CHALLENGES AND CHOICES:

1
CHALLENGES AND CHOICES
Guatemalas Land Fund

• Fruit of Peace, Seed of Development

2
Dr. John Strasma Professor, University of
WisconsinSenior Fellow, Boston Institute for
Developing Economies and Consultant,
USAID-Guatemala

• Assisted by Francisco Barquero,
• Alden Jiron and Julio Mendoza
• Prepared for the USAID Workshop on Conflict
  Prevention, Washington, D. C., 7 June 2000

3
Peace Accords Assume Strugglewas over land, not
Power

• Negotiators promised land cheaply
• for excombatants and refugees.
• Land Fund created to finance it.
• USAID grant 5 m, WB loan for 69 m.
• Tax reform and budget contribution promised.
• Groups strongly preferred, thought cheaper.
• Assumed poorest of the poor

4
Models of Access

• Welfare Transform day laborers into yeomen
  full-time market-oriented small farmers. Big
  loan and subsidy.
• Real world Up the tenure ladder, at rate set by
  individual capabilities. Multiple transactions,
  lower costs.

5
Land Conflict Prevention in Guatemala The first
two years

• By December 1999, 39 groups had bought farms for
  2,938 families.
• The average loan was 4,386 for land, with no
  down payment and a two-year grace period.
• Some intended to produce collectively other
  groups were only formed to acquire land.
• Groups idealized legitimated.
• Lack norms on entry, exit, bonding.
• This may cause problems in future.

6
Guatemala results

• No down payment expected average two-year grace
  period before first payment due.
• One loan per family, 4,386 average for land.
• A compensatory subsidy per family, 1,366.
• Administration, extension bring total to 6,500.
  
• First payments due collection mechanism?
• Five already requested rollover.

7
Are Lower Costs per Family Possible?

• Basic Concept More than one Window, with the
  first being most generous but others faster.
• Market Concepts to Donors Each to choose
  programs in allocating their resources.
• Finance Rentals, as well as Purchases.
• Require down payment poorest could Rent to
  own, like urban housing in the USA.

8
More Radical Ideas

• Invite applicants to waive legal right to
  Subsidy in exchange for faster service.
• Finance the productive value of the land, but
  not the speculative component of prices.
• Precio pagado por caballeria
• Peten 13,109 San Marcos 221,470 Lacapa
  20,446 Sololá 158,892 Izabal
  18,783 Chimaltenango 99,354

9
Buying Land and Market Prices

• Land prices in the market depend on speculative
  factors as well as productivity.
• The highest price land is not necessarily the
  most productive. It will be hard for farmers to
  pay back market prices unless they have already
  made a large down payment, to reduce the amount
  of debt.
• The Peace Accords spoke of access to land as a
  means of production that part of the price is
  all that the Land Fund is morally committed to
  finance.