Rural Land Market Reform

Rural Land Market Reform

At the time of the military coup, about 60 percent of Chile's irrigated land and 50 percent of total agricultural land was in control of the public sector. Land reform had started in the 1960s with expropriations of large landholdings (those larger than eighty basic irrigated hectares--BIH), and the encouragement of small farms (about 8.5 BIH) managed by their owners. The Allende administration favored large-scale farms under cooperatives and state-farm management over private ownership of agricultural land. Starting in 1974, the military government began using Cora to end agrarian reform by distributing land to establish family farms with individual ownership. In a period of three years, 109,000 farmers and 67,000 descendants of the Mapuche had been assigned property rights to small farms. About 28 percent of the expropriated land was returned to previous owners, and the rest was auctioned off.

Three key legal issues were then clarified by decree law in 1978. Government authority to expropriate land was repealed, the ceilings on landholdings (the equivalent of eighty BIH) were removed, and the ban on corporate ownership of land was eliminated. At the end of 1978, all farmland owned publicly had been distributed, and Cora was legally closed.

Reforms in the legislation that regulated land rentals and land subdivisions in 1980 added flexibility to the rural land markets. But perhaps more crucial aspects of the reforms were the separation of water rights from the land itself and the legal possibility of transferring water titles independently of land transactions.

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