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

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48 4.5 Labour, credit and product markets The potential to seize work opportunities outside the family farm varies according to various factors such as gender, skills, education and age. Labour markets in Sub-Saharan Africa are often poorly developed (e.g. Holden 1997), which is reflected in seasonal labour shortages in agriculture, for example. Farm production is, to a large extent, dependent on family labour, and in that respect a large family is an advantage. A large family may also facilitate income diversification. According to Ellis (2000), rural wage labour is plentiful in South and South East Asia, due to the high population density, inequalities in land ownership, and shortages of land. Wage labour is the main means of survival for landless or near landless families. Educated household members have better access to wage labour opportunities, and they are also more likely to migrate to other areas in search of work. Islam (1997) suggested that primary education improves labour productivity, whereas secondary education stimulates entrepreneurial activity. He also concluded that education was of great benefit to the selfemployed and to rural family enterprises irrespective of the location or sector. Health status is a critical factor affecting the capacity to participate in income-earning activities. The high prevalence of HIV/AIDS in Sub-Saharan Africa results in the loss of household members, an increasing household workload for women, and a high number of orphans who need to be cared for. According to some studies this has led to a growing reliance on non-farm income-generating activities and migration (Gordon and Craig 2001). RNF activities may be both a consequence of and a response to failure in the credit markets (Davis et al. 2002). Non-farm income is often essential for households to access agricultural inputs and investments. Reardon et al. (1994) claimed that the structural-adjustment programmes combined with shrinking government budgets brought large cuts in formal credit and input-supply programmes in developing countries, which increased the need to use non-farm earnings to finance farm inputs and capital investments. On the other hand, some non-farm activities require start-up capital, and the absence of credit limits the options. The poor tend to be drawn to poorly remunerative, low-entry-requirement activities, whereas the wealthier, with access to credit, can make deliberate decisions with regard to sources of nonfarm income. Islam (1997) refers to the results of a study covering four countries in Africa indicating, that in terms of the development of RNF activities, the lack of credit was the second biggest constraint, next in importance to the lack of infrastructure and followed by the lack of inputs and markets. A distinction is often made between tradable goods, which are traded mainly outside the region, and non-tradable goods, which are mostly consumed within it (Delgado 1995).
Haggblade et al. (2002) argue that many products of RNF activities, especially in remote areas, are regional non-tradables, while RNF goods and services also have export potential in more advanced areas. The economic liberalisation has in some cases led to heavy competition from large agri-business and trading companies, which in turn caused small rural entrepreneurs to lose their market. An improved infrastructure is essential for market access, but may also tighten the competition between urban and rural products (Islam 1997; Haggblade et al. 2002). 4.6 Seasonality Seasonality plays an important role in the allocation of resources between different incomeearning activities, especially in areas of a single annual harvest. In economic terms this means that returns on allocated labour time vary during the year in farm and non-farm labour markets (Ellis 2000). Seasonality causes the problem of a mismatch between constant consumption needs and an uneven flow of income. A major reason for income diversification therefore derives from the seasonality effect: the aim is to reduce seasonal income variability (ibid.) and to create smooth consumption in conditions in which other methods such as savings, credit and insurance are unavailable. In order to reduce income instability, income-earning opportunities outside the farm should not be synchronised with the farm’s own seasons. Ellis (1998) suggested that seasonal migration to other agricultural zones was one viable option and circular or permanent migration by some family members to non-farm occupations was another. Three major reasons why non-farm activities in Africa concentrate on the dry season were identified by Reardon (1997). First, the household´s own production has often been consumed towards the end of the dry season, and households become dependent on purchased foods for which they need cash. Secondly, remittances from seasonal migration, income from local non-farm activities and cash from crops sales are available for buying non-farm goods and services. Finally, safety-first behaviour makes farmers concentrate their labour on agriculture during the short rainy period in order to safeguard their own harvest. There is nevertheless evidence that smallholder households allocate labour to non-farm activities even during the growing season. Reardon (1997) listed three explanations for this: non-farm labour pays better than farming, land constraints may create labour surpluses, and in areas with more than one rainy season, rural non-farm activity is more evenly spread throughout the year. Evidence from Zambia reveals an additional reason: although December-February are the busiest months on the farms, they are also the most critical in terms of food security, and despite the agricultural work load, the poorest households with insufficient food stocks and lack of cash are forced to look for income-earning opportunities outside of their own farms (Kumar 1988). 49
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 30 and 31: 30 as tobacco and cotton the out-gr
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: which implies that diversification
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
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110 The Simpson diversification ind
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112 tares - the difference being st
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114 which brought more purchasing p
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116 diversification index. Block an
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118 evidence that households had no
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120 such as piecework and forest la
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122 7.2 Changes in the households b
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124 lower soil fertility, and the l
Page 126 and 127:
126 8. Conclusions and recommendati
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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
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144 Zulu, B., Nijhoff, J.J., Jayne,
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146 Annex 2. The theoretical framew
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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
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154 In the 1970s and 1980s, and eve
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