There are at least four strategies adopted to assist households exit from poverty: agricultural intensification and diversification, increased farm size, increased off-farm employment and income in rural areas, and rural-urban migration or exit from agriculture (Dixon et al., 2001 and ADB, 2006). Empirical evidence reveals that poverty exit-strategies adopted by households varies by regions and changes overtime, reflecting the choices available to households as well as their capacity to capture opportunities.

Household resources include physical, financial, natural, human and social capital. According to a report by the Asian Development Bank (2006), in Malaysia, China and Viet Nam, the following elements of household resources had the largest impact on exit from poverty: land, human capital (education, the ability to speak the dominant language, and self-esteem), grassroots organizations and social networks, household size and other demographic aspects, and physical and financial aspects. Farmland was the most important factor in poverty exit as traditionally, the agriculture sector was the dominant employer. Its existence is more crucial when off-farm employment and migration are not available. For an even greater contribution to welfare, farm land should be complemented with access to irrigation water and a system of rights.

Land policy is important, but complex as it is country-specific, long-term in nature and controversial politically (Deininger, 2003). Land is a key asset for the poor, and provides a foundation for economic activities and non-market institutions. Land policy addresses structural issues through improving economic opportunities for the poor. The challenges for land policy options are giving stronger rights for disadvantaged people (women, herders, and indigenous populations), allowing transferability of land, and encouraging a rental land market for off-farm sector development, equity, productivity, and long-term investment . To make land reform policy feasible, the following approaches are needed: strong local capacity, open and broadly-based policy dialogue, carefully chosen and evaluated pilots, and the sharing of experiences across countries. In addition, its implementation should be supported and co-ordinated by high-level governmental institutions.

UNU/WIDER show that there are many alternative paths of access to land: both formal and informal, and both spontaneous and heavily regulated (Janvry and Sadoulet, 2001). The potential for community titling exists where communities have a sufficient level of social capital and leadership to manage the resource efficiently. Access to land through rental contracts (share arrangements in particular) can be effective under the condition of extensive market and institutional failures. An informal land market can be implemented if land is abandoned and/or communities are endowed with enough social capital. On the other hand, formal registration and titling are essential if land is scarce and valuable, and local social capital is no longer sufficient to guarantee property rights and land trades.

Over the last two decades in Indonesia two main trends are apparent (based on an analysis of Agricultural Census Data from 1983, 1993 and 2003 (Rusastra et al.,2007)): (1) a decreasing trend of household income diversification (within both the agricultural and non-agricultural sectors); high inequality of land distribution; decreasing land size; and insufficient land-derived agricultural income to support household needs; and (2) besides economic growth, the critical factors influencing the welfare of the poor are infrastructure, human capital, agricultural prices, incentives, and access to technology. Four land-related policies are recommended for poverty alleviation: (1) policies dealing with improving rural and farming income should give priority to agricultural and rural development, agricultural diversification, agricultural land consolidation, informal and formal activities in rural areas, and rural-urban integration or exit from agriculture; (2) in addition to formal registration and titling to assist the poor to access land community titling, rental contracts, and the informal land market should also be considered; (3) instead of land redistribution to assist landless and small farmers land allotment seems to be more feasible; and (4) for the benefit of the disadvantaged, land policy reform should be complemented with effective rural development.

Written by I Wayan Rusastra, Programme Leader of R&D, UNESCAP-CAPSA, Bogor, Indonesia.

(References available upon request)