Wednesday July 17, 2019

Sri Lanka 'land reform' disaster made the state the biggest land owner

Oct 11, 2017 07:13 AM GMT+0530 | 2 Comment(s)

ECONOMYNEXT - Sri Lanka's had nationalised land from a number of citizens as well as foreigners and made the state the biggest landowner after independence from British rule, in an expropriation disaster, a top official had said.

The intention of land reform was to distribute land holdings among people taken from large landowners and foreigners in fact a large number of smaller land holders were expropriated to make big state holdings.

Rohan Pethiyagoda, head of Sri Lanka Tea Board, a regulatory body covering the tea sector, say the way Sri Lanka conducted "land reform in the 1970s was a disaster."

"..[W]e took it from a multiplicity of land owners and vested it all in a single landowner, the Government," he told the Planters Association, a body of tea estate managers in Colombo.

"That is not land reform, that is confiscation and then did we plan the way in which this land should be distributed? No, we didn’t,"

He said the most of the productive land was vested in Janatha Estate Development Board, and Sri Lanka State Plantations Corporation. The state then "ran the plantations into the ground."

Pethiyagoda himself was the son of a 'planter' or manager of a commercial tea farm.

Barely 20 years later the plantations, once big revenue and tax payers were eating billions of rupees in tax payer money as they struggled to pay salaries of workers.

It was then privatized first through management contracts, and later though 30 year leases as the lack of certainty and ownership did not encourage ownership.

The privatized plantations and performed with varying success depending on the skills of the private business group that bought the farms as well the diversity of crops.

But most are profitable and pays taxes and least rentals to the Treasury now, though there are losses when the commodity cycle turns, especially in less diversified farms.

Freehold land ownership, which emerged in England, developed with Dutch and then British rule. Under the feudal tenure system all land was effectively owned by the King with some limited holdings by temples and devales.

The developmetn of freehold in Sri Lanka was hit by two major events, economic analysts say.

First the British through a 'waste land ordinance' took over unused land that ownership could not be proved, creating vast areas of 'Crown land'. Some of it was given for foreign investors to set up coffee and then tea plantations and others remained as 'Crown land'.

The post-British period saw saw land, businesses and even homes, where freehold was firmly established being expropriated outright by the state, dealing a severe blow to not just to agricultural productivity, but to the deployment of land to the most productive use, whether in farming or otherwise.

This is in sharp contrast to countries like Japan, which during the 1860 'Meiji Restoration' deliberately broke the Tokugawa feudal land tenure system and gave ownership to people, helping create a massive boost to agricultural productivity and tax revenues. The gains were used to drive industry. By the turn of 1900s, Japan was a global power.

Post-communist states and others like China and Vietnam who allowed property rights to strengthen has also driven up productivity in agriculture. The deployment of former agricultural land for non-agricultural purposes, created even more prosperity. (Colombo/Oct11/2017)



  1. sacre blieu October 12, 08:19 AM

    The land reform ended up as a disaster because it became the treasure trove for the various looters and fraudsters. It strayed away from the ideals of the reform. Many government programs end up in a similar way. Some prize collections of hand crafted furniture were spirited away on spurious reasons and even there was reports that good estate produce were substituted by dealers substandard goods. Even good productive land was substituted with virtually unproductive land with politics and fraud, corruption been a big part. The management of estates were riddled with fraud and corruption.

  2. Nana October 11, 07:32 AM

    Srilankans short sighted. govt cant do business. Even PPP is not a good option for Sri Lanka with a corrupted political system. Only Privatising is the option. Privatisation brings in real management qualities urge to work hard in otherwise sleeping people under the Govt sector. Humans are usually like that. They give the best when they see are energised.

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