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«Policy Evaluation»

The idea of the research proposal is the study of the experience of the agrarian reforms in a developing country of Latin America. The author considers the process of the reforms’ implementation, as well as the issues and risks, which took place during this process. The paper also provides the evaluation of economic and political results of the changes in agrarian structure, the good and harm of changes for different classes of society.

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Research Problem Statement

The main subject of this research is the evaluation of the agrarian reforms processes in a developing country, the definition of the reforms’ implementation results, and their impact on the basic socio-economic processes in the state. The research and estimation of the positive and negative experiences of other countries in terms of agricultural policy is important due to the existence of various problems in the underdeveloped countries, whose economies’ basis is the agricultural sector. The definition of the issues and mistakes, which can occur during the reforms’ implementation period, allow to avoid such problems in the future and achieve better results in the development of the backward countries.

 The object of this research is the process of agrarian transformation in Chile, which took place in 1967-1979. The inconsistency of implemented reforms, determined by the absence of political stability during the period of reforms implementation, requires a closer study of the process of agrarian transformation in Chile to make correct judgments about the methods of their realization. The experience of this country is significantly useful in terms of defining the basic requirements that must be met in the planning and implementation of agrarian reforms in a developing country.

The Main Features of the Agrarian Reforms in Chile

It is considered that the main cause of the agrarian reforms in Chile was government’s intention to provide opportunities for the rapid growth of the national economy, which was inhibited by the monopoly of wealthier segments of the population on the means of production. The just redistribution of land was supposed to raise the low living standards of the majority of the population.

The agrarian reform in Chile consisted of several stages and started in 1962 when the first land reform law was promulgated by the government of Jorge Alessandri. This law provided the opportunities for the distribution of state-owned lands among Chilean peasants. Among the reasons that contributed to the changing process in the structure of land ownership in Chile, the active position of the USA should be noted. According to Antonio Bellisario, “The Kennedy strategy to induce agrarian modernization was to make any financial aid to Latin American countries conditional on the implementation of agrarian reform policies by the beneficiary countries” (2007, p.8). Nevertheless, the policy of Alessandri did not consider the expropriation as a means of land redistribution between the layers of the population. Therefore, no significant changes in the current situation of land ownership have been made.   

Christian Democrats, led by the president Eduardo Frei, initiated the program of state-led land redistribution that would benefit the landless and poor rural households. It was the first stage of the agrarian reform in Chile, which can be characterized as a beginning of latifundios’ land expropriation and its transfer to groups of peasants. The Frei government considered the existing structure of Chile’s land distribution as a key reason for the country’s agrarian sector low development level. The Chile’s government created the sequence and a mechanism of the agrarian reform realization, charged the Corporation of Agrarian Reform (the state administrative agency for agrarian reform established by the overnment of Alessandri, referred to hereafter as CORA), as the organization responsible for the implementation of the agrarian land expropriation and redistribution. Frei did not provide laws for the expropriation of livestock or machinery; the government allowed the landowners to choose a part of well-irrigated land equal to 80 hectares (ha) as a reserve. CORA was established as a transitional apparatus that had to act within five years, during which CORA maintained ownership of the land and capital and was responsible for major managerial decisions. After the five-year period, the land was transferred to the peasants. The peasants could make a decision about whether to divide the property into individual plots or form a mixed-property farming organization.

 Predictable resistance to reform emerged among the large landowners. The desire of landlords not to be the subject to expropriation led to the emergence of different methods of avoiding the transfer of land to the state. Trying to get around a limit of 80 hectares of land for households, large landowners subdivided their lands into smaller units and passed on to their relatives or proxies. This circumstance revealed shortcomings of the reforms, namely the inadequacy of the legislative acts. The practice of unauthorized land subdivision has been discontinued by the government in 1966. Another method invented by the landowners to avoid expropriation was the sale of all the moveable productive capital on the worst lands, leaving only land and empty physical infrastructure to CORA.

Surprisingly, some of the landowners decided to voluntary offer their lands for expropriation to obtain better compensation conditions and bigger land reserve with the largest shape of fixed capital. In this way, antagonistic relations between government and large landowners turned to be the first important issue of the reforms implementation. The resolution of this problem is the successful combination of the interests of large and small landowners.

Since the process of the land transfer to the peasants started, another weakness of the developed reforms manifested. As soon as the landowners intended to transfer only the worst land to the state and maintain in their ownership the majority of fixed capital, the peasants received poor lands without the appropriate infrastructure. The government had to realize financial help programs for the peasant groups to provide the implementation of agrarian reforms. The Frei administration decided to support peasants’ cooperatives rather than private landowners. The reason for this decision was economic - cooperatives were considered more viable and cost-effective form of land use. The tension increased among urban poor, by which the agrarian reform was carried out.

Regarding the negative aspects of this period in the history of Chile’s agrarian reform, the results were quite optimistic. According to Heit:

There was a new incentive for latifundias to reform and increase their productivity, resulting in higher growth in the agricultural sector, …,growth in the gross value of production jumped from the sluggish 1.8 to 2 percent recorded since the 1930s to a sizeable 5 percent per annum. (2008, p.3).

Thus, despite all the issues and challenges, the new agrarian reforms in Chile yield positive results.

Political Stability as the Economic Reforms Success Factor  

Further agrarian reform has led to a decrease in the overall performance of the agricultural sector of the economy. The reason was the coming to power of a new government of Salvador Allende’s Popular Unity. The mistake of the new government was their decision to expropriate the majority of landowners’ property and build a socialist economic model. The neglect of the landowners’ interests and desire to speed up the land redistribution process led to the increase of tension between the nation’s economic classes. The intention of Allende’s administration to develop state farming organizations instead of private or cooperative farms angered the population and increased costs of the realization of the plan for changes in the agricultural sector. The effectiveness of agrarian sector of the economy decreased, causing “collapse in agricultural production, which fell by 4.8 percent per annum between 1970 and 1973” (FAO, 1998). The amount of land seized for the period from 1964 to 1973 is shown in Appendix A.

The reactionary government of Pinochet, which took power in Chile in 1973, embarked on efforts to correct the mistakes of their predecessors. One of the main Pinochet’ government achievements was the development of the economic model based on exports of Chile’s natural resources and a rapid increase of agrarian products export. The dynamics of agricultural products export is shown in Appendix B. The new government implemented measures to liberalize the economy. According to Antonio Bellisario, “military carried out a land policy that sought to develop an open land market for a capitalist-oriented agriculture” (2007, p.18).

Thus, one of the issues of agrarian reform in Chile was the absence of political stability. Despite the problems, which Frei government faced during the first period of reforms’ realization, the definite positive result was obvious. Further changes in the sphere of political power led to the review of ideas and approaches to reforming, which reduced their effectiveness.

The Results of the Agrarian Reform in Chile

Despite the contradictory processes of agrarian reform in Chile and the drama of this period in the history of the country, the results of the lands redistribution process were significantly important for the country’s economic development. The expropriation of land from unproductive latifundios provided the opportunity for the increase of productivity in the agricultural sector. The dynamics of cereal yield is present in Appendix C. It shows the positive result of the land redistribution, which resulted in more effective approaches to the use of land by farmers and peasants. Due to the further development of agricultural technologies and methods, the positive trend in soil fertility maintains.

The economic results of the reforms implementation are presented in Appendix D. The growth of added value in the agricultural sector of the economy points to the correctness of the principles, which underlie in the basis of the agricultural development of the country.  The agrarian reform in Chile also had an significant influence on the poverty level in the country. Providing peasants with land and financial help for the development, the government gave them the opportunity to strengthen a wealth of households. The dynamics of the poverty level in Chile is presented in Appendix E.

The transition to more effective methods of land exploitation allowed decreasing the level of arable lands, which means the presence of a stock of fertile land. These lands preserve the natural fertility and are a valuable resource in the world today. It is the most durable long-term provision of any state. The information about the amount of arable land is presented in Appendix F.     

Conclusion

The results of the agricultural reform in Chile show that the development of individual and collective farmers' landholdings can stimulate economic growth of the developing economies. Among the mistakes that can lead to the failure to change the agricultural sector of any economy, the following aspects should be mentioned - the rush to implement the plans, lack of consideration of the interests of various sectors of society, and the inability to ensure the political stability of the state in the conditions of reforms.

 

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