Agriculture is the basic economic sector on which the country relies for its social and economic development. Its contribution to the GDP, employment, and foreign exchange earnings, which is in the order of 40 percent, 85 percent and 90 percent, respectively, makes it the uncontestable sector in the country's development prospect. Despite its importance, the sector is traditional and subsistence. At its present level, agriculture can not adequately feed the fast growing population of the country, which is estimated to be about 3.0 percent per annum (CSA 1990). Attempts to increase the productivity of agriculture and bring about rural development have focused on the structural sectoral problems. These problems related to land tenure, lack of inputs, inadequate and fragmented farm size (Arnessen 1989), pricing and marketing (Tesfaye 1989) and overall macro policies of the country (Fassil 1977). The development of agriculture, however, has to be seen not only as a sectoral problem but also as an inter-sectoral problem. The linkage between agricultural and non-agricultural or farm and non-farm1 activities must be adequately exploited to contribute to agricultural productivity and rural progress. Though the production and consumption linkages of agriculture to other sectors is known in the general literature (Mellor 1976; Hossain 1987), there is little understanding or little research effort on the impact of rural non-agricultural activities on agricultural production (Saith 1992; Evans and Ngau 1991). From this perspective, the role of rural non-farm opportunities for agricultural and rural progress must be adequately understood to foster more functional relationships between agricultural activities and non-agricultural activities.
Recently, the "peasant model", which assumes the livelihood of the rural smallholder in the third world to be conditioned only by access to land, is found to give an adequate picture of the activities of present-day rural smallholder (Smith 1989). Non-agricultural sources of income have to be considered to give adequate picture of the reality. In Western Gautemala, while fewer than 20 percent of smallholders derive their income from agriculture of any sort, most get the greater part of their income and spend most of their time in the production and distribution of non-farm activities. Anderson and Leiserson (1980) indicate that, based on minimal estimates, the percentage of rural labour force engaged in non-farm work in most of the 15 developing countries falls between 20 - 30 percent. In Africa, non-farm activities are primary sources of employment for 10-20 percent of the rural labour force (ILO/JASPA 1991). In Some African countries with a particular problem of population pressure, those engaged in non-farm activities are even higher. A typical example is that of Rwanda, a country experiencing high population pressure, where approximately half (47 percent) of the farm households are engaged in some off-farm activities, and 16.6 percent of all rural households' income comes from off-farm sources (UNSO 1992).
It is now asserted that the non-farm sector contributes to the real income of rural people (Chin 1979), could provide employment in its own right and stimulate agricultural production. However, in which direction, to what extent and through which economic mechanism the rural non-farm sector or changes in its importance affect rural progress in general and agricultural production in particular needs an investigation and are important issues that are capable of addressing agricultural development problems. Thus efforts to foster agricultural development and rural progress in Ethiopia should exploit the functional relations between the two.
This research has two objectives: (i) to assess the effects of non-farm activities on the production decision of farmers, particularly with regard to their input usage, cropping mix, cultivated land and extent of commercialisation; (ii) to identify household-level determinants of non-farm activities in the study area.
Rural development, which includes progress both in farm and non-farm activities, seems to be the only hope to bring better days in Ethiopia. Non-farm activities provide not only alternative sources of income and employment for the rural poor but also stimulate agricultural production. Knowledge of the nature, determinants and effects of the non-farm activities provide clues about the character of socio-economic changes which might be induced by the adoption of employment-oriented strategy to promote the rural non-farm economy. Thus this study, by identifying the determinants and impacts of non-farm activities, hopes to provide necessary analytical insights for targeting the rural non-farm sector in Ethiopia.
The basic data in this paper is information collected through surveys in the study areas. The survey was conducted in the month of October 1995. Information is collected through a structured questionnaire.
A three-stage sampling design is used in data collection. In the first stage, one wereda2 was chosen from each of the two zones in the Southern Ethiopia Peoples and Nationalities Region on the basis of the availability of non-farm activities. In the second stage, two peasant associations (PA's.) were selected from each wereda within a 15-km radius of towns on the basis of high concentration of non-farm activities. In the third stage, households were selected from the four peasant associations chosen. A total of 229 households were selected from the two study weredas. The distribution of the total households and the samples by weredas and peasant associations are given in table 1 and 2.
Random sampling was used to select farmers from roasters of peasant associations. A minimum of 40 households was selected from each of the peasant associations. Those peasant associations with relatively diversified non-farm activities received a higher number of samples. In selecting farmers, it was found out that in each peasant association there are farmers engaged in farm activities alone and farmers engaged in both farm and non-farm activities.
Table 1. Total households and occupational engagements in the study areas
Wereda |
Peasant Association |
Total number of households |
Engaged only in farm work |
Engaged in farm and non-farm work |
Percentage of total engaged in farm and non-farm work |
Kachabira |
Gemesha |
568 |
278 |
290 |
51.06 |
|
Lesho |
487 |
274 |
213 |
43.73 |
Damotgale |
Bibisso |
663 |
422 |
241 |
36.34 |
|
Balacosha |
480 |
118 |
362 |
75.41 |
|
Total |
2198 |
1092 |
1106 |
50.31 |
SOURCE: Own survey, October 1995.
Table 2. Distribution of samples in the study areas
Wereda |
Peasant Association |
Total sample |
Sample as percentage of total households |
Engaged only in farm work |
Engaged in farm and non-farm work |
Kachabira |
Gamesha |
79 |
13.9 |
24 |
55 |
|
Lesho |
40 |
8.21 |
16 |
24 |
Damotgale |
Bibisso |
60 |
9.84 |
17 |
43 |
|
Balachosha |
50 |
10.41 |
10 |
40 |
|
Total |
229 |
10.41 |
67 |
162 |
SOURCE: Own survey, October 1995.
Though the main interest of the study is on farmers engaged in farm and non-farm activity, farmers engaged in farm activity alone were also made part of the sample. This will facilitate comparisons between farmers engaged in farming alone and those engaged in farm and non-farm activities.
Different approaches are used to study the influences and effects of non-farm activities. The first approach is comparison of target variables (e.g., input use, household characteristics, etc.) among farmers with various degrees of non-farm income. Such methods will enable us see if there is any difference among different non-farm income groups in their various production, demographic and endowment characteristics. In such a target variable comparison, the pure influences and effects of non-farm activities on target variables may be affected by other variables. Thus, in order to address the functional relationships, econometric models are used. Through these models, an attempt is be made to capture the key relationships under investigation. The econometric models employed in this study are regression models.
Chapter 2 reviews the findings of research on non-farm activities and provides a conceptual framework for the study. Six testable hypotheses are generated from the conceptual framework to guide the study. Chapter 3 describes the study areas and provides highlights on the demographic characteristics of the sample households. Chapter 4 focuses on the farm economy of the region by examining the size of land, cropping pattern, yield inputs, manpower, draught animal and livestock. Chapter 5 describes the main non-farm activities of the study sites, namely, trade and handicraft activities. Chapter 6 presents the empirical results in the form of target variables comparison and regression models. This section presents the hypotheses of the study and identifies those hypotheses which receive support and those which do not. Chapter 7 summarises the findings of the study and discusses policy implications.
