CONTRIBUTIONS OF RURAL NON-FARM ECONOMIC ACTIVITIES TO HOUSEHOLD INCOME IN LERE LOCAL GOVERNMENT AREA OF KADUNA STATE

CONTRIBUTIONS OF RURAL NON-FARM ECONOMIC ACTIVITIES TO HOUSEHOLD INCOME IN LERE LOCAL GOVERNMENT AREA OF KADUNA STATE

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CHAPTER ONE

BACKGROUNDTOTHESTUDY

1.1       INTRODUCTION

The population of rural areas of developing countries is now approximately three billion, and these persons make up a large portion of the world’s poor in rural areas of the developing countries, the non-Farm sector is increasingly becoming important. At the start of’ the new millennium. 30-40 percent of rural full-time employment was attributed to non-farm economic activities in developing countries (Haggblade. et al., 2002).

It is a universally accepted fact that the agricultural sector is, by itself, incapable of creating additional opportunities of gainful employment in the wake of increasing population in many developing countries. As a result, the impetus for achieving sustainable development in rural areas has to pivot around expanding the base of non-farm activities. If such a comprehensive planning approach can be evolved, it could go a long way in reducing poverty, unemployment and out-migration in rural areas.

The significance of the non-farm sector is even more pronounced in agriculturally backward and low productivity zones (Davis and Cristoiu, 2002). Many small holders’ farm households complement their farm income with non-farm activities. This strategy has several advantages, especially for poorer households. The agricultural resources are often too limited to allow for efficient use of household labour, and non-farm activities can offer alternative remunerative allocation, especially during a lean season.

Moreover, income from agriculture is subject to high risk due to climatic factors, price fluctuations, pest and diseases. Earnings from non-farm employment may help to buffer the resulting income fluctuations and improve household security (Lanjouw, 1995).
The availability of various economic activities in rural areas besides agriculture, allows accumulation of capital for investment in human capital and micro-enterprises. Moreover, non- farm livelihoods potentially lead to sustainable income, help to cope with shocks and smooth consumption as well as create income opportunities for women outside unremunerated domestic work and male-dominated tasks (UNDP, 2009). Any attempt to alleviate poverty in the world must therefore be attempts to promote the well-being of the rural pout and this requires a much broader perspective than simply agricultural development (Szirmai, 1997: 9).The persistence of poverty in developing countries has been the most challenging problems in the world today. Available statistics show that as much as 1.4 billion people, out of 6.5 billion around the world in 2005 lived on less than US$1.25 a day and were thus classified as extremely poor with over 850 million people going to bed without sufficient food (UNDP, 2008).

In Nigeria, the incidence of poverty has been on the increase, rising from 28.1 percent in 1980 to 44.0 percent in 1992, and 65.6 percent in 1996 but reduced to 54.4 percent in 2004 (National Bureau of Statistics, 2006), 70.8 percent of the population was reported to have lived on less than US$ 1.25 a day, an internationally extreme poverty line in 2005 (UNDP, 2009).

Despite poverty-reduction strategies adopted in Nigeria, the poverty incidence in rural areas still remains high (UNDP, 2008). The reason for this may be attributed to the common approach to rural poverty reduction in Nigeria which is sector-driven, and rely almost entirely on the production of crops and livestock. Hence there is a need to reconsider a more comprehensive approach which embraces the potential of income diversification within the Nigerian rural economy.
Although agriculture remains the main source of income and employment e time, non-farm livelihoods can release pressure on rural workers to migrate by offering jobs in the rural area and tighten the labour supply for agriculture leading to increase in wages. Furthermore, the goods and services produced are mainly consumed and made by the poor. Consequently, a healthy and growing non-farm economy can create income opportunities with a greater upward mobility than subsistence agriculture (Bhaduri, 2002; Buchenreider and Knuepfer, 2002; Christensen and Lacroix, 1997; Ellis, 2000).

Given the multitude of constraints faced by households and the heterogeneity of non-farm employment opportunities available to them, livelihood diversification strategies vary widely (Barrett et al., 2005). This heterogeneity can make generalizations problematic and is a reason for lack of sufficient knowledge about non-farm rural economy (Haggblade, et al., 2007).

Past studies (Awoyeni, 2004, Jonasson, 2005, Benjamin and Kimhi, 2006) reported that the contribution of non-farm income activities in a rural economy cannot be neglected because it has grown substantially during the last two decades and its share of total household income ranges between 30 percent and 50 percent in some developing countries. In this respect, the behavior of rural households in diversifying their sources of income and employment from solely agriculture to non-agricultural activities could be considered to be important as a critical requirement for rural poverty reduction in Nigeria. It would be misleading however to see the growth in rural non-farm economic activities in isolation from agriculture, as both are linked through investment, production and consumption throughout the rural economy, and both form parts of complex livelihood strategies adopted by households. It is therefore useful, when thinking about rural development, to think of’ a full range of rural income generating activities, both agricultural and non-agricultural, carried out by rural households.

1.2       STATEMENT OF THE RESEARCH PROBLEM

The traditional development approach of providing technology and infrastructure to increase agricultural production has not succeeded in curbing the trend of increasing rural poverty, and alternative sources of productive employment must be sought in order to support additional workforce created by population explosion in developing countries like Nigeria. Moreover, the dual economic model looked at traditional sector, including the rural non-Farm sector, as static and isolated; its contribution to the development of modern economy was considered as inconsequential (Singh, 1993).

Even in high economic growth regions, the potential development in agriculture seems to be tapering off. Indeed the relatively rapid growth in agriculture in some countries is unlikely to employ the entire rural labour force in such places at reasonable levels of productivity and incomes (Papola, 1984). Also, even in a situation of bringing appropriate technological advancement in agricultural sector, the rural labour force cannot be employed fully in agricultural activities in land-scarce countries (Islam, 2009).

In previous studies, Haggblade, Hazell and Reardon, (2007) examined issues related to the structure and growth of non-farm employment. Reardon, et al, (2008) examined the risk and vulnerability in the agricultural sector finding that wage employment is much more important than self- employment in Africa, the latter being more risky and capital intensive. Haggblade, et al. (2007) examined the transformation of the rural economy in Africa concentrating on sectorial growth linkages between agriculture and rural non-farm economy saying a sound agricultural base forms a good foundation for a sustainable rural non-farm economy, while Lanjouw and Feder (2007) focused on economic analysis and policy implications of farm and non-farm employments. However, relatively little attention has been given to finding the types, mode of operation, contributions to general household income and limitations to the non-farm sector. This research therefore seeks to fill this gap.

Based on the research problem, this study tends to provide answers to the following questions:

i. What categories of rural non-farm economic activities are being undertaken in Lere LGA?

ii. What categories of these non-farm economic activities increase employment generation in the study area’?

iii. To what extent do rural non-farm livelihoods offer more income to supplement or replace income from agriculture and help farm-based households spread risk?

iv. To what extent do rural non-farm economic activities have the potential to curb out-migration in the study area?

v. What challenges is rural non-farm activities faced with in the study area?

1.3       AIM AND OBJECTIVES OF THE STUDY

The aim of this study is to examine the contributions of rural non-farm economic activities to household income in Lere Local Government Area of Kaduna State. The specific objectives are

 i. To identify the types of rural non-farm economic activities in the study area.

ii. Examine the trend of unemployment linked to non-farm economic activities in the study area

iii. Establish the contribution of rural non-farm economic activities to household income in the study area,

iv. Establish whether rural non-farm activity has the potential to reduce out-migration in the study area and

v. Examine the challenges to rural non-farm activities in the study area.

1.4       HYPOTHESIS

The following research hypothesis has been formulated to provide a focus for the study:

H0. There is no significant difference between the incomes of households that engage in farm and non-farm economic activities and incomes of households that engage in farming only in the study area. -

H1 There is a significant difference between the level of incomes households that engage in both farm non-farm economic activities and incomes of households that engage in farming only in the study area.

I.5        JUSTIFICATION OF THE STUDY

This study is relevant in many ways. In poor agrarian countries struggling with growing numbers of marginal farmers and lack-luster agricultural performance like Nigeria, the importance of the rural non-farm economy cannot be over emphasized., the study shall draw the attention of policy makers to view rural non-farm economic activities as a potential alternative to agriculture for stimulating rural economic growth and development and also generate data that is lacking on rural non-farm economic activities in the study for the local authorities, state and for future reference for those that would embark on similar studies.

The study would serve as an essential tool to individuals as well as the communities to raise awareness on their plight and perhaps change their attitude towards engaging in more rewarding rural non-farm economic activities that could ameliorate their livelihood conditions for the better. In this context, the challenges for policy makers is how to ensure that the growth of rural non-farm economic activities can be harnessed to the advantage of the poor households and how to identify mechanisms to best exploit synergies across agricultural and non-agricultural sectors.

1.6       SCOPE OF THE STUDY

The study area is the entire Lere Local Government Area (Figures 1 and 2). The focus of the study is on households that fully participate in agriculture as their only source of income and those households that adopt both agriculture and other non-farm economic activities as their sources of livelihood. The time frame for the study covered five years (2007-20 11). Lere LGA was purposively selected for this research because it is predominantly noted as the food basket of Kaduna State. Moreover, there are wide spread of and diverse rural income generating activities in the study area.


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