IDEAS home Printed from https://ideas.repec.org/a/bla/rdevec/v27y2023i1p89-111.html
   My bibliography  Save this article

Complementarity and substitutability between farm and nonfarm activities: Evidence from agricultural households in Tanzania

Author

Listed:
  • Jehovaness Aikaeli
  • Martin Julius Chegere
  • John Rand

Abstract

Increasing evidence shows that farm households in developing countries maintain a portfolio of income‐generating activities. Concerns have been raised that household income diversification to include nonfarm activities will stifle farm works, and thus reduce agricultural productivity. On the contrary, some evidence of complementarity between the farm and nonfarm activities in rural areas has been found. This paper uses data from the fourth and the fifth waves of Tanzania's National Panel Surveys to examine whether there exists complementarity or substitutability between farm and nonfarm activities in rural Tanzania. The findings show that participation in off‐farm work and nonfarm business activities has no clear relationship to the adoption and use of improved agricultural practices, namely, irrigation, fertilizers, pesticides, and herbicides. Participation in off‐farm work and nonfarm business activities does not also seem to directly influence agricultural investments, production, and productivity nor overall household income. These results suggest that the complementary and substitution effects of nonfarm activities offset each other in Tanzania, implying that proper policies are required to unleash the potential impact of nonfarm activities on agriculture.

Suggested Citation

  • Jehovaness Aikaeli & Martin Julius Chegere & John Rand, 2023. "Complementarity and substitutability between farm and nonfarm activities: Evidence from agricultural households in Tanzania," Review of Development Economics, Wiley Blackwell, vol. 27(1), pages 89-111, February.
    • Handle: RePEc:bla:rdevec:v:27:y:2023:i:1:p:89-111
    DOI: 10.1111/rode.12942
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/rode.12942
    Download Restriction: no
    File URL: https://libkey.io/10.1111/rode.12942?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Thomas Reardon & Eric Crawford & Valerie Kelly, 1994. "Links Between Nonfarm Income and Farm Investment in African Households: Adding the Capital Market Perspective," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(5), pages 1172-1176.
    2. Reardon, Thomas, 1997. "Using evidence of household income diversification to inform study of the rural nonfarm labor market in Africa," World Development, Elsevier, vol. 25(5), pages 735-747, May.
    3. Tom Hertz, 2009. "The effect of nonfarm income on investment in Bulgarian family farming," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 161-176, March.
    4. Gbemisola Oseni & Paul Winters, 2009. "Rural nonfarm activities and agricultural crop production in Nigeria," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 189-201, March.
    5. Hymer, Stephen H & Resnick, Stephen, 1969. "A Model of an Agrarian Economy with Nonagricultural Activities," American Economic Review, American Economic Association, vol. 59(4), pages 493-506, Part I Se.
    6. Davis, Benjamin & Di Giuseppe, Stefania & Zezza, Alberto, 2017. "Are African households (not) leaving agriculture? Patterns of households’ income sources in rural Sub-Saharan Africa," Food Policy, Elsevier, vol. 67(C), pages 153-174.
    7. Frank Ellis, 2000. "The Determinants of Rural Livelihood Diversification in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 289-302, May.
    8. Janvry, Alain de & Sadoulet, Elisabeth, 2001. "Income Strategies Among Rural Households in Mexico: The Role of Off-farm Activities," World Development, Elsevier, vol. 29(3), pages 467-480, March.
    9. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
    10. Frank Ellis, 1998. "Household strategies and rural livelihood diversification," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-38.
    11. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, vol. 26(4), pages 315-331, August.
    12. Talip Kilic & Calogero Carletto & Juna Miluka & Sara Savastano, 2009. "Rural nonfarm income and its impact on agriculture: evidence from Albania," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 139-160, March.
    13. Mulubrhan Amare & Bekele Shiferaw, 2017. "Nonfarm employment, agricultural intensification, and productivity change: empirical findings from Uganda," Agricultural Economics, International Association of Agricultural Economists, vol. 48(S1), pages 59-72, November.
    14. Benedito Cunguara & Augustine Langyintuo & Ika Darnhofer, 2011. "The role of nonfarm income in coping with the effects of drought in southern Mozambique," Agricultural Economics, International Association of Agricultural Economists, vol. 42(6), pages 701-713, November.
    15. Deininger, Klaus & Olinto, Pedro, 2001. "Rural Nonfarm Employment and Income Diversification in Colombia," World Development, Elsevier, vol. 29(3), pages 455-465, March.
    16. Jikun Huang & Yunhua Wu & Scott Rozelle, 2009. "Moving off the farm and intensifying agricultural production in Shandong: a case study of rural labor market linkages in China," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 203-218, March.
    17. Ripon Kumar Mondal & Eliyathamby A Selvanathan & Saroja Selvanathan, 2021. "Nexus between rural nonfarm income and agricultural production in Bangladesh," Applied Economics, Taylor & Francis Journals, vol. 53(10), pages 1184-1199, February.
    18. Haggblade, Steven & Hazell, Peter B. R. & Reardon, Thomas Anthony (ed.), 2007. "Transforming the rural nonfarm economy: Opportunities and threats in the developing world," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-8018-8664-5.
    19. Jolliffe, Dean, 2004. "The impact of education in rural Ghana: examining household labor allocation and returns on and off the farm," Journal of Development Economics, Elsevier, vol. 73(1), pages 287-314, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hongyun Zheng & Puneet Vatsa & Wanglin Ma & Dil Bahadur Rahut, 2023. "Does agricultural cooperative membership influence off‐farm work decisions of farm couples?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(3), pages 831-855, September.
    2. Jutao Zeng & Jie Lyu, 2023. "Simultaneous Decisions to Undertake Off-Farm Work and Straw Return: The Role of Cognitive Ability," Land, MDPI, vol. 12(8), pages 1-21, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Benjamin Davis & Paul Winters & Thomas Reardon & Kostas Stamoulis, 2009. "Rural nonfarm employment and farming: household‐level linkages," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 119-123, March.
    2. Nguyen, Huy, 2014. "The effect of land fragmentation on labor allocation and the economic diversity of farm households: The case of Vietnam," MPRA Paper 57521, University Library of Munich, Germany.
    3. Laura Barasa & Bethuel K. Kinuthia & Abdelkrim Araar & Stephene Maende & Faith Mariera, 2023. "Nonfarm entrepreneurship, crop output, and household welfare in Tanzania: An exploration of transmission channels," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 762-792, July.
    4. Marwan Benali & Bernhard Brümmer & Victor Afari‐Sefa, 2018. "Smallholder participation in vegetable exports and age‐disaggregated labor allocation in Northern Tanzania," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 549-562, September.
    5. Bethuel Kinuthia & Abdelkrim Araar & Laura Barasa & Stephene Maende & Faith Mariera, 2019. "Off-Farm Participation, Agricultural Production and Farmers’ Welfare in Tanzania and Uganda," Working Papers PMMA 2019-01, PEP-PMMA.
    6. Tanui, Joseph & Groeneveld, Rolf & Klomp, Jeroen & Mowo, Jeremiahs & Ierland, Ekko C. van, 2013. "Explaining investments in sustainable land management: The role of various income sources in the smallholder farming systems of western Kenya," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161275, African Association of Agricultural Economists (AAAE).
    7. Babatunde, Raphael O., 2013. "On-Farm and Off-farm Works: Complement or Substitute? Evidence from Rural Nigeria," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 160437, African Association of Agricultural Economists (AAAE).
    8. Govinda P. Sharma & Ram Pandit & Ben White & Maksym Polyakov, 2020. "The income diversification strategies of smallholders in the hills of Nepal," Development Policy Review, Overseas Development Institute, vol. 38(6), pages 804-825, November.
    9. Getahun, Tigabu & Fetene, Gebeyehu, 2022. "Determinants of Participation in Rural Off-Farm Activities and Its Effects on Food Shortage, Relative Deprivation and Diet Diversity," Discussion Papers 319328, University of Bonn, Center for Development Research (ZEF).
    10. Kaat Van Hoyweghen & Goedele Van den Broeck & Miet Maertens, 2020. "Employment Dynamics and Linkages in the Rural Economy: Insights from Senegal," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 904-928, September.
    11. Mamoudou Ba & Amar Anwar & Mazhar Mughal, 2021. "Non‐farm employment and poverty reduction in Mauritania," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(3), pages 490-514, April.
    12. Vimefall, Elin, 2015. "Income diversification among female-headed farming households," Working Papers 2015:11, Örebro University, School of Business.
    13. Jan Fałkowski & Maciej Jakubowski & Paweł Strawiński, 2014. "Returns from income strategies in rural Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 22(1), pages 139-178, January.
    14. Almeida, Alexandre N. & Bravo-Ureta, Boris E., 2019. "Agricultural productivity, shadow wages and off-farm labor decisions in Nicaragua," Economic Systems, Elsevier, vol. 43(1), pages 99-110.
    15. Paul Kwame Nkegbe & Abdelkrim Araar & Benjamin Musah Abu & Hamdiyah Alhassan & Yazidu Ustarz & Edinam Dope Setsoafia & Shamsia Abdul-Wahab, 2022. "Nonfarm activity and market participation by farmers in Ghana," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-23, December.
    16. Mark Musumba & Cheryl A. Palm & Adam M. Komarek & Patrick K. Mutuo & Bocary Kaya, 2022. "Household livelihood diversification in rural Africa," Agricultural Economics, International Association of Agricultural Economists, vol. 53(2), pages 246-256, March.
    17. Korir, Luke Kipkurgat, 2011. "Risk Management Among Agricultural Households And The Role Of Off-Farm Investments In Uasin Gishu County, Kenya," Research Theses 117806, Collaborative Masters Program in Agricultural and Applied Economics.
    18. Vellema, W. & Buritica Casanova, A. & Gonzalez, C. & D’Haese, M., 2015. "The effect of specialty coffee certification on household livelihood strategies and specialisation," Food Policy, Elsevier, vol. 57(C), pages 13-25.
    19. Bezu, Sosina & Holden, Stein, 2014. "Are Rural Youth in Ethiopia Abandoning Agriculture?," World Development, Elsevier, vol. 64(C), pages 259-272.
    20. Sharma, Govinda Prasad & Pandit, Ram & White, Ben & Polyakov, Maksym, 2015. "The Income Diversification Strategies of Smallholder Coffee Producers in Nepal," Working Papers 207693, University of Western Australia, School of Agricultural and Resource Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:rdevec:v:27:y:2023:i:1:p:89-111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.