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A Composite Fuzzy Indicator for Assessing Farm Household Potential for Non-farm Income Diversification

  • Fritzsch, Jana
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    European politicians encourage the income diversification of rural households through various measures. Although being aware of farm households’ potential for non-farm income diversification seems important for finely-targeting such policy measures, no attempt has thus far been made to summarise the various determinants of income diversification in a single figure. This contribution aims to close this gap. A composite fuzzy indicator that measures farm household potential for non-farm income diversification is developed and applied to 1,053 farm households in Bulgaria, Hungary, Poland, Romania, and Slovenia. The indicator summarises the incentives of and capacities for non-farm income diversification on the individual household member level, and on the household and regional levels to a single measure using fuzzy logic methodology. The composite fuzzy indicator performs well, and the results for the single farm households can easily be retraced. The indicator not only singles out the households that have the potential for non-farm income diversification, but also shows the reasons for this. Thus, the result for 1,053 farm households is not only that most of them have a high potential for non-farm income diversification, but also that the majority of these households are pushed in diversification due to the smallness of their farms. Only a few of the farm households act under pull conditions, i.e. diversification is not a necessity, but they could opt for profitable non-farm employment due to favourable age, education, and regional conditions. Decision-makers could utilise the composite fuzzy indicator to finely-target diversification measures to the multifaceted conditions of farm households.

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    File URL: http://purl.umn.edu/114349
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    Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114349.

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    Date of creation: 2011
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    Handle: RePEc:ags:eaae11:114349
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    1. Frank Ellis, 2000. "The Determinants of Rural Livelihood Diversification in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 289-302.
    2. 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.
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    4. Sophia Davidova & Lena Fredriksson & Alastair Bailey, 2009. "Subsistence and Semi-Subsistence Farming in Selected EU New Member States," Studies in Economics 0920, School of Economics, University of Kent.
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    10. Chaplin, Hannah & Davidova, Sophia & Gorton, Matthew, 2003. "Agricultural Adjustment And The Diversification Of Farm Households In Central Europe," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25843, International Association of Agricultural Economists.
    11. Hannah Chaplin & Matthew Gorton & Sophia Davidova, 2007. "Impediments to the Diversification of Rural Economies in Central and Eastern Europe: Evidence from Small-scale Farms in Poland," Regional Studies, Taylor & Francis Journals, vol. 41(3), pages 361-376.
    12. Tauhidur Rahman, 2007. "Measuring the well-being across countries," Applied Economics Letters, Taylor & Francis Journals, vol. 14(11), pages 779-783.
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