Sharecropping has benefits and costs for both the owners and the tenant. In it, the landowner encourages the cropper to remain on the land, solving the harvest rush problem. Since the cropper pays in shares or portions of his harvest, owners and croppers both share the risks and benefits of harvests being large or small and of prices being high or low. Because both parties benefit from larger harvests, tenants have an incentive to work harder and invest in better methods than, for example, in a slave plantation system. However, by dividing the working force into many individual workers, large farms do not benefit from economies of scale. On the whole, sharecropping has been shown not to be as economically productive as the gang agriculture of slave plantations, though less efficient than modern agricultural techniques.
In the U.S., "tenant" farmers owned their own mules and equipment,[when?] and "sharecroppers" did not. Thus sharecroppers were poorer and of lower status. Sharecropping occurred extensively in Scotland, Ireland and colonial Africa, and came into wide use in the Southern United States during the Reconstruction era (1865–1877). The South had been devastated by war – planters had ample land but little money for wages or taxes. At the same time, most of the former slaves could provide labor but had no money or land – they rejected the kind of gang labor that typified slavery. A solution was the sharecropping system focused on cotton, which was the only crop that could generate cash for the croppers, landowners, merchants and the tax collector. Poor white farmers who previously had done little cotton farming needed cash as well and became sharecroppers.
Jeffery Paige made a distinction between centralized sharecropping found on cotton plantations and the decentralized sharecropping with other crops. The former is characterized by political conservatism and long lasting tenure. Tenants are tied to the landlord through the plantation store. This form of tenure tends to be replaced by paid salaries as markets penetrate. Decentralized sharecropping involves virtually no role for the landlord: plots are scattered, peasants manage their own labor and the landowners do not manufacture the crops. This form of tenure becomes more common when markets penetrate.
Use of the sharecropper system has also been identified in England (as the practice of "farming to halves"). It is still used in many rural poor areas of the world today, notably in Pakistan and India.
Although there is a perception that sharecropping was exploitative, "evidence from around the world suggests that sharecropping is often a way for differently endowed enterprises to pool resources to mutual benefit, overcoming credit restraints and helping to manage risk." According to Dr. Hunter, "a few acres to the cottage would make the labourers too independent."
Sharecropping can have more than a passing similarity to serfdom or indenture, particularly where associated with large debts at a plantation store that effectively ties down the workers and their family to the land. It has therefore been seen as an issue of land reform in contexts such as the Mexican Revolution. However, Nyambara states that Eurocentric historiographical devices such as 'feudalism' or 'slavery' often qualified by weak prefixes like 'semi-' or 'quasi-' are not helpful in understanding the antecedents and functions of sharecropping in Africa.
Sharecropping agreements can, however, be made fairly, as a form of tenant farming or sharefarming that has a variable rental payment, paid in arrears. There are three different types of contracts.
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