Rural income dynamics in post-crisis Indonesia: evidence from Central Sulawesi (original) (raw)
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Agricultural interventions still have an important role to play in poverty alleviation. More attention needs to be given to research and development of 'agronomy for the poor'. Addressing the neglect of the rural non-farm economy is critical. On the base of six case studies from SNV, KIT and VECO, the paper comes to the following messages: * Conventional agronomic interventions, which focus on raising land productivity through intensification, exclude the poorest households in rural areas. * Diversification (income from on-/off-farm sources) is key to reducing vulnerability and supporting upward mobility. * Risk reduction remains essential in household strategies and is complementary to diversification. * Rural poor depend economically on the demand for their labour. * Optimizing labour productivity can help the poorest households move out of poverty. This is achieved through several interventions: - Agronomy for the poor: promoting diversification of nutritious food crops for household consumption while minimizing farming labour input. - Stimulate non-farm economies in rural areas. - Promote vocational training to enhance skills (linked to the demand of the non-farm sector). - Advocate for better wage and labour conditions for the rural poor.
Rural Income Dynamics in Post-Crisis Indonesia
Proceedings of the German …, 2009
Abstract: Indonesia is, what the World Development Report 2008 calls, a transforming country characterized by increasing rural-urban income disparities and high poverty rates. Bearing these facts in mind, it is striking how little is known about causes and mechanism of the ...
The paper has been set to determine the factors influencing farm and non-farm activities as sources of household income in Kahama District in Tanzania. Two villages (Bunasani and Kinamapula villages) of Kahama district were sampled for the study and a sample of 207 farmers had been drawn randomly from the population. A double-censored regression model, in particular a two-limit tobit model was applied to analyze the determinants of income share from farm and non-farm income sources among the households. Results reveled that, farm size increases, the share of income from farm income source would also increase. However, the marginal effect for farm size is 4.16 which is significant at 1% level of significance. Male-headed households derive a large share of their income from farming activities as compared to female-headed households where the marginal effects are about 3.5 percentage points. To promote the farm and non-farm sector income and strengthening its potential linkages between them, the study mainly recommends increasing efforts on two fronts: first, reforming the institutions responsible for rural development and second, development activities and projects that would enhance farm and non-farm income and the linkages between them. 1.0 Introduction The rural labour force in most of developing countries is growing very rapidly, but employment opportunities are not growing in the same rapidity (Senadza, 2012). According to (Scharf & Rahut, 2014) as land available for farming activities becomes increasingly scarce, non-farm activities must expand in order to reduce rural poverty in developing countries. Non-farm activities in the rural households has a great potential to upsurge rural employment, improving income distribution, contributing to economic growth, and poverty reduction (Katega & Lifuliro, 2014). Therefore it is important to determine how non-farm activities can be promoted, given the importance of non-farm income as a mechanism whereby rural households can sustain and improve their living standards and as a possible path out of poverty (FAO, 2002) Nevertheless, in most developing countries, farm activities has been considered as the most important income generating activities of the population living in rural areas. This unquestionable fact on rural economies and livelihood has led to the neglect of non-farm activities as another source of rural income and play a significant role in the socioeconomic development process of rural households (Senadza, 2012). The World Bank (2008) claimed that, in developing countries, the traditional image on rural households has been that of focusing almost solely on farming and neglecting rural non-farm activities. Policy debate still tends to equate farm income with rural incomes. This situation has led to a tendency of most development experts and decision makers interested in rural development to neglect the rural non-farm activities as sources on income in the rural households. Apart from this affinity, there is growing evidence that in developing countries, rural non-farm activities offer employment to a significant share of rural households and income derived from rural non-farm activities is an important resource for farm and other rural households, including the landless poor as well as rural town residents (Scharf & Rahut, 2014). According to (Badariah & Nathan, 2016) the share of the non-farm sector in rural employment in developing countries varies from 20 to 50 percent. Ellis & Allison, (2004) notes that the typical rural household in Africa has more than one member employed in a non-farm enterprise and the average share of rural non-farm incomes as a proportion of total rural incomes is about 42 percent. Moreover, (Reardon, 2010) note that the rural non-farm sector accounts for roughly 25 percent of full time rural employment and 32-40 percent of rural incomes across the developing world. Based on the potential role of income diversification in stabilizing incomes and alleviating rural poverty, governments in several developing countries have devoted increasing attention to output diversification policies (Scharf & Rahut, 2014).
Rural Livelihoods: Interplay Between Farm Activities, Non-Farm Activities and the Resource Base
Despite ongoing urbanization, over 70% of the world’s poor are located in rural areas (IFAD 2001). Agriculture plays an important part in their livelihoods. Rural households play a central role in realizing policy objectives. Production decisions at farm household level determine the current availability of agricultural produce (food security objectives; Roetter and Van Keulen 2007), as well as future production potentials (sustainability objectives; Verhagen et al. 2007). The majority of the poor are furthermore located in the rural areas of developing countries. Rural households are, thus, also key to poverty reduction policies. Farm households, however, do not live of farming alone. Parallel to the developments in agricultural science, the view on rural households has changed in the past decades. Analyses of single production systems have given way to a view on rural households as diversified enterprises. Rural household enterprises are not limited to the agricultural sector. Non-farm activities play an important role in income of these households all across the world, even in regions commonly thought of as subsistenceoriented, such as Sub-Saharan Africa. In a rare worldwide comparison of the importance of non-farm income in developing countries, Africa ranked first with 42% of total rural income, followed by Latin America (40%) and Asia (32%) (Reardon et al. 1998). Rural areas play a prime role in two of the Millennium Development Goals: reducing poverty and hunger and ensuring environmental sustainability. The omnipresence of non-farm income in rural areas implies that any policy aimed at realizing these two Millennium Goals needs to look beyond households’ agricultural activities. Non-farm activities play a prime role, directly by contributing significantly to household income and indirectly by shaping agricultural activities with implications for sustainability. However, the effect can be positive or negative. Pressure on natural resources may be reduced when households have alternative sources of income (Bahamondes 2003). Non-farm income may also (partially) be invested in sustainable agricultural practices. Soil nutrient mining is a key issue in the African context (see Verhagen et al. 2007). Inorganic fertilizers are an important source of nutrients. These fertilizers require cash which may be generated by non-farm activities. Nonfarm activities would then contribute to sustainability. In the Asian context, excessive use of pesticides and herbicides is a prime concern (see Verhagen et al. 2007). Farm households that are engaged in non-farm activities could replace hand weeding by herbicides. In that situation, non-farm activities would threaten the sustainability of agricultural practices.