Working Paper

Does non-farm income affect food security? Evidence from India

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Abstract

Livelihood diversification and greater non-farm income have been considered as useful mechanisms to propel growth, lower rural poverty and augment farm income in the developing countries. Little, however, is known about its implications for nutritional outcomes such as dietary diversity. This article con-tributes to the literature by investigating whether greater non-farm income helps in improving food consumption patterns and dietary diversity. Using a nationally representative panel data of rural India and an instrumental variable (IV) approach, we investigate this association and find that non-farm income increases expenditure on food products especially non-cereal products, leading to greater household dietary diversity. This has crucial policy implications for nutrition transition and livelihood diversification, further contributing to the existing knowledge on agriculture-nutrition pathways.

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... However, a greater share of households in rural India now rely on markets to access food. 2 Nationally representative data suggests that 88% of farming households rely on some form of non-farm income sources to sustain their livelihoods (Chandrasekhar & Mehrotra, 2016). Non-farm income is therefore becoming an important source of food security and dietary diversity (Mishra & Rahman, 2018). Livelihood and income diversification out of farming have been considered as desirable for enabling greater structural transformation. ...
Chapter
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In this chapter, we deliberate upon the role of the non-farm sector in the food systems. We argue that livelihood diversification in rural India would lead to an overall economy-wide increase in productivity, and facilitate swifter structural transformation and poverty reduction. We highlight the role of the non-farm sector for job creation in rural areas, especially along the rural-urban continuum for structural transformation to take place. Policy has not yet leveraged the potential of small towns and the peri-urban spaces as a means to create new job opportunities. We focus on these blurring of the rural-urban distinction which provide an opportunity to diversify the portfolio of economic opportunities available to rural households, thereby enabling greater rural income and improved access to food and nutrition.
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Migration has become a key component in the livelihood strategies of an increasing number of households across the developing world and remittances have expanded dramatically in the last decade. This has come at a time when an increased emphasis has been placed on reducing malnutrition to achieve Millennium Development Goal (MDG) targets. While this is the case, there has been little attention on the interface between migration and nutrition even though migration can influence nutrition through a number of channels. The objective of this special issue is to present state-of-the-art analyses of the link between migration and nutrition in developing countries. In this paper, an overview of the conceptual and empirical issues in identifying the link between migration and nutrition are considered. Further, the results from seven country case studies are synthesized and policy implications are drawn.
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Tajikistan is the country with the largest share of remittances to GDP in the world. At the same time it suffers from stubbornly high levels of child malnutrition against which only very slow progress has been made. This paper investigates the relationship between international migration and child malnutrition, using data from a recent nationally representative household survey. There are theoretical reasons to expect that migration may be exerting both positive and negative effects on nutrition and food security, so that understanding what the net effect may be is essentially an empirical question. Our results indicate that migration appears to be playing a positive role in enhancing child growth patterns (as measured by height-for-age z-scores) in the country. We explore some of the possible channels through which this effect might be operating and find that one such channel is by increasing households' kilocalorie consumption.
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Farm households diversify their income sources by working off the farm. This is a risk management strategy that is used by farm households in both developed and developing countries. Income diversification via off-farm work is associated with higher incomes and food consumption. However, little is known about the association between off-farm work and farm household food expenditures. In an effort to bridge this gap, this study attempts to assess the impact of off-farm work decisions by the operator and/or the spouse on the food expenditures of the farm household. Using a nationwide farm household survey in the United States and new econometric method, we find that the decisions of the operator and/or the spouse to work off the farm are significantly interrelated (29%). However, these two decisions affect food expenditures in different ways. The operator’s off-farm work decision is positively related to food expenditures, while the spouse’s decision is negatively associated with expenditures on food by the farm household.
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document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Asset, activity and income diversification lie at the heart of livelihood strategies in rural Africa. This paper introduces a special issue on the topic “Income Diversification and Livelihoods in Rural Africa: Cause and Consequence of Change. ” We concentrate on core conceptual issues that bedevil the literature on rural income diversification and the policy implications of the empirical evidence presented in this special issue.
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While the poverty implications of off-farm income have been analyzed in different developing countries, much less is known about the impact of off-farm income on household food security and nutrition. Here, this research gap is addressed by using farm survey data from Nigeria. Econometric analyses are employed to examine the mechanisms through which off-farm income affects household calorie and micronutrient supply, dietary quality, and child anthropometry. We find that off-farm income has a positive net effect on food security and nutrition. The prevalence of child stunting, underweight, and wasting is lower in households with off-farm income than in households without. Using a structural model, we also show that off-farm income contributes to higher food production and farm income by easing capital constraints, thus improving household welfare in multiple ways.
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This paper has sought to quantify the inter-relationships among the investment decisions of government, financial institutions and farmers and their joint effects on agricultural investment and output. Empirical results using district-level time-series data from India confirm the importance of input and output prices in the determination of aggregate crop output, but also confirm that aggregate outout supply elasticities are low. Education infrastructure availability and the rural banks play an overwhelming role in determining investment, input and output decisions. Availability of banks is a more important determinant of fertilizer demand and aggregate crop output than interest rates. While farmers respond to infrastructure, the governments in turn allocate their infrastructure investments in response to the agroclimatic potential of the districts and banks locate their branches where the agroclimate and the infrastructure are favorable to their operation. Agricultural output is therefore determined in a complex interactive process where farmers, government and intermediaries respond to the same factors. This sharply affects the econometric techniques which have to be used to analyze output supply.
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Does access to off-farm income complement or compete with agricultural production? This article explores the effect of off-farm income on agricultural production activities, using data from the 2003 Mexico National Rural Household Survey. We first discuss the theoretical conditions under which access to off-farm income may influence production in an agricultural household model. Instrumental-variable (IV) estimation methods are then used to test whether agricultural production activities, technologies, and input use differ between households with and without access to off-farm income. We find that off-farm income has a negative effect on agricultural output and the use of family labor on the farm, but a positive impact on the demand for purchased inputs. There is also a slight efficiency gain in households with access to off-farm income. Findings offer insights into how household production evolves as rural households increasingly engage in off-farm income activities. Copyright (c) 2009 International Association of Agricultural Economists.
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Dietary diversity is usually measured using a simple count of foods or food groups over a given reference period. Our overview however revealed that studies in developed and developing countries have used a variety of food and food-group classification systems different numbers of foods and food groups and varying reference period lengths (ranging from 1 to 15 days). Research should be conducted to validate and compare indicators based on different methodological approaches. It would also be useful to continue to explore whether indicators based on food groups (a simpler approach) perform as well as those based on single foods in predicting outcomes of interest. (excerpt)
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Off-farm activities generate on average more than half of farm households' incomes in the Mexican ejido sector. Participation in these activities helps reduce poverty and contributes to greater equality in the distribution of income. This paper analyzes the determinants of access to off-farm sources of income across households. We find that education plays a major role in accessing better remunerated nonagricultural employment. Adults of indigenous ethnic origin suffer from an educational lag and have less access to off-farm nonagricultural employment than non-indigenous adults at identical educational levels. The regional availability of off-farm employment strongly affects participation. In addition, women are differentially limited by distance to urban centers in their ability to gain off-farm employment.
Article
The rural non-farm sector has traditionally been viewed as a low-productivity sector which produces low quality goods. It is often expected to wither away as a country develops. Recent years have seen a shift away from this position towards recognition that the rural non-farm sector can, and often does, contribute to economic growth, rural employment, poverty reduction, and a more spatially balanced population distribution. This paper reviews the literature on the conceptual and empirical underpinnings of this more recent perspective, focussing on the experience in developing countries. The paper documents the size and heterogeneity of the sector, pointing to evidence that in many countries the sector is expanding rather than declining. The issues associated with measuring the sector’s economic contribution are discussed, followed by empirical assessments for several countries and regions. The distributional impact of non-farm earnings is examined and it is found that a pro-poor impact, while by no means inevitable, can be considerable. The sector’s trajectory over time, in different settings, is reviewed and the scope for, and experience of, various policy interventions is discussed.
To farm or not to farm ? Indian farmers in transition
  • Bina Agarwal
  • Ankush Agrawal
Bina Agarwal and Ankush Agrawal. To farm or not to farm ? Indian farmers in transition. Number April. 2016. ISBN 9781909336353.
Rural roads and structural transformation
  • Sam Asher
  • Paul Novosad
Sam Asher and Paul Novosad. Rural roads and structural transformation. Technical report, 2017.
The Stunted Structural Transformation of the Indian Economy URL http://www.epw.in/review-rural-affairs/ stunted-structural-transformation-indian-economy
  • P Hans
  • Binswanger-Mkhize
Hans P. Binswanger-Mkhize. The Stunted Structural Transformation of the Indian Economy. Economic and Political Weekly, 48(26-27): 5-13, 2013. URL http://www.epw.in/review-rural-affairs/ stunted-structural-transformation-indian-economy. html{%}255Cnhttp://www.epw.in/system/files/pdf/2013{_}48/ 610 26-27/The{_}Stunted{_}Structural{_}Transformation{_}of{_}the{_}Indian{_}Econo pdf.
What do we really know? Metrics for food insecurity and undernutrition
  • Boris Branisa
  • Stephan Klasen
  • Maria Ziegler
Boris Branisa, Stephan Klasen, and Maria Ziegler. What do we really know? Metrics for food insecurity and undernutrition. 2011.