Rural Income Generation and Diversification - A Case Study ... - Doria

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30 as tobacco and cotton the out-grower companies provided seeds to their contract farmers on a seasonal credit basis. Non-governmental organisations were involved in large-scale seed and planting-material distribution (cassava, sweet potato) with a view to improving the food situation in the country 10 . Before the agricultural reforms three main lending institutions, Zambian Cooperative Federation-Financial Services (ZCF-FS), the Credit Union of Savings Associations (CUSA) and Lima Bank, provided subsidised agricultural credit to smallholder farmers, while commercial farmers obtained their credit through commercial banks (Wichern et al. 1999). However, market liberalisation ended the era of government-subsidised credit delivery. High inflation and controlled interest rates kept real interest rates negative until 1994, although financial-market liberalisation was initiated in 1992. Despite the obvious profitability resulting form the loans, the recovery rates were very low as reported by Wichern et al. (1999). The first MMD government wanted to address the issue of agricultural credit partly for political reasons and partly because of previous failures in reform implementation. This led to the establishment of the Agricultural Credit Management Program (ACMP) in 1994 (Copestake 1998). ACMP was intended to be a transitory arrangement until the commercial banks could take responsibility for rural financing. During the two years of its existence it distributed 135,000 donor- and government-funded agricultural loans that secured inputs for 286,000 hectares. The repayment rate remained at 50 per cent, however, and despite temporarily increasing maize output, the impact on agri-business and financial development was considered negative (ibid.) The number of households applying for loans in the 1996/97 agricultural season was minimal, especially in the remote provinces where out-grower schemes and contract farming were practically non-existent. The cotton and tobacco companies were the most important providers of seasonal loans, while the commercial banks played hardly any role (CSO 1999b). Only 11.5 per cent of rural households applied for loans from the formal or commercial sectors during the 1997/98 season, with 67 per cent of these applicants receiving them mostly through outgrower schemes of cotton and tobacco companies (CSO 1999b). Partly because of credit constraints, contract farming expanded to cover new crops such as paprika, soyabeans, castor oil, and groundnuts (Wichern et al. 1999). Loan repayment rates were also in decline in the cotton sector and after the 1998/99 agricultural season, the recovery rate was only 65 per cent (Govereh et al. 2000; Tschirley and Kabwe 2007). Although input credits obtainable through contract farming might have alleviated the smallholders' seasonal 10 Interviews conducted in Lusaka, 2003.
liquidity problems, they did not solve the problem of accumulating capital for long-term investments in livestock, agricultural implements and storage construction, for example. 2.2 Other trends in Zambian society and the economy Reforms in agricultural policy and market liberalisation were not the only things to affect people’s lives and living conditions in rural Zambia. There were other simultaneous phenomena and trends – HIV/AIDS and changing rainfall patterns among others – shaping the social and economic environment both separately and interdependently. This section discusses the effect of HIV/AIDS, the occurrence of droughts and poverty issues on rural households. 2.2.1 HIV/AIDS At the end of 2001, 21.5 per cent of Zambian adults were estimated to be living with HIV/AIDS and the estimated number of people who died of AIDS during the year was 120,000. The number of AIDS orphans (under the age of 15) who had lost their mother, father or both to the disease was approximately 570,000 (WHO 2002). The prevalence of AIDS had already had an impact on life expectancy at birth, which according to WHO (2002) was 41 years during 1995-2000. The Zambia Human Development Report (UNDP 2001) estimated that the average life expectancy had declined to 37 years. The WHO statistics revealed that HIV prevalence among antenatal women tested in major urban areas increased from five per cent in 1985 to 27 per cent in 1992 and remained stable at that level throughout the 1990s. The incidence of tuberculosis, which is often linked to AIDS, has also increased in the country. The association between HIV/AIDS and food security is suggested to be strong. The Zambia Emergency Food Security Assessment Report (ZVAC 2003) identified four main links: 1. food insecurity increases exposure to HIV/AIDS infection because of risky coping strategies among starving people; 2. HIV/AIDS depletes the human capital needed for food production and income earning; 3. HIV/AIDS depletes financial capital; 4. taking in orphans threatens food security in already stressed households. Some studies conducted in Zambia have examined the impact of ill health on farm resource allocation and time lost to health related activities and funerals. Referring to the studies conducted by Waller (1997) and Fosters (1993), Bangwe (1997) noted that 15 per cent of households in Monze district of Southern Province had experienced the death of one member due to AIDS by 1991, and by 1996 this rate was expected to reach 35 per cent. Bangwe’s findings from Monze towards the end of the 1990s even exceeded the forecasts: 51 per cent of 31
Page 1 and 2: Kaisa Karttunen Rural Income Genera
Page 3 and 4: University of Helsinki Department o
Page 5 and 6: CONTENTS 1. Introduction ..........
Page 7 and 8: Table 6. Percentages of income from
Page 9: WFP World Food Programme WHO World
Page 12 and 13: 12 man 2002). These include income-
Page 14 and 15: 14 The following questions were for
Page 16 and 17: 16 of household comsumption is also
Page 18 and 19: 18 Zambian farmers fall into three
Page 20 and 21: 20 impact on rural poverty. Startin
Page 22 and 23: 22 1992 consumer and transportatio
Page 24 and 25: 24 The Government of Zambia (GRZ) i
Page 26 and 27: 26 inadequate monitoring of the act
Page 28 and 29: 28 Distributor Scheme was fully in
Page 32 and 33: 32 households were directly afflict
Page 34 and 35: 34 If it had no control over the m
Page 36: 36 According to the AHM, a househol
Page 39 and 40: icultural economy was opened up to
Page 41 and 42: Similar concerns were shared by Tay
Page 43 and 44: order to reduce income variablity.
Page 45 and 46: of infrastructure development, the
Page 47 and 48: which implies that diversification
Page 49 and 50: Haggblade et al. (2002) argue that
Page 51 and 52: In many cases the processing of the
Page 53 and 54: 4.9 Rural income diversification in
Page 55 and 56: Table 3. Rural income-diversificati
Page 57 and 58: 1990s - made the farmers reluctant
Page 59 and 60: In addition to asset endowments and
Page 61 and 62: 5.1.2 The 2003 dataset The second s
Page 63 and 64: clarifying some concepts and assess
Page 65 and 66: 5.2 Methods The theoretical grounds
Page 67 and 68: able random variables not explicitl
Page 69 and 70: Incshare 25 or Inclevel 26 = β0 +
Page 71: 5.2.4 Choosing the estimation metho
Page 74 and 75: 74 Both cash and in-kind income wer
Page 76 and 77: 76 Share of income 100 90 80 70 60
Page 78 and 79: 78 The households considered market
Page 80 and 81:
80 The proportion of income generat
Page 82 and 83:
82 The seasonality effect was clear
Page 84 and 85:
84 Since a lack of money was given
Page 86 and 87:
86 % of income 100 90 80 70 60 50 4
Page 88 and 89:
88 100 90 80 70 60 50 40 30 20 10 0
Page 90 and 91:
90 6.1.7 Grouping households accord
Page 92 and 93:
92 number of adult members, was cri
Page 94 and 95:
94 more likely to use fertilisers a
Page 96 and 97:
96 holds. According to the responde
Page 98 and 99:
98 The following process was follow
Page 100 and 101:
100 6.1.9 The results of the econom
Page 102 and 103:
102 The categorisation of household
Page 104 and 105:
104 Table 20. Determinants of the s
Page 106 and 107:
106 In some cases the former househ
Page 108 and 109:
108 indicated thus an opposite tren
Page 110 and 111:
110 The Simpson diversification ind
Page 112 and 113:
112 tares - the difference being st
Page 114 and 115:
114 which brought more purchasing p
Page 116 and 117:
116 diversification index. Block an
Page 118 and 119:
118 evidence that households had no
Page 120 and 121:
120 such as piecework and forest la
Page 122 and 123:
122 7.2 Changes in the households b
Page 124 and 125:
124 lower soil fertility, and the l
Page 126 and 127:
126 8. Conclusions and recommendati
Page 128 and 129:
128 Rural non-farm activities are l
Page 130 and 131:
130 Politiikkamuutosten seurauksena
Page 132 and 133:
132 References Abdulai, A. & CroleR
Page 134 and 135:
134 CSO. 1997. Living Conditions Mo
Page 136 and 137:
136 Ellis, F., Kutengele, M. & Nyas
Page 138 and 139:
138 Heltberg, R. (mimeo) 2001. Comm
Page 140 and 141:
140 Lanjouw, J.O. & Lanjouw, P. 200
Page 142 and 143:
142 Ruotsi, J., Lindberg, O., Seger
Page 144 and 145:
144 Zulu, B., Nijhoff, J.J., Jayne,
Page 146 and 147:
146 Annex 2. The theoretical framew
Page 148 and 149:
148 1,050 millimetres, while in the
Page 150 and 151:
150 Annex 4. Schedule of the field
Page 152 and 153:
152 Annex 5. Three household cases
Page 154 and 155:
154 In the 1970s and 1980s, and eve
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