Agriculture Reference
In-Depth Information
choose carefully what investments they make to sustain a livelihood dependent on
mixed income sources and market options. The pursuit of mixed income-generating
activities is often linked to farmer perception of risk. Strategies for risk manage-
ment include overlapping methods that provide protection against food deficits. While
some methods seek to reduce yield risk directly, others focus on generating com-
pensatory income to mitigate production losses (Malton 1991). The diversification of
income sources is understood as a method of self-insurance in which the small-farmer
exchanges foregone expected earnings for the reduced income variability that is real-
ized through an assortment of assets and activities that have a low to negative correla-
tion with incomes (Barrett et al. 2001; Babatunde et al. 2010; Bigsten and Tengstam
2011).
The issue is not simply a matter of risk. In a thought-provoking analysis on the
profitability of rainfed crop production for small farmers, Harris (2012) found that
even if the average-sized small farm household were to apply all recommended tech-
nologies in rainfed crop production, the household would not be able to achieve
incomes sufficient to exceed the poverty level of a dollar a day per capita. The limita-
tion Harris (2012) found is technical, but not a matter of the technology per se. The
critical limitation to achieving sufficient income was the amount of land available to
small-farmer households and the size of their families.
This insufficiency is compounded by the fact that small-farm households are
mixed production and consumption units, consuming part of what is produced and
selling the rest. Most households do not produce enough to feed themselves for the
entire year. Sutherland et al. (1999) describe food shortages among smallholder
households in semiarid Kenya throughout the year. Most households experience food
shortages from late September through late December as early food crops are har-
vested. Less affluent households are forced to sell their crops shortly after harvest
to generate income. All households, excluding the ones capable of purchasing cab-
bage at local markets, experience a lack of green vegetables in their diet during dry
periods that typically last for 7 months out of the year. Furthermore, drought periods
that occur every 3-5 years create severe food shortages, forcing households to rely
on famine-relief supplies to meet dietary needs.
On the basis of a review of farm household income studies across Africa, Reardon
(1997) noted that an average of 45% of small-farmer income was derived from non-
farm sources, with this percentage increasing over time. This increase is seen as a
response to declining on-farm income and the need to insure against production and
market risks (Babatunde et al. 2010). Off-farm activities have become an important
element in maintaining the livelihood of the small farmer. Off-farm activities are
diversification mechanisms driven by population growth and crop and market fail-
ures that “push” the small farmer into alternative income-generating activities and
by the perception that nonfarm activities are less risky than agricultural production.
A recent analysis by Duflo et al. (2009) applies a behavioral economics approach
to explain why farmers fail to apply adequate amounts of fertilizer at the appro-
priate moments in the production process. Continued farmer resistance to fertilizer
use is seen as a function of poorly functioning formal and informal networks that
influence production behavior. Here the term “formal networks” refers to those mar-
ket relations formally regulated and promoted by the state, such as extension and
