I have been going through some of my writings in preparation for my autobiography and came across the attached, which was presented at a conference in Belize City some almost thirty years ago.
Although I still think it is worth discussing in the interest of the country’s development, it never seemed to take off – maybe because of poor quality, or maybe because of our innate indifference to anything that requires a little thinking.
If you share my view that it has merit and therefore deserves serious discussion, I would appreciate your kindly giving these thoughts some airing.
Although, apart from Evan, we probably don’t know each other, I would welcome hearing from you on this or other subjects related to our dear BELIZE.
Cornelius (Pat) Cacho
An Economic Framework for the Formulation of a Land Policy
by Cornelius (Pat) Cacho
Brief Historical Background
Over the decades, indeed the centuries, the land scenario — its ownership, tenancy and use, has not been favorable to Belizeans. Most of the land was owned or controlled by foreigners and by the Crown. The Crown’s representative, the colonial government, managed the land to satisfy the Crown’s purposes. Those purposes did not seem to recognize the rights of Belizeans as a people, to the land. The stake of Belizeans in the land was mainly confined to short leases. Even today some 34% of the land is privately owned mainly in large plots by a few foreign landowners and though publicly owned, another 31% is leased largely to foreign private interests.
This unfriendly scenario should have provoked protests and calls for improvements more favorable to the country’s citizens. But it didn’t. Somehow Belizeans found accommodation with the situation, probably because the center of local power resided in Belize City and was held by persons whose orientation was urban rather than rural and agricultural.
The situation has improved somewhat since independence – crown lands have become national lands and vested in the government, and many areas have been either compulsorily acquired or repossessed by the Government, in lieu of taxes. Also a much larger number of Belizeans now participate in export agriculture – mainly sugar, citrus and bananas.
Calls for Policy Revision
Popular demand to replace the existing land arrangement with one more Belizean-friendly was motivated not by a wish to eradicate the old colonial arrangement as such, but by three recent events.
(1) The government’s grant of a license to a foreign company to extract timber from areas traditionally regarded as earmarked for the use of indigenous Amerindians in the Toledo District and the consequent Amerindian demand for a homeland.
(2) The influx of latino refugees from Guatemala, Honduras, Salvador and Nicaragua. Many of the latinos are farmers and have taken possession of land in the countryside by legal and other means. The influx has created a threat particularly to non-latino Belizeans whose numbers and prominence in the public service had given them much leverage in public affairs.
(3) The non-latinos saw their numbers and their political clout diminishing relative to the latinos and although most had previously shown little interest in rural land, they began to feel a sense of urgency to get a portion of their home country before the latino immigrants occupied it all, thus leaving them a powerless and landless minority, in light of the slowness of the government’s land organization in processing applications for both urban and rural land. The resulting anxiety has been heightened by these two events.
In essence the clamor for changes in the lands arrangements has been provoked by narrow group interests – (i) Amerindians’ homeland and non-latinos wanting their share (ii) racial bias – the anti-latino sentiment which for example found expression in the proposal of the Immigration Advisory Committee 1987 for Government “ … to investigate the possibility of using West Indian Contract labor” presumably to replace the latinos and in order to secure “ … an ethnic identity that could assimilate into the national fabric”. It should be noted that by the time the Committee’s report was written, latinos may already have comprised a sizeable percentage of the country’s population, and (iii) a nascent sense of national ownership by the non-latinos, perhaps most aptly captured in the words “God’s goodness gave this land to me” from one of our well-known Belizean patriotic songs.
The call then tends to be emotionally charged. The concern is with ownership and possessions as ends in themselves and not with productive use on which the very livelihood of Belizeans depend. Nowhere is heard or seen a proposal that recognizes land as the country’s most important non-human economic resource and the basic source of the national product. There is a serious deficiency in this rationale for developing national policies for the ownership, possession and use of our lands. This paper attempts to address that shortcoming.
The purpose is to inject economic rational into the debate, in the hope that (i) it will highlight efficiency and productivity considerations, in deciding what to do with such an important economic resource. The more efficiently this asset is used the better off Belizeans will be and the better the care that is likely to be taken of the land’s intrinsic properties. (ii) it urges the use of objective criteria in order to reduce recourse to the subjectivity of emotions-based criteria and their proneness to produce negative conflicts and to reduce the prospect for reaching national consensus.
Land is particularly important as an economic asset in a country like Belize than in a country like, say Singapore. Singapore is relatively well-supplied with entrepreneurs and a highly skilled labor force and can depend more on the quality of its entrepreneurs and the skills of its workers to add economic value. In Belize where entrepreneurship and skills are in much shorter supply, we need to depend more on the land to create value.
Land in Belize is like capital — be it liquid as cash in the bank or fixed like buildings and plants — to an individual or a corporation in business. The objective of a rational business person is to employ assets in ways that maximize productivity. If the undertaking is a farm, for example, the objective would be to work the land and the equipment to obtain the highest net yield per acre consistent with maintaining the land’s productive capacity. The same criteria apply to the use of a country’s economic assets.
It follows that two of the main strands in an economic framework for land policy are (i) to maximize its productivity consistent with (ii) maintaining its inherent properties, including safeguarding the environment.
But land is not homogeneous. Some areas are more fertile than others. Others are better suited for some purposes than for other purposes. Some are more productive in crops or in particular crops or pastures or forests. Some areas are better served by communications and other necessary infrastructure. Although detailed knowledge of land capability is not available, there is enough information, which must of course be refined with time, on the basis of which to earmark areas for the most productive uses in particular crops, forests, mining, tourism and reserves for environmental or other purposes. This should provide a guide to entrepreneurs interested in investing in Belizean land and to the government in seeking to rationalize existing arrangements of land use which degrade the land and/or do damage to the environment.
The provision of a Maya homeland or the parceling out of land, on the basis of ethnicity or mere citizenship, is clearly economically wasteful and sociopolitically undesirable. The land would invariably not go to those who would either use it more productively or would ensure the safeguard of its inherent properties. Use would be sub-optimal, the total national product would be smaller and the country would be poorer. Socially and indeed politically the country would become more fragmented and ethnic particularism which it spawns, would do great harm to the national cohesion that every developing country, particularly a small country like Belize, must have for peaceful and timely development.
The importance of an economic asset to an individual, a firm, or a country lies in its productivity and not in its mere existence, whoever the owner may be. Land not in use does not produce. Productive capacity must be employed if it is to generate income and employment. Land in improper and inefficient use yields a lower total product. In either case we are worse off than giving possession of the land to those who will use it mostly efficiently in its best potential use. Having the land and starving does not make sense. The slogan “Land to the tiller (or user)” which I heard a lot of in socialist Ethiopia is common to all economic philosophies.
Small Size and the Efficiency Imperative
Belize is a small, indeed a tiny, economy. It is a truism that the smaller an economy the more open it has to be in order to improve the standard of living. The more open an economy, the more productive and competitive it has to be to survive. The global market is a faceless reality of which we are a part, whether we like it or not. Its hallmark is literally the survival of the fittest— that is, of the comparatively speaking most productive. We fail to respond to its challenges at our peril. As we discuss land policy and land arrangements this is a reality that must constantly be our guide.
We have allowed ourselves to be lulled into sleepy relative inefficiency by special marketing arrangements for our three most important export crops – sugar, citrus and bananas. The arrangements are being dismantled and we will soon have to face the chilly wind of competition in these markets and indeed in markets for other crops. Before too long Belize will have to become a competitive producer of whatever it produces, whether for the domestic or the export market, or we will literally wallow in poverty. This further reinforces the need for a policy of land ownership, tenure and use that will maximize productivity. That is best achieved by allowing the land to be used by the most productive operators – be they farmers, loggers, tourism operators, miners or other users of this all important resource.
Importance of Foreign Entrepreneurship
The three crops – sugar, citrus and bananas, and tourism that have assumed such importance in recent years, owe their development to foreign entrepreneurs, capital and skills. I will not argue, indeed it would be a useless exercise, whether we got the best deal from them. The hard fact is that had we held on to our land and not allowed them its use, it would be largely less developed and we would be much poorer economically. There is nothing inherently wrong with foreign participation in our domestic economy. It is up to use to ensure that the nation gets a fair share of what that participation produces.
Unfortunately, we have far from overcome the dearth of entrepreneurship, capital and skills for the next round of agricultural and other developments. In some senses our state of readiness has deteriorated. We now depend almost completely on foreigners for farm labor and crop harvesting in Belizean agriculture for the operation of other economic activities.
Many will find this purely economic approach to land ownership, distribution and use, unacceptable. They will argue that there is more to life than the material, that the psychic satisfaction of ownership and of belonging are also important and could be lost by a police which might even for sound economic reasons, result in even more of the country’s land being owned or possessed and used by foreigners. This they argue would make second class citizens of Belizeans in their own country. Realism suggests that they have a point. According to the scriptures “man (and I take it that this was meant to include ‘woman’) shall not live by bread alone”. And even hardened economists realize that economic policies must have a human face.
This objection to the pure economic criteria for land ownership, distribution and use could be satisfied by providing that (i) Belizeans will be given preferential consideration (ii) foreign entrepreneurs will as far as practicable seek out Belizean partners, undertake to employ only Belizeans if Belizeans with the required skills are available and help Belizeans to acquire managerial and other skills, and (iii) local financial institutions will not discriminate against and indeed will favor credit-worthy Belizean entrepreneurs.
It will have been evident that the foregoing policy proposals for land distribution and use are of course based on the basic principle that national lands are held in trust for all Belizeans in common. This equalizes rights to land anywhere in the country as between citizens subject only to the economic efficiency and land quality maintenance criteria set out above. It denies rights to “homelands” for any ethnic group and to the allocation of land on the basis of mere ethnicity or nationality.
History and fairness suggest that an exception to this principle should be made for Amerindian citizens who are still engaged in milpa farming as the main source of livelihood in the Toledo District, but only for a specified period. In their case, an area which is not environmentally sensitive and which is based on their anticipated need during the period specified should be reserved for their use consistent with practices that will at least minimize the degradation of the land.
As part of this arrangement the government should undertake to inject adequate doses of agricultural and other forms of extension services to wean those involved from shifting cultivation on to other forms of activity that will improve their standard of living and provide the opportunity for further integration into the society as a whole. One Belize for all Belizeans makes not only political sense but economic sense as well.
There is much to be said for unused land being owned by the government, provided the nation’s land stock is managed efficiently. It provides the kind of flexibility which allows environmental concerns to be addressed promptly and facilitates the use of the land by the most productive. On the other hand it should be recognized that speculation can play a useful economic role if there is a disincentive to delaying the marketing process that will lead to the use of the land.
So far the cost of keeping land idle in the hope of reaping larger gains has been negligible. Privately owned land was acquired at low prices so that the income forgone in capital locked up in the land is relatively negligible; also land taxation tends to be low. The incentive for aggressive marketing of the land is absent. This must be discouraged and is better done in the Belizean setting by fiscal means than by acquisition, compulsory or otherwise.
In recent years the government has acquired much idle private land by compulsory purchase in circumstances that both border on the confiscatory and lack transparency. Also these purchases have resulted in sizeable government debts to former landowners. This could needlessly undermine both the government’s credibility and its creditworthiness. The method is clearly flawed and harmful to the country’s reputation and attractiveness to both domestic and foreign entrepreneurs because it increases the risk in investing in Belize. The law authorizing compulsory government land acquisitions must therefore be repealed in any policy package designed to improve the contribution of our natural resources to the country’s future economic growth. This would not preclude policy provisions for some compulsory acquisition if it becomes necessary to satisfy limited critical national needs such as rights of way for roads and the operation of public utilities.
The use of appropriately designed taxes would serve the same ends without the potential disadvantages of compulsory purchases. The general level of taxes on unused private land beyond a given size of say 1,000 acres (as an example) should be substantially raised. The tax rate should then be doubled at intervals of say two years. The size of the designated land area and the frequency of increasing the tax rate, would of course depend on the cost relative to the benefit of doing so and the capacity of the relevant government organization to administer the law. There could be variations on this central theme. For example unused lands within certain distances of roads and towns/villages could be taxed at higher rates.
If done effectively this policy could achieve the purposes of accelerating the putting of private land to productive use and/or the reversion of unused private land to the state. The tax regime would have to be monitored closely to ensure the achievement of these objectives.
Land, the current use of which is degrading its quality or adversely impacting the environment, should as far as practicable, likewise be taxed back into the national land pool.
Public management of land
The land is our most valuable non-human asset. As the present favorable marketing arrangements for our export products diminish, the comparative productivity of the land will determine our competitiveness and therefore our future prosperity.
In future governments, land should be made available on a leasehold basis in the first place with the lengths of the leases varying to suit the proposed uses of the land. Every lease should have monitorable development conditions. Depending on the type of economic activity, provision might be made for the conversion of leases to freehold after the development conditions have been satisfied.
The resources that have been devoted to managing this national asset do not reflect its importance. Much more needs to be done to refine our knowledge of the land’s capability, and to deal with matters such as unused land, land degradation, land use which adversely affects the environment, and the general efficiency of the service to the public on land matters.
This is an important factor in investing. Skilled staff must be available to serve prospective investors and to move land transactions forward with transparency and efficiency. Staff must be sensitized to the notion that their role is to safeguard the national interest while facilitating and leaving it to the entrepreneur to make the key investment decisions.
The additional resources required to manage the nation’s estate could, by rationally reordering priorities, fairly easily be secured from within the government’s existing budget. By any objective standard the government is too large and too costly. The reduction or elimination of less important activities, could release resources to fund an appropriately effective Land Management Organization.
A land policy based on economic criteria will yield at least three important benefits: (i) serve the country’s economic/social development – output/incomes/jobs best (ii) preserve the quality of the land as a basic resource and (iii) diffuse the budding ethnic particularism which underlies much of the request to review the country’s land policy. This could seriously undermine national cohesion and civil order. Land to the user, whoever he/she may be, makes economic sense. Land to every Belizean is wasteful and a form of puerile nationalism. Land to specific ethnic groups is similarly unproductive. The land’s importance to our welfare is in its use and its productivity, which depend on entrepreneurship, skills and capital. While any policy must provide reasonable benefits to Belizeans from the use of the lands, ownership alone produces nothing.
To sum up, the ownership, distribution and use of land should be based on the following principles:
Public land is held in trust for all Belizeans, with Belizeans having access to lands anywhere in the country on an equal basis. The only exception to this principle would be the earmarking of defined area(s) for a given period for the use of Amerindians who presently depend on milpa-type shifting cultivation as their principal means of subsistence in the Toledo District. Distributing land on the basis of ethnicity is inefficient and could lead to social fragmentation and inter-ethnic antagonisms.
Unused lands serve the public purpose best by being vested in the government rather than in private ownership. Fiscal methods should replace compulsory accession to achieve this objective.
Land that is being used in ways that seriously damage its productive potential and/or create serious environmental damage, must similarly be brought into the national stock through fiscal means.
Save in exceptional circumstances for the public good, government should not acquire land compulsorily. When it does, there must be the utmost transparency.
In the future the use to which all land is put should be based strictly on its scientifically determined capability and the concern for degradation and adverse environmental impact.
Land should preferably be leased with developmental conditions and in some cases with right of purchase after the conditions have been satisfied.
Idle land does not confer any economic benefits. Land is most beneficial in the use which maximizes its production. Accordingly land should be leased/sold to those who will use it most productively, including resident foreigners/foreign concerns. Other things being equal, preference should be given to Belizeans. Foreign investors should be required as far as possible to have Belizean partners, employ Belizeans and train Belizean employees.
The lease/sale of land of say 1,000 acres or more by the Government must also be done with utmost transparency, as indeed should all public transactions involving land.
The present ownership, distribution and use of land below a designated size of say 1,000 acres, would remain unchanged except in extreme cases of use which create degradation and/or environmental damage.
The government organization charged with implementing the proposed policy package should be made adequate in capacity and size to carry out its increased responsibilities.
I am grateful to the authors of the following: “Aspects of State Policy on Land Distribution and Use in the Crown Colonial Period and After 1990,” by Dr. Carla N. Barnett; “The Political Economy of Land in Belize,” 1991 UWI doctoral thesis by Dr. Carla N. Barnett; “Belize – Agricultural Sector Study” 1995 – by CEPPI; “Summit Report” 1996 – by SPEAR; “Compulsory Acquisitions of Estates and Interests in Land” 1997 by Jim Hyde.
(Editor’s NOTE: Before he left Belize, Mr. Cacho was Chief Economist, second to the Financial Secretary, Mr. Rafael Fonseca. His presentation annoyed the then Minister of Natural Resources, who said he felt insulted, and reportedly stated that “I no wah mek no lee buay dictate to me”. Mr. Cacho did not remain in government after that.)