Abstract
The current study aims to investigate the agricultural investment differences among three kinds of land lease agreements and their effect on farmers’ decisions regarding sustainable growth in terms of soil conservation and wheat productivity, using cross-sectional data from rural households in Punjab, Pakistan. The “multivariate Tobit model” was used for the empirical analysis because it considers the possible substitution of investment choices and the tenancy status’ endogeneity. Compared to agricultural lands on lease contracts, landowners involved in agribusiness are more likely to invest in measures to improve soil and increase productivity. Moreover, the present study has also identified that the yield per hectare is much higher for landowners than sharecroppers, and thus, the Marshall’s assumption of low efficiency of tenants under sharecroppers is supported.
Highlights
The reformation of agricultural land has garnered broad support in many countries
Empirical studies that were conducted in the sub-Saharan Africa and Asian countries demonstrated that unsecured land-use rights do not instigate any investment for the sustainability of soil fertility, which is not beneficial for the farmers [3,4,5,6,7,8,9]
When two types of land ownership were examined in terms of their total land holds, the difference was found to be significant in the use of labor and animal ownership
Summary
The reformation of agricultural land has garnered broad support in many countries. Such reformation depends to a certain extent on the assumption that agrarian land under secured land tenancy status is preferable to other types of land right arrangements [1,2]. Secured land rights ensure permanent retention of farmland, which incentivizes and encourages farmers to invest in sustainable development for long-term benefits. Many farmers with unsecured land rights, are very much interested in gaining short-term benefits from their investment. They tend to spend on supplements which help increase productivity but gradually diminish the sustainability of soil fertility. The lower investment in fertilizer, organic and green manure for soil conservation will subsequently lead to a considerable decrease in farm output
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