Rural household sources of income, livelihoods strategies and institutional constraints in different commodity contexts - Institutional Constraints to Small Farmer Development in Southern Africa - page 34

Transfers or remittances negatively affect participation in rural farm or non-farm activities.
Chaplin et al. (2000) found negative relationship between transfers and participation in
off-farm employment in Poland and Czech Republic. Transfers act as insurance, reducing
variability in total income and, therefore, decrease the income risk factor, i.e. reduce push
and pull (Barrett et al., 2001; Davis, 2003). In the absence of transfers, diversification into
non-farm activities is widely understood as a form of self-insurance. Barrett et al. (2001)
reported similar results in Africa and Asia. Conversely, households' access to transfers can
facilitate participation in non-farm activities. If it coincides with adequate household food
production, transfers can provide the required capital to venture into non-farm activities.
2.4.3 Community variables
According to Matsumoto et al. (2006), variables which entail infrastructure, community
average land productivity, the distance to the nearest market, and the distance to the
government support agencies are the major determinants of participation in non-farm
activities among households.
Basic problems with infrastructure, scarce information and poor utility services militate
against the successful development of the rural non-farm sources of income in many parts
of Africa (Perret, 2002). A case study in Poland (Chaplin et al., 2000) show that average
distance to public transport negatively affects the diversification into non-farm activities.
Infrastructure with special focus on transport and communication are important factors
in the development of viable non-farm activities. An improvement in rural infrastructure
increases the chances of adoption of non-farm activities by rural dwellers. High land
productivity encourages individuals to adopt farming instead of non-farm activities.
Land productivity has a negative impact on the participation in local non-farm activities
(Matsumoto et al., 2006). People from low-potential agricultural areas participate in non-
farm activities to a greater extent than people from high potential agricultural areas. High
population density in most rural areas of South Africa has led to diversification to non-farm
activities as a way of reducing pressure on limited land (Machethe, 2004).
2.5 Household income by source
Despite the rural economy being assumed to be naturally agriculture based, a large number
of rural households derive most of their income and employment from the non-farm sector
(Barrett et al., 2001). Agriculture alone cannot provide sufficient livelihood opportunities
for the rural population (Davis and Pearce, 2001; Mehta, 2002; Davis, 2003). In South
Africa, StatsSA (2000) reports that only 4% of poor households have agriculture as their
primary source of income, 57% depends on income from wages or salaries, 14% from social
grants and 10% from remittances. Using a sample of households from two villages in the
Eastern Cape, Guquka and Koloni, Fraser et al. (2003) found that agricultural activities