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Rural economy and farm income diversification in developing countries

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  • Delgado, Christopher L.
  • Siamwalla, Ammar
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    Abstract

    Farm-level diversification, the adoption of alternative income-generating activities by farm households, is rarely deemed an explicit objective by economists. Where agricultural transformation has occurred, markets function well and agriculture is a waning portion of overall national product, such as the rice growing regions of Southeast Asia, farm diversification might be a desirable outcome of pursuing a market liberalization objective, but is probably not an end in itself. In Sub-Saharan Africa, where these conditions often do not hold, development depends on pro-actively commercializing rural areas. African farmers tend to diversify their production activities widely to mitigate risk, but to only produce one or two exportable commodities. High transaction costs are common barriers to diversification into new export opportunities, especially for the poor and less well-informed, who tend to fall behind during times of rapid structural change. Identifying appropriate rural institutions to incorporate rural people into new export opportunities is a major priority for relevant policy research; contract farming and participatory cooperatives offer promise and merit further study.

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    Bibliographic Info

    Paper provided by International Food Policy Research Institute (IFPRI) in its series MTID discussion papers with number 20.

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    Date of creation: 1997
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    Handle: RePEc:fpr:mtiddp:20

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    Keywords: Alternative agriculture ; exports ;

    References

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    1. Adams, Richard H. Jr. & He, Jane J., 1995. "Sources of income inequality and poverty in rural Pakistan:," Research reports, International Food Policy Research Institute (IFPRI) 102, International Food Policy Research Institute (IFPRI).
    2. Craig L Infanger, 1993. "The Agrarian Origins of Commerce and Industry, A Study of Peasant Marketing in Indonesia," Comparative Economic Studies, Palgrave Macmillan, vol. 35(2), pages 60-62, July.
    3. Minot, Nicholas, 1986. "Contract Farming and Its Effect on Small Farmers in Less Developed Countries," Food Security International Development Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 54740, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    4. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(409), pages 1400-417, November.
    5. Pingali, Prabhu L. & Rosegrant, Mark W., 1995. "Agricultural commercialization and diversification: processes and policies," Food Policy, Elsevier, Elsevier, vol. 20(3), pages 171-185, June.
    6. Lopez, Ramon E., 1984. "Estimating labor supply and production decisions of self-employed farm producers," European Economic Review, Elsevier, Elsevier, vol. 24(1), pages 61-82.
    7. Reardon, Thomas & Matlon, Peter & Delgado, Christopher, 1988. "Coping with household-level food insecurity in drought-affected areas of Burkina Faso," World Development, Elsevier, Elsevier, vol. 16(9), pages 1065-1074, September.
    8. Staal, Steven & Delgado, Christopher & Nicholson, Charles, 1997. "Smallholder dairying under transactions costs in East Africa," World Development, Elsevier, Elsevier, vol. 25(5), pages 779-794, May.
    9. Hossain, Mahabub, 1988. "Nature and impact of the Green Revolution in Bangladesh:," Research reports, International Food Policy Research Institute (IFPRI) 67, International Food Policy Research Institute (IFPRI).
    10. Alderman, Harold & Garcia, Marito, 1993. "Poverty, household food security, and nutrition in rural Pakistan:," Research reports, International Food Policy Research Institute (IFPRI) 96, International Food Policy Research Institute (IFPRI).
    11. Delgado, Christopher L., 1995. "Agricultural diversification and export promotion in sub-Saharan Africa," Food Policy, Elsevier, Elsevier, vol. 20(3), pages 225-243, June.
    12. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(3), pages 488-500, August.
    13. Hare, Denise, 1994. "Rural nonagricultural activities and their impact on the distribution of income: Evidence from farm households in Southern China," China Economic Review, Elsevier, Elsevier, vol. 5(1), pages 59-82.
    14. Rosegrant, Mark W. & Schleyer, Renato Gazmuri & Yadav, Satya N., 1995. "Water policy for efficient agricultural diversification: market-based approaches," Food Policy, Elsevier, Elsevier, vol. 20(3), pages 203-223, June.
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    Cited by:
    1. Tobgay, S., 2006. "Agriculture Diversification in Bhutan," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia, International Association of Agricultural Economists 25409, International Association of Agricultural Economists.
    2. Rashid, Shahidur & Sharma, Manohar & Zeller, Manfred, 2002. "Micro-lending for small farmers in Bangladesh," MTID discussion papers, International Food Policy Research Institute (IFPRI) 45, International Food Policy Research Institute (IFPRI).
    3. Cocchi, Horacio & Bravo-Ureta, Boris E. & Quiroga, Ricardo E., 2004. "Farm Benefits And Natural Resource Projects In Honduras And El Salvador," 2004 Annual meeting, August 1-4, Denver, CO, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20328, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Goletti, Francesco, 1999. "Agricultural diversification and rural industrialization as a strategy for rural income growth and poverty reduction in Indochina and Myanmar," MTID discussion papers, International Food Policy Research Institute (IFPRI) 30, International Food Policy Research Institute (IFPRI).
    5. Minot, Nicholas, 2003. "Income Diversification And Poverty Reduction In The Northern Uplands Of Vietnam," 2003 Annual meeting, July 27-30, Montreal, Canada, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 22029, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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