AGRICULTURE & FARM PRODUCTIVITY

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Of course, the strength of these multipliers (extent to which an increase in farm ouptut/income actually generates additional economic activity in the rural area) depends heavily on the extent to which the local area itself is relatively self-sufficient - the more it relies on national or international sources and sinks for its inputs, products and services, the smaller will be the local multiplier, since the linkages leak income out of the locality.  Some developments (e.g. towards mechanisation, artificial fertlisers etc.) may actually reduce traditional local economic activity, rather than increase it, while increased local (farm) incomes may simply be spent on externally manufactured consumer goods - radios, bicycles etc.

For local multipliers to be strong, the local economy must possess some competitive advantages - low labour costs, high labour availability, low site costs, in conjunction with local demands for the goods and services strong enough to allow for sufficient economies of scale at the local level -  to compete with external sources. More equal growth in the farm sector (more farm households participating in the growth of the sector) should favour more local linkages than growth restricted to the larger (fewer) farms.

The  arguments, however, remain farm-focused - farm production and income growth is seen as the driver of rural growth here.  Note, too, the caveats about estimating and interpreting multipliers (Ellis, p 102, and multiplier notes). In contrast  to the  logical arguments about possible  agricultural growth linkages, there is evidence that  rural development depends more on  non-farm factors in many practical situations - triggered by falling farm incomes,  or the shedding of labour from the agricultural sector as it adopts labour-saving technologies and practices, and that rural non-farm growth is largely independent of the prosperity of the farm sector.

• farm incomes are insufficient for survival;
• diversified income sources reduce risk and vulnerability, including reducing the seasonal variation;
• long distance migration taps into economic growth and prosperity outside the locality.

The effects of these strategies (and the extent of their adoption) depend on a number of inter-related factors such as:  the availability and skills of the family (household) labour;  household ambitions and aspirations with respect to their 'family farm';  inheritance and control aspects of the management and ownership of the farm; social and economic change surrounding the household. Generalisations about the effects are not possible or sensible.

Land 'markets' are often critical - land fragmentation as population expands - division of household land between increasing  numbers  of  households - frequently reduces the capacity of the land to provide livings for everyone.  One solution is the development of a secure tenancy market - allowing some households to specialise in farming larger areas, and pay a rent to the multiple owners. However, the  social and cultural traditions may not allow this. History seems to show that land consolidation more typically occurs through forced evictions than voluntary trade in land rights.  In many poor or insecure socio-economic conditions, land rights (on however small an area) represent a very significant, if not the only, security net  for households - they will not willingly relinquish this.  [The examples from the economies in transition - those emerging from extended periods of central planning in Central Europe and the former Soviet union - suggest that the early deterioration in the general economic conditions, coupled with land restitution of various forms to the former owners before collectivisation, led to a substantial increase in subsistence farmers, as those now unemployed in the uncompetitive industrial sector 'retired' to their newly restituted farms to eak out a subsistence living.  Such farmers may well take a considerable time to be persuaded of either the benefits of releasing their land to someone else, or to the substantial investments (including time and effort) necessary to become commercial farmers.] For a recent review of land markets, and access the land, and of land reform policies, see de Janvry and Sadoulet, Policy Brief 3, WIDER/UNU.

Local and distant Labour markets are also critical in colouring the extent and effects of household  diversification.  If it is the young, skilled and educated and innovative members of the household who take  up the off-farm work, this may substantially reduce the development of the farm sector. If, however, off-farm work takes up the seasonal slack in farm labour forces, and compliments farm activities, then the effects may be quite different.  Ellis notes the example of southern Africa in the 1970s and 1980s - high off farm wages in the mines and factories, coupled with low food prices (often through policy intervention) encouraged off farm work, especially of the most fit and able, and discouraged local food production. "Both the ability and the incentive to raise farm output and productivity were diminished" (p 105). On the other hand, higher food prices, and off farm job opportunities for skilled women, might have the opposite effects on farm productivity and production.

The role of remittances is similarly context and circumstance specific.  On the one hand, these might provide valuable investment and insurance funds for the home farm, improving productivity.   On the other, for a variety of reasons, the off-farm income might be used to supplement living expenses, and provide for consumption, and even off-farm investment, which would otherwise not be possible, having no, or even a negative effect on farm productivity and production.  In short, the development of the farm sector is likely to depend most on the conditions facing agriculture rather than the opportunities for diversification off the farm.   The more secure and dependable are farm returns, the more one would  expect the farm sector to develop, and vice versa - where insecure and undependable farm returns, whether because of weather, policy or market variability, the more households are  likely to try and develop their off farm income sources.  Furthermore, we would expect households to vary in their capacities and willingness to explore alternatives, and to vary in their skills in exploiting new opportunities, and to be more or less lucky with their experiments.  So, we would expect income inequalities to grow rather than diminish with new opportunities.

Once again, the only general message is that the extent and effects of both agricultural development and of household activity development in rural areas are heavily if not totally dependent on the context and circumstance of the development.  The Green revolution (increases in yields from hybrid varieties) in Asia had quite different impacts and consequences in different regions and areas, and cannot be expected to be repeated in Africa, where conditions and contexts are quite different.

"In the end, the direction of resource allocation by family members will reflect real comparative returns to different activities in different locations, modified by considerations of risk and long-term livelihood security of the rural family." "Unlike the sector-level rural growth linkages model, the livelihoods approach is unable to offer a single chain of causality linking sectoral growth to rural poverty reduction." " The strategies and options of the rural poor need to be understood before deciding on the most appropriate means to support their efforts. The livelihoods approach embraces complexity, and requires that poverty reduction policies are adapted to the local circumstances to which they are applied." (Ellis, p 110).

On farm diversity means maintaining a diverse spread of farm activities which interlock with and complement each other.  It is the opposite of monoculture, or farm specialisation.  It will often involve more  intensive use of the land (more inputs and resources per hectare). The point here is that intensification (and the implied increase in average productivity of land, and also probably labour) does not need to imply specialisation (plantations, monocultures etc.).  Multiple farm activities, however, need to be based on sound agro-ecological, agronomic and economic reasons to be sustainable.

Increasing on farm diversity carries the potential costs of reduced flexibility and adaptability, in the sense that farm resources are more fully committed to the farm, but can often increase the livelihoods of the families involved.  On the other hand, sectoral (agricultural or trade) policies aimed at increasing the diversity of the sectoral production (away from staple crops, or away from primary export crops) will fail if the incentives operating at the farm household level do not encourage such diversification, or if the conditions and circumstances of the households to not permit the changes in production envisaged at the simplistic sectoral level.