“Despite the fact that land availability is a significant factor in improvement of living standards among rural population, it nevertheless could not eradicate poverty in regions. Such obstacles as remoteness of a land plot from the owners’ residence address, lack of initial capital, and no advisory and training organisations that would teach how to effectively use the resource, do not allow the people to use it to the full and derive maximum profit,” analyst Asylgul Kanatbekova (Bishkek) wrote in her article for CABAR.asia.
Celebrating the 30th anniversary of independence of Kyrgyzstan, we can judge what has been done these years and how people’s life has changed. Just as in other countries of former USSR, human wellbeing in Kyrgyzstan depended strongly on the Soviet economy. In those days, economy was sustainable due to the trade mechanisms between the countries. But after the collapse of the Soviet union, life of the population worsened quickly, poverty and inequality increased much. Officially, there was no poverty in the Soviet Union, and the state was providing the people from birth till death with social and economic benefits. People used to think their life would be always the same and never saved money for the future because they did not know how to live further and even survive after the country became sovereign. To overcome the crisis, the authorities of Kyrgyzstan decided to carry out a land reform with a view to switch to market economy in the first years of independence.
The poverty issue has been relevant for Kyrgyzstan since the day of independence and still is. So far, the economy of Kyrgyzstan developed and declined under the influence of domestic and foreign factors, which are hard to describe in one article, just like poverty and its causes. Poverty alleviation depends on a variety of factors. However, this article tried to find relation between the land reform and poverty reduction and to learn about efficiency of the reform and whether it has a long-term effect on the people’s welfare today.
1.Land reform process
Land is more expensive than gold as it is one of the three components of productivity and the only one restricted by nature. Land reform is a typical decision for many countries with low income, whose economy depends on agriculture (Swinnes, 2007). As Kyrgyzstan used to be a country with predominantly agrarian economy since the time of the USSR (with over 60 per cent of total population living in villages), this reform was aimed at improving the economy by privatising lands to farmers and households, which must have improved productivity and supplied food to the population. It was planned to provide own land plots to rural residents and social workers.
Officially, the land reform “On measures to carry out the land reform in the Republic of Kyrgyzstan” started with the adoption of a package of normative documents dated February 15, 1991. Later on, published normative documents established targets of the land reform as follows:
- Creation of conditions for equal development of various forms of economic management on earth;
- Forming mixed economy;
- Adjustment of land fees;
- Rational use and protection of lands.
At the time, land reform divided population into two camps. The followers of public ownership of land, who supported the kolkhoz-sovkhoz system, believed that existing farm businesses must be equipped with necessary equipment and the mechanism of economic relations between the city and rural areas must be adjusted in order to ensure a way out of a bad food situation. They referred to the experience of the United States, where agricultural industry was based on large farms. Others insisted on land transfer to farmers and used Norway as an example, where main suppliers of food were 80 thousand local farmers. To avoid a conflict with various branches of government, the presidential administration issued decrees in 1991-1994, but the progress was very slow.
At initial stages of the land reform, the authorities did not have enough experience and knowledge to solve emerging problems. For example, they did not have experience in achieving public consensus; they lacked legal framework and necessary information for new landowners.
The lack of effective mechanism of market pricing caused unprofitability of agriculture products at the time. Documents entitling to use lands were handed over to reorganised farming groups, and in most cases, individuals could not use lands because land lease conditions were unprofitable for them.
Also, one of the problems was the lack of information and advisory centres at the beginning of the land reform. Five years later, advisory and training centres for agriculture were opened, but they provided restricted information to farmers and peasants.
2.Poverty
According to the National Statistical Committee of the Kyrgyz Republic, poverty level in 2020 was 25.3 per cent, which is 5.2 per cent more than last year. 1 million 678 thousand people (with population about 6.5 million) lived below the poverty line, including 73.7 per cent in rural areas. Some get richer every year, others cannot overcome poverty as they do not have any income. If the poor do not own any land, it turns out that they are deprived of this source of income.
It is not that easy to measure the poverty level in Kyrgyzstan because indicators vary not only between regions, but also between districts in one region. The trend is that poor people live in the regions where most of the people live in villages or mountainous areas. For example, the high mountainous region of Naryn with limited access to communications and low level of infrastructure was on the top in the poverty ranking, leaving behind traditional “leaders” – Batken and Dzhalal-Abad regions. People’s activities vary depending on the climate, natural and economic conditions (transport and communication systems, industry, education and technology required for manufacture of goods and services).
The table below shows the dynamics of poverty level growth in Kyrgyzstan by regions in 2006-2019. Three southern regions of Dzhalal-Abad, Osh and Batken used to be at the top of the ranking, and then were replaced by Naryn region for some time. Fluctuation of these indicators depends on various conditions. For example, Naryn attracted the majority of investments in 2014, which reduced the poverty level significantly, and in southern regions the poverty level declined mainly because of money remittances because 90 per cent of migrant workers from Kyrgyzstan were natives of southern regions.
The poverty level depends on location – there are more poor people in villages than in the cities. This imbalance has existed since the sovereignty. In 2020, poverty level in villages reached almost 30 per cent, while it was 18.3 per cent in cities. It suggests that the collapse of the Soviet Union had stronger impact on the economy of villages because of the cessation of trade and export of agricultural goods to other neighbouring countries of the USSR. One of the main reasons for high poverty rate was growing unemployment. The unemployed people do not have money to buy goods and services, which leads to the decrease in demand for goods and services, thus making it difficult for the economy to recover from crisis. Despite the fluctuations in the poverty rate every year, the number of the poor decreased almost twice in the last 20 years. It is important to note that in southern regions almost 80 per cent of people live in rural areas, which also increases the poverty rate for them.
The severity and depth of poverty give a more complete picture of poverty in the country – the number of people living in extreme poverty in the southern Osh and Dzhalal-Abad regions is much higher than in Naryn region. According to the World Bank’s definition, people who live for less than 1.9 dollars a day are considered extremely poor. As the Covid-19 pandemic started, the number of extremely poor people in the world has increased up to 150 million people.
As it follows from the chart above, Kyrgyzstan shows a downward trend in extremely poor population since 2000, but with the spread of coronavirus in March 2020, their number increased from 35.9 thousand to 59.1 thousand people.
These indicators change once internal and external factors change. Internal factors are general socio-political situation, which affects the economy. External factor is the condition of the Russian economy, which has strong impact on Kyrgyzstan. Welfare of migrant workers depends on the economic situation in Russia because their annual cash remittances account for almost one third of the total national GDP. As we can see, poverty rate started to decline after the land reform.
- Inequality
The egalitarian system of land allocation provides for reduction of inequalities, which could otherwise increase with development of agriculture (rich people acquire lands and become richer, while the poor have no resources for income generation). The population of Kyrgyzstan had more or less equal distribution of income back in the Soviet period, but inequality increased by the end of 90s if compared to other developing countries. The most widespread indicator of inequality is the Gini index, which shows the deviation of the actual income distribution from the equal distribution in a certain group of people. In Kyrgyzstan, the Gini index of income declined from 0.408 in 2015 to 0.364 in 2019. Inequality is large in cities, rather than in rural areas. The inequality rate decreases every year in the country.
- Relation between poverty and land reform
After 1996, the main driver of agriculture growth was the emergence of commercial farms along with less focus of new private farms on production of staple foods. As a result of land distribution, many small private farms have accumulated livestock since the date of land receipt, which can lead to conclusion that the reform was a driver for agricultural development and reduction of poverty in villages.
The Asian Development Bank prepared a research of the land reform in 2008. According to field investigations, people trusted that land reform helped them to overcome poverty and make their family prosperous. The situation of children and the older generation has improved, which is proven by other works. Land privatisation has had positive impact on child development until 5 and their nutrition. The mechanism of influence can be explained by the fact that a household with its land plots increases consumption of homemade food. The people have improved their knowledge of agriculture independently. If previously the state decided on their behalf on what and how much to grow, the moment came when people had to decide on their own. Nothing changed in people’s lives when they access to land, it was more important to manage land resources effectively, to know how to grow arable crops and to sell them – all these factors have become essential in combatting total poverty. This information makes us think that access to land, quality and size have direct influence on people’s welfare.
- Migration as a key decision for many rural residents
Once Kyrgyzstan has become sovereign, it experiences active migration flows – from villages to cities and beyond the country. Internal migration always has one pattern – when people from villages move to cities temporarily or forever. This phenomenon can be explained by the fact that after the collapse of the USSR production stopped in districts and regions, some infrastructure remained in cities. The fact that the state could not provide all active rural residents with land plots and instructions on how to use them effectively forced many rural residents to seek jobs in cities or other countries. Even if they had a land plot, a certain part of rural residents wanted to find jobs in a more profitable and low labour-intensive sectors of economy rather than in agricultural sector.
- Conclusion
We can analyse the land reform in Kyrgyzstan based on the information available since the mid-90s. Land privatisation was definitely a stimulus to economy development and fight against poverty in the country. Inequality in the country has declined significantly when the poor have gained access to national land resources. Also, the poverty rate has declined, but the reform has failed to eradicate poverty. Despite the fact that land is an important factor in improving living standard in rural areas, the land itself could not change the economic status of a certain portion of the population. Such obstacles as land remoteness from owner’s home, lack of initial capital (for example, a loan or savings to buy necessary things to grow products), lack of organisations providing advisory and training services on how to use land effectively, lack of knowledge about the market and poor infrastructure prevented the population from using the land in full and making profit. Moreover, migration of economically active population from villages to cities for work and education has deteriorated infrastructure and accumulated main economic assets in cities.
Despite the fact that poverty is caused by a variety of factors, we can analyse the impact of the land reform on this indicator. To make a deep analysis of the land reform, we should collect data from all regions and from people belonging to various socioeconomic demographic groups. It can help experts and decision-makers to take appropriate measures in future to use the country’s agricultural potential effectively and to affect the reduction of rural poverty. While the lion’s share of the national land stock has already been distributed to citizens, it is important to make an analysis and inventory to find out whether the process of distribution of remaining and transforming land plots has been and continues to be transparent and fair. Local residents often report and complain about cases when particular citizens suddenly become owners of large land plots, while the rest of residents of these areas have less land plots or are on the waiting list for years. Given the high level of corruption in the country, it is clear that this has also affected the distribution of land plots.
Although there are currently no precise data to confirm the reduction of poverty upon implementation of land reform in Kyrgyzstan, it is nevertheless clear that the distribution of land plots among the rural population who became unemployed following the collapse of the Soviet Union in one way or another contributed to reducing poverty or prevented them from crossing the poverty line. According to the history and theory of economics, owning a land plot not only provides you with food and livestock feed, but also gives a stimulus for further productive, in all senses, living despite low initial capital and external life challenges.