Seasonal fixed land rental market may help land transfer from relatively resource poor farmers/temporary absentee owners to relatively resource rich farmers/agro-businesses. Hence this may improve the allocative efficiency of factors of production and so may improve the productivity by expanding the use of capital intensive resources like the purchased farm inputs such as inorganic fertilisers and improved seeds. However to reap the maximum benefit agro-businesses may use tillage, fertilizer, pesticides etc as much as possible without thinking sustainable production and maintenance of soil quality. What do you think about this proposition?
Yes to agreat extent. Sharing of the produce and inputs is perhaps cumbersome, time consuming and conflicting even though soil quality and sustaiabilty issues are better taken care of. Thus the conflicts between landlords and tenants have been reduced by cash rental system and even the land lease market has rapidly grown which is in the interest of the society as resources get optimally utilized.
Thanks for the answer. It would be helpful if you add a reference showing optimal utilization of resources under seasonal (renting for a particular season, eg., Rabi crop in India) cash rental.
Land lease market, unlike other commodies cannot be very volatile because the lessees are conveniently neighbourers. Therefore, leasing contracts should possibly be for a reasonable time period say 3-5 years. If every season, the tiller is uncertain about its continuity, he will derive maximum and add minimum to land, endangering its sustainability.
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