**Reforms in land rental markets.** For the very poor, the landless, the young, and migrants, land rental is the gateway to agricultural employment and eventual land ownership. For those pursuing pathway 1 (perhaps hoping to acquire additional land to scale up family holdings) and pathway 2, rental provides a workable approach to gain access to land. Worldwide evidence demonstrates that introduction of long-term leases and/or certification of land rights has increased land rental activity (e.g., in China, Vietnam, Ethiopia, the Dominican Republic, Nicaragua, and Ethiopia), since people secure of their rights are more likely to offer temporary use to others. In turn, well-functioning land rental markets can facilitate labor mobility, increase efficiency by transferring land to more productive users, increase equality, and enhance structural transformation. Rental can be particularly helpful in easing the intergenerational transfer of land while still providing income to elderly owners (see Box 4). The most common restrictions on rental markets, such as ceilings on rental rates or prohibitions against absentee landownership, are often introduced in an effort to safeguard the interests of smallholders. Instead, they may lock land into inefficient patterns of use, greatly disadvantaging young potential users (Deininger 2003).

# **Box 4: Land Transfer Program in Mexico**

In Mexico, most land was in the past commonly owned. Traditionally, transfer of rights on this common land from one generation to another was heavily restricted, limiting access of young farmers to land. In the early 2000s, with the support of the World Bank, the Government of Mexico initiated the “Youth Rural Entrepreneur and Land Future Program” to accelerate the intergenerational transfer of land. This program has been successful. It provided credit to rural landless youth to acquire underutilized common land. The young people were trained and received technical assistance in setting up their farming activities. Older landowners who transfer their land to young farmers are helped to access social welfare schemes for their retirement.

Source: FAO, IFAD and MIJARC 2012.

Land rental markets have been shown to promote commercial farming in Ghana (Amanor and Diderutuah 2001) and to create new opportunities elsewhere in West Africa (Estudillo, Quisumbing and Otsuka 2001). In the Republic of Sudan, there is evidence that land rental markets facilitated the transfer of land to smaller producers (Kevane 1996). In contrast, Uganda’s rental markets largely ceased to function in the 2000s due to severe ceilings on rent and controls on the eviction of tenants. In Ethiopia, restrictions on land rental markets in all regions except Amhara were found not only to have reduced the opportunity for more productive use of land, but may have also have inhibited development of the non-farm sector, as those who took nonfarm jobs perceived a significantly high risk of losing their land through redistribution (Deininger _et al_ . 2003).

**Redistribution of agricultural land.** Programs of redistribution can have a profound and positive impact on the poor. If operated at sufficient scale, they can change the income distribution and increase incentives and opportunities for investment by poor households. Poorly designed programs can also transfer land to those poorly suited to farm it, and choke off investment due to uncertainty about future redistribution. The success of programs of redistribution thus depends critically upon objectives and design. As individuals in pathway 2 have the greatest need for access to new land, they will have the most to gain or lose from

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