Conditions Giving Rise to Land Leasing in Indonesia

 

Let us consider why the culture of land leasing is so prevalent in Indonesia—not to take a side for or against it, but to understand the context. Research indicates that land leasing flourishes in open areas where competition for arable land is intense. There is a tendency to view sharecropping as a hallmark of traditional agriculture, whereas leasing characterizes modern farming. Sharecropping arrangements are often considered fairer, as the sharecropper typically belongs to a lower socioeconomic class, whereas farmers who opt for leasing generally come from a higher economic bracket. Thus, sharecropping serves as a mechanism to realize the social value of land—a distinct contrast to the leasing system.

My research reveals that the relationship between the landowner and the lessee is more impersonal, distant, and calculated. The fee (rent) is paid upfront, often covering multiple seasons or years at once, ensuring the landowner incurs no loss.

In sharecropping, the cultivator usually comes from a lower economic stratum. In leasing, however, the cultivator or lessee may belong to a higher economic class, often possessing greater capital than the landowner. Unlike sharecropping, leasing shifts greater authority to the lessee; effectively, the lessee holds more power. Landowners sometimes feel fortunate simply because someone is willing to lease their land for a substantial sum.

To put it simply: this leasing relationship carries a distinct air of individualistic capitalism. The question arises: is this the agricultural muamalah (social-economic interaction) envisioned by Islam?

Therefore, after examining the relevant Quranic verses and hadiths and comparing them with current land-leasing practices—which tend to be exploitative—I believe we must approach this with caution. I have yet to encounter a tenant farmer who is truly happy with their situation. Yet, they are the voiceless—people who not only do not know where to turn for redress but have also likely never heard a religious sermon explaining how deeply the Prophet cared about the plight of tenants like them.

The expansion of land leasing in Indonesia is also closely related to broader structural changes in the rural economy. Population growth, land fragmentation through inheritance, rising land values, urban expansion, and the commercialization of agriculture have all contributed to a situation in which access to land increasingly depends on financial capacity rather than social relations. At the same time, advances in agricultural technology, the growing importance of market-oriented production, and the emergence of entrepreneurial farmers have encouraged the concentration of operational control over larger areas of land. Under such circumstances, leasing becomes an efficient mechanism for consolidating fragmented plots into economically viable farming units. However, this efficiency often comes at the cost of weakening traditional norms of reciprocity, mutual assistance, and community solidarity that historically characterized agrarian relations in many Indonesian villages.

Furthermore, the widespread adoption of leasing reflects unequal bargaining positions within rural society. Many landowners lease out their land because they are elderly, have migrated to urban areas, lack labor, or no longer wish to engage directly in farming. On the other hand, tenant farmers frequently accept high rental costs because they have limited alternatives for accessing land. This creates a situation in which agricultural risks—such as crop failure, pest outbreaks, market fluctuations, or extreme weather events—are disproportionately borne by the cultivator. The moral concern from an Islamic perspective is therefore not merely the legality of the contract itself, but whether the arrangement protects the dignity, livelihood, and welfare of those whose labor sustains agricultural production. Any agrarian system that systematically transfers risk downward while concentrating security and returns upward deserves careful scrutiny in light of Islam’s enduring concern for justice, compassion, and the protection of vulnerable groups.

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