Economic Efficiency of Sharecropping in Drylands: A Case Study of Gum Arabic Production in Kordofan Gum Belt, Sudan

The enigma of sharecropping as an economic institution of resource allocation has a long history and always been a fruitful source of controversy in economic literature. The Marshallian economists generally condemned sharecropping as an inefficient institution in that it did not provide incentives to the sharecroppers, because producers had to share the output with the landlords, while the Cheungian economists claimed sharecropping to be as efficient as any other tenure system. This study examines the empirical validity of these two approaches, using evidence from the Kordofan gum arabic orchards of Sudan. This study was planned mainly to examine the differences in input and output intensities among the mixed and pure sharecroppers of gum arabic orchards. Mixed sharecroppers are gum farmers who rent-in land besides cultivating own land. Pure sharecroppers are gum farmers who rent-in land with no land of their own. We examined these differences by modeling three comparison cases. Case (A) compares input and output differences on owned versus sharecropped gum orchards of mixed sharecroppers. Case (B) compares input and output differences on the owned orchards of mixed sharecroppers with the gum orchards of pure sharecroppers. Case (C) compares input and output differences on the shared gum orchards of mixed sharecroppers with the gum orchards of pure sharecroppers. The significance of these differences in input and output intensities was measured by employing two test procedures. An F-test based on Hotelling's T2 statistic was employed to measure the significance of differences in input and output intensities of comparable but different cases. The second test, which is based on Shaban's methodology, measures the impact of tenancy on input and output intensities by isolating the pure tenancy effect from the total variation in input and output intensities. Shaban's methodology was modified to incorporate five new variables: gum orchard size, gum trees capital services flow, gum trees tapping intensity, rainfall and its fluctuation, and soil type, in the model. The findings of the study reveal that total differences in inputs and output intensities across the tenure systems can be explained by differences in gum orchard size, gum trees capital services flow, gum trees tapping intensity, rainfall and its fluctuation, soil type and the tenancy effect. The tenancy effect and gum orchard specific characteristics (in particular differences in gum orchard size, gum trees capital services flow, rainfall and its fluctuation, and tapping intensity) are the most significant factors in determining inputs and output intensities. The results of this study also indicate that the impact of tenancy is stronger and more sizeable for those inputs that are not shared by the gum orchard owner. Mixed sharecroppers apply more family labour in their owned-operated gum orchards than in the shared-operated orchards they tap. Among the shared inputs, differences in input intensity are sizeable and significant for other inputs variable. There are similar results in case (B) (comparing owned-operated gum orchards of mixed sharecroppers and pure sharecroppers), though differences in inputs and output intensities are relatively smaller, a result consistent with Bell's findings. Our case (C) comparison between mixed sharecroppers and pure sharecroppers is fully corroborating Bell's findings. A sharecropper-owned resources such as family labour is used more intensively in pure sharecropped gum orchards in the case (C) comparison. Input intensity of other inputs is mainly determined by input share rules applicable to them. Mixed as well as pure sharecroppers' input intensity increases when their gum orchard owners share these inputs. Our empirical results, moreover, contain some implications for the theoretical controversy . between the traditional and the Cheungian views of land tenure arrangements. Our results, which confirm and extend the earlier views of Bell and Shaban, support the traditional view of the matter; in some relative sense sharecropping arrangements are less efficient than production on owned gum orchards