From Raj Nallari and Breda Griffith's lecture notes.

Land Inequality and Rural Poverty

On average, rural poverty accounts for nearly 63 percent of poverty worldwide with wide geographical spread. The rural poor account for 90 percent of poverty in China and Bangladesh and between 65 and 90 percent in Sub-Saharan Africa whereas poverty is concentrated in urban areas in the Latin America region (Khan, 2000).  Among the rural poor, those who are landless suffer more than landholders.  The rural poor depend mainly on the primary sector—agriculture, forestry and fishing—and some small scale industries.  One area that holds promise for the rural poor is agricultural growth. Khan (2000) and others (Gaiha, 1993; Datt and Ravallion, 1998) argue that agricultural growth even when land holdings are low and technology is sparse has almost always contributed to a reduction in poverty.  In spite of this, government policy has oftentimes disfavored the agricultural sector and rural infrastructure, both social and physical.  These elements and other characteristics have been identified by Jazairy and others (1992), Gaiha (1993) and reproduced in Khan (2000) in highlighting how rural poverty is created.  These studies suggest that rural poverty arises from:

• political instability and civil strife;
• systemic discrimination on the basis of gender, race, ethnicity, religion, or caste;
• ill-defined property rights or unfair enforcement of rights to agricultural land and other natural resources;
• high concentration of land ownership and asymmetrical tenancy arrangements;
• corrupt politicians and rent-seeking public bureaucracies;
• economic policies that discriminate against or exclude the rural poor from the development process and accentuate the effects of other poverty-creating processes;
• large and rapidly-growing families with high dependency ratios;
• market imperfections owing to the high concentration of land and other assets and distortionary public policies; and
• external shocks stemming from natural causes (for example, climatic changes) and changes in the international economy.

The ‘land factor’ is particularly evident in accounting for rural poverty. It plays a direct role in terms of whether an individual or household has access to or ownership of land and also indirectly in terms of gender discrimination, rent-seeking, market imperfections and poorly defined property rights. 

The ‘land factor’ plays a direct role in differentiating the rural poor -  cultivators have access to land as small landowners and tenants, and non-cultivators are landless, unskilled workers (Khan, 2000). Cultivators account for the majority of the rural poor and are directly involved in agricultural production. In most cases they are unable to sustain themselves from their own landholdings and thus offer their labor to other landholders. Thus there is some functional overlap between cultivators and non-cultivators. The latter are the poorest of the rural poor and their numbers have been increasing. Natural increase has contributed to their rising numbers but also “depeasantization”—public policies aimed at moving small landholders out of agricultural production. Non-cultivators are particularly vulnerable to changes in the demand for labor, wage rates and food prices. Furthermore, they are typically isolated from public infrastructure services and public sector safety nets such as food rations. Also rural women suffer more than rural men because of lower social status and discrimination, for example in inheritance laws.

Khan (2000) offers some policy prescriptions that include land titling and redistribution for helping the rural poor and these are outlined below.  Efforts to help the rural poor should take into consideration initial conditions, the level of institutional development and incentives. A four-way classification of the rural poor is recommended that would take into account: (i) small landholders who cultivate their land; (ii) landless tenants who cultivate other peoples’ land; (iii) landless laborers who depend on casual or long-term employment in farm or non-farm sectors; and (iv) women who transcend the other three groupings. Based on Khan (2000) and Lipton (1998), a policy to reduce rural poverty might include the following elements:

• land reform through land titling, land redistribution and/or fair and enforceable tenancy contracts;
• improvements in the social (health, education) and physical (irrigation, transport and communications) infrastructure and the involvement of local government and civil society in devising and implementing improvements;
• public sector rural credit programs that target the needs of the rural poor – perhaps the extension of community-based credit programs;
• a flexible public works program to smooth out household consumption and avoid transient poverty for the near landless and landless. This could also strengthen the bargaining power of the poor in rural areas; and
• public sector safety nets such as food supplement programs in times of need that could be provided through schools, health care clinics, and community centers.

In summary, the nature of the rural poor’s links to the economy—cultivators, tenants, laborers, male and female—should inform public policy so as to improve their access to land and also to credit, education and health care, public work programs and public sector safety nets such as food rations.