ABSTRACT
Ian Livingstone suggested that the rural areas so far had acted as "a very effective 'sponge', absorbing and retaining population and labour". This chapter considers the possibility that the privatisation of state agriculture in state socialist transitional and developing countries could be best effected through a policy of distributing state-owned land to smallholders, both increasing output through economies of scope as well as through higher smallholder land productivity. It argues that there is strong support for the view that privatisation based on smallholder agriculture is likely to lead to higher levels of output and employment than is large-scale corporate agricultural privatisation. However, the reasons for maintaining the integrity of plantations with their managerial hierarchy are also good reasons for following a 'smallholder privatisation' strategy. Nationalisation afforded the Tanzanian government opportunity to abandon the plantation as the organising principle of sisal production.
