Thomas Reardon

Nonfarm Income Diversification and Household Livelihood Strategies in Rural Africa: Concepts, Dynamics and Policy Implications

Asset, activity and income diversification lie at the heart of livelihood strategies in rural Africa. This paper introduces a special issue on the topic “Income Diversification and Livelihoods in Rural Africa: Cause and Consequence of Change.” We concentrate on core conceptual issues that bedevil the literature on rural income diversification and the policy implications of the empirical evidence presented in this special issue.

The Rapid Rise of Supermarkets in Latin America: Challenges and Opportunities for Development

Why are we writing, in the same article, about ‘supermarkets’ and ‘development’ in a region where 39% of the people are in poverty and 13% in absolute poverty (Echeverria, 1998)? Are not supermarkets niche players for rich consumers in the capital cities of the region? The answer is ‘no’; that traditional image is now a distant memory of the preliberalisation period before the 1990s. This theme issue of Development Policy Review shows that supermarkets are now dominant players in most of the agrifood economy of Latin America, having moved from a rough -estimate population-weighted average of 10-20% in 1990 to 50-60% of the retail sector in 2000. In one globalising decade, Latin American retailing made the change which took the US retail sector 50 years. The supermarkets, together with large-scale food manufacturers, have deeply transformed agrifood markets in the region. Many of those changes spell great challenges – even exclusion – for small farms and processing and distribution firms, but also potentially great opportunities. Development policy and programmes need to adapt to this radical change. The above findings are derived from the articles in this theme issue, the key points of which are compared in this overview article, and set in the context of background and other recent case literature. Earlier versions of the articles 1 were presented at the International Workshop ‘Concentration in the Processing and Retail Segments of the Agrifood System in Latin America, and its Effects on the Rural Poor’, held in November 2000 in Santiago, Chile, organised by the International Network for Research on Farming Systems (RIMISP) and funded by the Department for International Development (DFID) of the United Kingdom. The nine articles are on Argentina, Brazil, Chile, Costa Rica, and Mexico. They focus on the rise of supermarkets and large-scale food manufacturers over the 1990s to the present, and illustrate the effects of their rise on the dairy products and fresh fruit and vegetables (FFV) sectors. Dairy and FFV were chosen because of the interest development programmes have for these products: they are seen as good prospects for sma ll farms and firms because of their higher value-added and income-generation potential and their relative lack of economies of scale (compared with basic grains and

Using Evidence of Household Income Diversification to Inform Study of the Rural Nonfarm Labor Market in Africa

Abstract The labor market literature in developing countries has seldom drawn on the studies of rural household income diversification. This paper draws on such studies to inform future study of the rural nonfarm labor market in Africa. The review of evidence provides some surprising departures from traditional images of nonfarm activities of rural households. Among the most striking is the dominant importance in the majority of case study areas of nonfarm wage labor (as compared to self-employment), of nonfarm sector earnings (as compared to farm sector wage earnings), and of local nonfarm earnings (as compared to migration earnings). The most worrying finding was the poor distribution of nonfarm earnings in rural areas, despite the importance of these earnings to food security and farm investments. This poor distribution implies significant entry barriers and market segmentation; it is probable that this will lead over time to an increasingly skewed distribution of land and other assets in rural Africa.

Links between rural poverty and the environment in developing countries: Asset categories and investment poverty

Abstract This paper presents a framework for analyzing the links between poverty and the environment in rural areas of developing countries. It introduces the concept of “investment poverty” and relates it to other measures of poverty in analysis of these links. The notion of poverty is examined in the context of categories of assets and categories of environment change, with particular focus on farm household income generation and investment strategies as determinants of the links. The strength and direction of the poverty-environment links are shown to differ (even invert) depending on the composition of the assets held by the rural poor and the types of environmental problems they face. Policy strategies need to focus on conditioning variables that affect market development, community wealth, infrastructure, household asset distribution, and the affordability and appropriateness of natural resource conservation technologies.

Rural Nonfarm Employment and Incomes in Latin America: Overview and Policy Implications

Abstract Rural nonfarm employment (RNFE) and incomes (RNFI) are crucial to Latin American rural households. The 11 rural household income studies in this volume, reviewed in this paper, use 1990s data and show that RNFI averages 40% of rural incomes. RNFI and RNFE have grown quickly over the past three decades. The review of evidence provided some surprising departures from traditional images of nonfarm activities of Latin American rural households. In terms of shares of rural incomes: (1) nonfarm wage incomes exceed self-employment incomes; (2) RNFI far exceeds farm wage incomes; (3) local RNFI far exceeds migration incomes; (4) Service-sector RNFI far exceeds manufactures RNFI. These findings suggest the need for more development program attention to wage employment in the service sector, versus the traditional focus on small enterprise manufactures. Moreover, poor households and zones tend to have higher shares in their incomes but lower absolute levels of RNFI as compared to richer households and zones. The RNFE of the poor tend to be the low-paid nonfarm equivalent of semi-subsistence farming. Raising the capacity of the poor to participate in the better-paid types of RNFE is crucial — via employment skills training, education, infrastructure, credit. Finally, RNFE has grown fastest and been most poverty-alleviating where there are dynamic growth motors, in particular in the agricultural sector, but also in tourism, links to urban areas, mining and forestry. This means that developing RNF jobs cannot be done at the expense of programs promoting agricultural development.

Determinants and effects of income diversification amongst farm households in Burkina Faso

Using four years of household data from three agroecological zones in Burkina Faso ‐ Sahelian, Sudanian, and Guinean ‐ the article examines the determinants and effects of household income diversification. Harvest shortfalls and terms of trade are found to drive diversification, but land constraints do not. Income diversification is associated with higher incomes and food consumption, and more stable income and consumption over years.

Global change in agrifood grades and standards: Agribusiness strategic responses in developing countries

The role of GS (2) by medium-large domestic firms, to lobby governments to adopt public GS (3) by small firms and farms, to ally with public and nonprofit sectors to form G&S and certification systems to access export markets and to bring institutional change to nontradable product markets. Governments should build the capacity of the poor to invest to “make the grade” implied by the new G&S.

Agroindustrialization, globalization, and international development An overview of issues, patterns, and determinants

This paper offers an overview for a special issue on agroindustrialization, globalization, and international development. It sets out a conceptual framework for understanding the links among these three broad phenomena and then discusses emerging issues and evidence concerning the factors conditioning agroindustrialization in developing countries and the subsequent effects on employment, poverty, and the natural environment. We conclude with a research agenda.

Coping with household-level food insecurity in drought-affected areas of Burkina Faso

The paper examines strategies used by rural households in the Sahelian and Sudanian zones of Burkina Faso to ensure food security in the face of drought-induced cropping shortfalls. It finds that three-quarters of the average household income in the Sahel sample and half of the same in the Sudanian sample come from non-cropping sources. These are more diversified regionally and sectorally in the case of the Sahel. The latters non-cropping income is less covariant with the local cereal economy than is the case in the Sudanian sample. Moreover, much greater food aid was targeted to the Sahel for geographical reasons, without taking into account the more stable and higher level of purchasing power in that zone vis-a-vis the Sudanian zone.

Agroclimatic shock, income inequality, and poverty: Evidence from Burkina Faso

Abstract This paper examines the impacts of agroclimatic shock on income inequality and poverty, using household-farm data from three agroecological zones of Burkina Faso together with income-source decompositions of the Gini coefficient and the Foster-Greer-Thorbecke poverty index before and after a severe drought. Our findings reveal that, because the poor lack acces to off-farm income, off-farm income increases inequality and fails to shield poor households against agroclimatic risks. The direction of the empirical relationship between changes in inequality and poverty after the drought depends critically on environmental variables and on apparent constraints on income diversification at different points in the income distribution.