During early phases of market development, rental transactions did not involve direct payments from current users to owners, although land users already had to pay land taxes. During liberalization, fixed rental contracts and sharecropping quickly gained importance (Deininger and Jin 2008). This situation should be of interest to future researchers who can consider the strong orientation toward efficiency and good performance of tenants (those who agreed to fixed rental contracts) on the one hand, while weighing the risks, vulnerability, and equity issues (sharecropping) on the other hand.
Who is active in rental markets? Deininger and Jin (2008) state that agricultural plots are transferred preferentially to only those households having limited asset endowments but a high level of agricultural abilities (Deininger and Jin 2008). Consequently, they have been able to increase the productivity of land by transferring resources exactly to those producers who can make better use of them. At the same time, rental markets allowed those whose comparative advantage is not in agriculture to provide land rentals and join nonagricultural sectors, where they gain a higher remuneration for their labor. Transfers positively impact not only efficiency but also equity standards. Neither female headed households nor those being threatened by adverse shocks are discriminated against in accessing local rental markets. However, some elements of discrimination do exist, as smallholders in the most productive age are preferred to the old age strata.