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October 14th, 2019

Transaction costs, land rental markets, and their impact on youth access to agriculture in Tanzania

Published by Land Economics journal,

This study (PDF) in the Land Economics journal estimates the extent to which land rental markets provide a pathway for youth to enter into agriculture, and how transaction costs may impede youth access to renting land in Tanzania. The article provides evidence that, while rental markets are important avenues for the acquisition of farmland by young farmers, the transaction costs faced by younger farmers attempting to access land rental markets appear to be higher than those faced by older farmers. One reason for this may be that weak contract enforcement could make rental arrangements contingent upon reputation, which may take many years to develop. Results also showed that younger farmers pay higher prices for rented land and are somewhat less likely to belong to village savings groups than are their older counterparts. In order to address the looming rural “youth bulge” and overcome the challenges associated with increased land pressure, it is important for policy makers to recognize the importance that land rental markets can play in facilitating land transfer and land access by new generations of farmers. This is particularly the case in countries like Tanzania, where the nonfarm and urban sectors are still too underdeveloped to absorb surplus labor that might wish to leave rural areas. In order to better understand and redress transaction costs and transaction cost asymmetries that may disproportionately affect younger farmers who are in greatest need of access to farmland, this study makes the following policy recommendations: 1) Consider setting up a willing tenant/willing landlord program that matches younger potential tenants with older potential landlords; 2) Second, governments should consider means of collecting and disseminating representative land rental rates for different areas, in order to provide a reference for rental negotiations.

Curated from le.uwpress.org