PLS AS A LAND TENURE ARRANGEMENT

The practice of the profit and loss sharing is well-known in economic activities such as sharecropping which has survived in the various parts of the world including the developed country such as the US, UK, Australia and New Zealand. Crop share tenancy is a contractual arrangement which the productive inputs owned by two parties are brought under the same managemnet to produce an output that is shared between them in a pre-arranged proportion. in conventional share contracts, as the name indicates, the leasee of the land or of a fishing equipment pays to the leasor a predetermined share of the current harvest instead of a fixed sum of money or a fixed quantity of produce.
Sharecropping method is seen as a device to share such risks between landlords and tenants. this methods allows the parties involved in the contract to temporarily transcend any resource constraints by convening their individually owned resources under a single productive enterprise. if neither party has sufficient amounts of all productive resources,the benefits of, and consequently impetus to,such a collaboration is overhelming. when production is subject to exogenous risks and work monitoring is costly,sharecropping offers a satisfactory method of reducing these costs and increasing the expected reward for both parties.

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