Breakout Session 12: Creating off-farm opportunities

Paper "Non farm opportunities for smallholder agriculture" by Vijay Mahajan and Rajeev Kumar Gupta

Chair’s remarks and key points:  Ashwani Saith, ISS, The Netherlands

• The list of off-farm opportunities is long, but which activities are feasible for farmers? Diversification was mentioned as an alternative, but whether this could be a main livelihood strategy is debatable. This depends on the capacity and response of the household, as diversity exists not only in regions but also among households.

• The way the Rural Non-Farm Economy (RNFE) is conceived is critical; is it part of an exit strategy from agriculture, or a synergetic sector which is can stimulate a virtuous circle of good development where agriculture fits. In other words, should there be a place-centric approach focussed on agriculture or a people-centric strategy that addresses released agricultural labour by enhancing human capital and enabling people to migrate or prosper in RNFEs.  

• Opportunities are not simply self-generated but dependant on the enabling environment –macroeconomic conditions, the external economy and market development are crucial in the creation of the enabling environment where employment choices could be exercised.

• Within the discussion of human capital the question is not to have a choice but what do choices can be converted into? What does empowerment contains? In other words, what changes do choices actually make?

• Off-farm labour should be differentiated as self-employed, subcontractor of a value chain or as a worker. For example, salaried work can be crucially different from other types of jobs. The question was raised about education – can it prepare rural people to better confront these options? Is it necessary for landing decent work?

• An approach that promotes development more locally can be a creative way to generate a basis for demand, which could spur further development.

Synthesis of discussion

The RNFE is increasingly important in Asian and Latin American countries for its potential to diversify economic activity at the regional level and generate alternative sources of income within rural households. However, a closer look at the trends of rural off-farm employment, such as the participation of youth and women, the labour conditions, the individual capacities to take advantages of opportunities and the implications for migration, bring to light inequality in access to these opportunities. A greater understanding of these trends is necessary for informed policies that make the RNFE a dynamic sector rather than a survival strategy.        

The RNFE becomes more relevant when understood in the broader process of rural transformation. In many countries, agricultural activity has given way to other activities creating new economic dynamics. What are the linkages between agriculture and the RNFE? Which is the driver of growth? For some countries, agriculture is still a main driver, for others growth is driven by activities outside agriculture. At the local level, unresolved debates surround the potential of small agro-industries in a context of competition with large retailers with scale advantages.     

The list of rural off-farm employment opportunities is long and the feasibility of each depends on factors including individual, household and regional assets and capacity to access the opportunities. For example, handicraft manufacturing, petty trade or construction are viable jobs in one region while in another they may only be a source extra of income to a few households – this serves to illustrate the different results in terms of quality of life and poverty reduction. In many cases the rural poor (including youth) end up in low wage, casual, and labour intensive jobs that do not necessarily improve their quality of life. Policies and interventions, therefore, have to reflect the constraining factors in order to reach goals of rural development.

Which rural off-farm activities are most likely to bring improvement to rural areas is context dependant. In this vein, RNFE should not be analyzed at the country level but by region, household and individual assets and capacities, and enabling environments. The promotion of particular employment activities has to be in accordance with context: proximity to markets, economic and human capital requirements, access to credit, technological needs, and regulations. The importance of household income diversification was discussed in relation to specializing in either agriculture or non-farm activity. Contrary to prior belief, it was revealed that diversified households are a minority in Latin America. Finally, synergies between different rural off-farm activities, and between these activities and the agricultural sector, were noted as an important research interest.

The role and future of youth was brought up as a major concern. Why youth is moving out of agriculture and where they are going are questions that tap into broader dilemmas - how does youth migration affect long-term development of the agricultural sector? If the jobs that young people have access to are not necessarily improving their quality of life, what is it that drives the choice to exit agriculture? It was agreed that the answers are not straight forward, and that income and labour are not always the main motive for migration – breaking the isolation of rural areas can be a reason. A policy proposal was to target education and training to rural youth and women to improve their capacities to take advantage of the RNFE. However, how cash transfers are used and what impact these are generating was raised as a key policy research gap.

What trade-offs are there between policy to stimulate the RNFE and that to promote agriculture? The reality is that most policies overlap; only a few, such as agricultural research and extension service, differ. Road, power, health, education, and some rules and regulations are investments that can stimulate overall rural development. Often, local governments are better poised to reach objectives than national governments. This brings into question in which circumstances can local dynamics generate virtuous cycles, and what is the importance of demand driven development where external factors are major constraints?