Agriculture Reference
In-Depth Information
Agricultural development is widely recognised in many countries of Africa, Asia and other
continents as behind reduction in poverty and household income growth (Cherduchuchai
and Otsuka, 2006). The literature recognizes the impact of the Green Revolution represented
by the development and adoption of fertilizers and high-yielding modern varieties on
the change in household income and poverty. Despite these crucial developments, the
importance of income from farming is declining partly due to price variability in the output
markets for agricultural produce and escalating prices of inputs. All this is happening at the
time when the non-farm sector is developing; wages are increasing with better protection
of workers through the unions. All these render the non-farm sector less risky relative to
own farming. Factors such as lower risk non-farm activities will tend to 'pull' households
into these activities. In this way, households will be undertaking diversification into non-
farm activities as a safety net (Sanchez, 2005). This is because of the higher predictability
of income flows in most non-farm sources relative to farm sources of income (Barrett et
al., 2001).
2.3.2 Distress-push factors
Distress-push diversification typically occurs in an environment of risk, market imperfections,
and disguised agricultural unemployment. This is typically triggered by economic misfortune,
which sets the household on a downward income spiral (Davis, 2003). According to Barrett
et al. (2001), distress-push diversification emerges naturally due to diminishing or time
varying returns to household productive assets (land or labour), from market failures, from
ex ante risk management and from ex post coping with adverse shocks.
Individual factors of production face diminishing returns to scale (Parkin, 2008).
Households endowed with much labour relative to land will, in the absence of well-
functioning land markets, typically apply some labour to their own farm, and hire out excess
labour for off-farm wage employment. This explains what Barrett et al. (2001) pointed
out as desperation-led-diversification. Diversification might be derived by the existence
of incomplete markets for land, labour, credit and insurance. Where markets often do not
operate in a competitive or efficient manner, personal and institutional constraints can play
an important role in determining participation in non-farm activities.
Households diversify as a way of achieving self-sufficiency if located in remote areas where
physical access to markets is costly and causes factor and product failures (Nel and Binns,
2000). Limited access to market forces individuals and households to develop local coping
strategies which facilitate self-reliance. Barrett et al. (2001) also indicate that diverse
work portfolios arise because neither subsistence production (agricultural commodity
production), nor non-agricultural activities, guarantee security of livelihoods. In such an
environment, the search for the right balance of activities becomes necessary thus resulting
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