non-irrigated lands and 1500 hectares for grazing lands. However, in the highlands and the jungle, the limits for the landlord were lower; they were allowed to have a land size between 30-55 hectares according to the local characteristics. The fact that the government allowed the plantations of the coast to maintain up to 150 hectares, was a representation of the government's desire to preserve the entrepreneurial spirit of the agricultural commerce. But the sugar plantations, owned by foreign enterprises, did not have any privilege this time and were totally expropriated from the northern coast.
In this sense, the government gave more emphasis in groups of operation for plantations and livestock ranches, whose economies of scale were more prone to suffer from the subdivision. (Eguren, 2009)
According to Chirinos (1975), in general terms, the Land Reform had the following objectives:
A. Increase the income of the peasant sector and to secure the labor stability. This objective is achieved through the participation of the profits of the new companies among the partners.
B. Guarantee social justice in the less favored sector of the peasantry, regulating the right to property, pointing out the limitations of the same based on social interest.
For this purpose, all forms of exploitation were banished. Those systems were still present in the Peruvian agriculture despite the existence of laws abolishing some of these systems from previous regimes.
C. Increase the production and productivity of the sector, ensuring the commercialization of the products obtained. The crisis situation of agriculture in Peru and Latin America moved the groups in power to try to increase the production of the sector to get rid of the dependence on food import. This concern to at least maintain production is evident with the direct control of the government,
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at the beginning of the process, for those products with high productivity such as the sugar plantations. This allowed not only to cover the internal market but also be able to bring foreign currency to the country.
D. One of the main objectives of the Agrarian Reform process was to favor peasant mobilization. The self-managed system implemented for the rural sector has as its main purpose to guarantee not only a salary according to the needs of the workers but also the possibility of making decisions in the company’s management, as well as taking responsibility for the implementation of the policies to follow. The idea of participation and not manipulation was one of the pillars not only for new companies in the rural sector but also in the rest of the sectors of the Peruvian economy. According to the author, this was the most important decision for the approach of a new society and also, logically, the riskiest. Having this scheme in mind, the diffusion and consolidation of CAPS (Agricultural Production Cooperatives) in the coast and SAIS (Agricultural Societies of Social Interest) in the highlands were encouraged as the models in line with the principles of participation.
E. The property rights of the old indigenous communities are guaranteed giving them, when they are part of a SAIS, the possibility of receiving surpluses from the efficiently organized production units. Historically, these communities had lost their lands at the expense of the expanding latifundia. This type of organization gave rise to the so-called Agricultural Societies of Social Interest (SAIS).
F. Finally, the law clearly states that it is intended to consolidate small and medium-sized property. The consolidation of small property (minifundios) centers its main problem in the existence of a dispersion of smallholdings, whose grouping is an extremely complicated work. The smallholding solution is mainly proposed in terms of land consolidation, the objective of which is to reunite small
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smallholdings into production units that are much more economically profitable and much more feasible to manage from a technological point of view.
4.2.2.2 Fourth Stage: Formation of CAPS and SAIS
The lands were adjudicated to associative enterprises, peasant’s communities, group of peasants and natural people approved by the DGRA (General Direction of Agrarian Reform). Two types of associative enterprises were created: the Agricultural Production Cooperatives (CAPS) and the Agricultural Societies of Social Interest (SAIS). The CAPS were mainly organized in the relatively modern haciendas of the coast, where the properties were collectively given to the permanent workers of the hacienda. They decided their supervisory and control bodies and various specialized
committees. According to Eguren, they had a contradictory nature since they were employees, who were looking for an increment of their salaries; and at the same time, they were also members, who had to look for the capitalization of their profits. On the other hand, the SAIS was a complex business organization created to replace the extensive haciendas. In order to organize the SAIS, the few salaried workers were
committees. According to Eguren, they had a contradictory nature since they were employees, who were looking for an increment of their salaries; and at the same time, they were also members, who had to look for the capitalization of their profits. On the other hand, the SAIS was a complex business organization created to replace the extensive haciendas. In order to organize the SAIS, the few salaried workers were