[go: up one dir, main page]

IDEAS home Printed from https://ideas.repec.org/a/bla/devpol/v38y2020i6p804-825.html
   My bibliography  Save this article

The income diversification strategies of smallholders in the hills of Nepal

Author

Listed:
  • Govinda P. Sharma
  • Ram Pandit
  • Ben White
  • Maksym Polyakov
Abstract
Motivation There is an ongoing debate in development economics about whether resources aiming to improve household welfare should be allocated to general development programmes, such as providing education, or to specific income enhancing programmes, such as promoting certain commodities or practices. Purpose This article contributes to this debate by analysing income levels and income diversification strategies of households that were engaged in growing organic coffee in the hills of Nepal. Engaging in organic coffee production is hypothesized to be an important income enhancing activity for asset‐poor subsistence farmers. Approach and Methods We conducted a structured household survey of 441 coffee growers from Gulmi and Lalitpur districts in Nepal with a focus on the sources of income. The household income diversification was measured using the mean of the household share of each type of income and the share of a given source of income over a given group of households. We modelled the determinants of household income using Ordinary Least Squares and Tobit regressions. Findings We found that most households derive a higher proportion of income from off‐farm sources. The main finding is that education increases household off‐farm income by improving access to domestic and international labour markets, and this reduces dependence on farming. Low‐income households have a higher proportion of income from farming. Across all households, non‐certified coffee production is financially more attractive to farmers than organic production. Policy Implications Our findings suggest that investing in general development, especially education, is more effective than a scheme to promote cash crops as it allows asset‐poor subsistence farmers to engage in regional and international labour markets.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:devpol:v:38:y:2020:i:6:p:804-825
    DOI: 10.1111/dpr.12462
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/dpr.12462
    Download Restriction: no

    File URL: https://libkey.io/10.1111/dpr.12462?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. Weinberger, Katinka & Lumpkin, Thomas A., 2007. "Diversification into Horticulture and Poverty Reduction: A Research Agenda," World Development, Elsevier, vol. 35(8), pages 1464-1480, August.
    2. Jean-François Maystadt & Valerie Mueller & Ashwini Sebastian, 2016. "Environmental Migration and Labor Markets in Nepal," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(2), pages 417-452.
    3. Francesca Marchetta, 2008. "Migration and non farm activities as income diversification strategies: the case of Northern Ghana," Working Papers - Economics wp2008_16.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    4. 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.
    5. Dickson, Matt & Harmon, Colm, 2011. "Economic returns to education: What We Know, What We Don’t Know, and Where We Are Going—Some brief pointers," Economics of Education Review, Elsevier, vol. 30(6), pages 1118-1122.
    6. de Janvry, Alain & Sadoulet, Elisabeth, 1996. "Household Modeling For The Design Of Poverty Alleviation Strategies," CUDARE Working Papers 25121, University of California, Berkeley, Department of Agricultural and Resource Economics.
    7. Dil Bahadur Rahut & Maja Micevska Scharf, 2012. "Non-farm employment and incomes in rural Cambodia," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 26(2), pages 54-71, November.
    8. Singh, Inderjit & Squire, Lyn & Strauss, John, 1986. "A Survey of Agricultural Household Models: Recent Findings and Policy Implications," The World Bank Economic Review, World Bank, vol. 1(1), pages 149-179, September.
    9. 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.
    10. Deininger, Klaus & Olinto, Pedro, 2001. "Rural Nonfarm Employment and Income Diversification in Colombia," World Development, Elsevier, vol. 29(3), pages 455-465, March.
    11. Paul Winters & Timothy Essam & Alberto Zezza & Benjamin Davis & Calogero Carletto, 2010. "Patterns of Rural Development: A Cross‐Country Comparison using Microeconomic Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(3), pages 628-651, September.
    12. Davis, Benjamin & Winters, Paul & Carletto, Gero & Covarrubias, Katia & Quiñones, Esteban J. & Zezza, Alberto & Stamoulis, Kostas & Azzarri, Carlo & DiGiuseppe, Stefania, 2010. "A Cross-Country Comparison of Rural Income Generating Activities," World Development, Elsevier, vol. 38(1), pages 48-63, January.
    13. 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.
    14. MacKinnon, James G. & White, Halbert, 1985. "Some heteroskedasticity-consistent covariance matrix estimators with improved finite sample properties," Journal of Econometrics, Elsevier, vol. 29(3), pages 305-325, September.
    15. 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.
    16. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 979-1014.
    17. Francesca Marchetta, 2013. "Migration and nonfarm activities as income diversification strategies: the case of Northern Ghana," Post-Print halshs-00913108, HAL.
    18. Bernardin Senadza, 2012. "Non-farm Income Diversification in Rural Ghana: Patterns and Determinants," African Development Review, African Development Bank, vol. 24(3), pages 233-244, September.
    19. Marcel Fafchamps & Forhad Shilpi, 2003. "The spatial division of labour in Nepal," Journal of Development Studies, Taylor & Francis Journals, vol. 39(6), pages 23-66.
    20. Frank Ellis, 1998. "Household strategies and rural livelihood diversification," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-38.
    21. G. Regmi & C. Tisdell, 2002. "Remitting Behaviour of Nepalese Rural-to-Urban Migrants: Implications for Theory and Policy," Journal of Development Studies, Taylor & Francis Journals, vol. 38(3), pages 76-94.
    22. Øystein Juul Nielsen & Santosh Rayamajhi & Patricia Uberhuaga & Henrik Meilby & Carsten Smith-Hall, 2013. "Quantifying rural livelihood strategies in developing countries using an activity choice approach," Agricultural Economics, International Association of Agricultural Economists, vol. 44(1), pages 57-71, January.
    23. 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.
    24. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    25. 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.
    26. Shenggen Fan & Connie Chan‐Kang, 2005. "Is small beautiful? Farm size, productivity, and poverty in Asian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 135-146, January.
    27. Bernardin Senadza, 2012. "Non-farm Income Diversification in Rural Ghana: Patterns and Determinants," African Development Review, African Development Bank, vol. 24(3), pages 233-244.
    28. Felix Naschold, 2009. "Microeconomic Determinants of Income Inequality in Rural Pakistan," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 746-768.
    29. Devendra, C. & Thomas, D., 2002. "Smallholder farming systems in Asia," Agricultural Systems, Elsevier, vol. 71(1-2), pages 17-25.
    Full references (including those not matched with items on IDEAS)

    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. 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.
    2. Gamel Abdul-Nasser Salifu, 2019. "The Political Economy Dynamics of Rural Household Income Diversification: A Review of the International Literature," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 273-290, December.
    3. 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.
    4. Helmy, Imane, 2020. "Livelihood Diversification Strategies: Resisting Vulnerability in Egypt," GLO Discussion Paper Series 441, Global Labor Organization (GLO).
    5. 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.
    6. Asfaw, Solomon & McCarthy, Nancy & Paolantonio, Adriana & Cavatassi, Romina & Amare, Mulubrhan & Lipper, Leslie, 2015. "Diversification, Climate Risk and Vulnerability to Poverty: Evidence from Rural Malawi," 2015 Conference, August 9-14, 2015, Milan, Italy 230216, International Association of Agricultural Economists.
    7. Bezu, Sosina & Barrett, Christopher B., 2010. "Activity Choice in Rural Non-farm Employment (RNFE): Survival versus accumulative strategy," MPRA Paper 55034, University Library of Munich, Germany.
    8. Dil Bahadur Rahut & Khondoker Abdul Mottaleb & Akhter Ali, 2018. "Rural Livelihood Diversification Strategies and Household Welfare in Bhutan," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(4), pages 718-748, September.
    9. Jiao, Xi & Pouliot, Mariève & Walelign, Solomon Zena, 2017. "Livelihood Strategies and Dynamics in Rural Cambodia," World Development, Elsevier, vol. 97(C), pages 266-278.
    10. 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.
    11. Asfaw, Solomon & Savastano, Sara, 2015. "Topic: Building Resilience to Climate Change Through Social Protection and Climate-Smart Agriculture: Synergies and Trade-offs," 2015 Conference, August 9-14, 2015, Milan, Italy 210963, International Association of Agricultural Economists.
    12. Dil Bahadur Rahut & Akhter Ali & Menale Kassie & Paswel P. Marenya & Chudamani Basnet, 2014. "Rural Livelihood Diversification Strategies in Nepal," Poverty & Public Policy, John Wiley & Sons, vol. 6(3), pages 259-281, September.
    13. Zeeshan & Geetilaxmi Mohapatra & Arun Kumar Giri, 2022. "How Farm Household Spends Their Non-farm Incomes in Rural India? Evidence from Longitudinal Data," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(4), pages 1967-1996, August.
    14. 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.
    15. 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.
    16. Corral, Paul & Radchenko, Natalia, 2017. "What’s So Spatial about Diversification in Nigeria?," World Development, Elsevier, vol. 95(C), pages 231-253.
    17. Asfaw, Solomon & Scognamillo, Antonio & Caprera, Gloria Di & Sitko, Nicholas & Ignaciuk, Adriana, 2019. "Heterogeneous impact of livelihood diversification on household welfare: Cross-country evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 117(C), pages 278-295.
    18. Xuhuan Dai & Zhilong Wu & Yao Fan & Bo Li & Zihan Yang & Bo Nan & Xu Bi, 2019. "Characteristics and Determinants of Livelihood Diversification of Different Household Types in Far Northwestern China," Sustainability, MDPI, vol. 12(1), pages 1-20, December.
    19. Shanta Paudel Khatiwada & Wei Deng & Bikash Paudel & Janak Raj Khatiwada & Jifei Zhang & Yi Su, 2017. "Household Livelihood Strategies and Implication for Poverty Reduction in Rural Areas of Central Nepal," Sustainability, MDPI, vol. 9(4), pages 1-20, April.
    20. Olale, Edward & Henson, Spencer J. & Cranfield, John A.L., 2010. "Determinants of Income Diversification among Fishing Communities in Western Kenya," Annual Meeting, 2010, Denver Colorado, July 25-27 61259, Canadian Agricultural Economics Society.

    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:devpol:v:38:y:2020:i:6:p:804-825. 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: https://edirc.repec.org/data/odioruk.html .

    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.