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The Influence of Market Barriers and Farm Income Risk on Non-Farm Income Diversification

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  • Olale, Edward
  • Nazli, Hina

Abstract

Empirical evidence shows that non-farm income diversification is associated with higher welfare among farm households. However, most studies have ignored market barriers and farm income risk in explaining income diversification behaviour. This study develops an analytical framework that includes both market barriers and farm income risk, in addition to other factors, in explaining income diversification behaviour. The analytical framework is used to test the hypotheses that: market barriers reduce the intensity of non-farm income diversification; and farm income risk increases the intensity of non-farm income diversification. The results confirm the hypotheses, suggesting that market barriers and farm income risk are key factors in explaining income diversification behaviour of farm households. Future studies should, therefore, consider the two factors in the analysis of income diversification behaviour.

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Bibliographic Info

Paper provided by Canadian Agricultural Economics Society in its series Annual Meeting, 2010, Denver Colorado, July 25-27 with number 60915.

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Date of creation: 27 Apr 2010
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Handle: RePEc:ags:caes10:60915

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Keywords: market barriers; farm income risk; income diversification; Agricultural and Food Policy; Community/Rural/Urban Development; Food Security and Poverty;

References

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  15. Haggblade, Steven & Hazell, Peter B. R. & Reardon, Thomas, 2009. "Transforming the rural nonfarm economy: Opportunities and threats in the developing world," Issue briefs 58, International Food Policy Research Institute (IFPRI).
  16. Ellis, Frank, 2000. "Rural Livelihoods and Diversity in Developing Countries," OUP Catalogue, Oxford University Press, number 9780198296966, September.
  17. Barrett, Christopher B. & Bezuneh, Mesfin & Aboud, Abdillahi, 2001. "Income diversification, poverty traps and policy shocks in Cote d'Ivoire and Kenya," Food Policy, Elsevier, vol. 26(4), pages 367-384, August.
  18. Abdulai, Awudu & CroleRees, Anna, 2001. "Determinants of income diversification amongst rural households in Southern Mali," Food Policy, Elsevier, vol. 26(4), pages 437-452, August.
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