Rural Livelihoods: Interplay Between Farm Activities, Non-Farm Activities and the Resource Base

Despite ongoing urbanization, over 70% of the world’s poor are located in rural areas (IFAD 2001). Agriculture plays an important part in their livelihoods. Rural households play a central role in realizing policy objectives. Production decisions at farm household level determine the current availability of agricultural produce (food security objectives; Roetter and Van Keulen 2007), as well as future production potentials (sustainability objectives; Verhagen et al. 2007). The majority of the poor are furthermore located in the rural areas of developing countries. Rural households are, thus, also key to poverty reduction policies.

Farm households, however, do not live of farming alone. Parallel to the developments in agricultural science, the view on rural households has changed in the past decades. Analyses of single production systems have given way to a view on rural households as diversified enterprises. Rural household enterprises are not limited to the agricultural sector. Non-farm activities play an important role in income of these households all across the world, even in regions commonly thought of as subsistenceoriented, such as Sub-Saharan Africa. In a rare worldwide comparison of the importance of non-farm income in developing countries, Africa ranked first with 42% of total rural income, followed by Latin America (40%) and Asia (32%) (Reardon et al. 1998).

Rural areas play a prime role in two of the Millennium Development Goals: reducing poverty and hunger and ensuring environmental sustainability. The omnipresence of non-farm income in rural areas implies that any policy aimed at realizing these two Millennium Goals needs to look beyond households’ agricultural activities. Non-farm activities play a prime role, directly by contributing significantly to household income and indirectly by shaping agricultural activities with implications for sustainability. However, the effect can be positive or negative. Pressure on natural resources may be reduced when households have alternative sources of income (Bahamondes 2003). Non-farm income may also (partially) be invested in sustainable agricultural practices. Soil nutrient mining is a key issue in the African context (see Verhagen et al. 2007). Inorganic fertilizers are an important source of nutrients. These fertilizers require cash which may be generated by non-farm activities. Nonfarm activities would then contribute to sustainability. In the Asian context, excessive use of pesticides and herbicides is a prime concern (see Verhagen et al. 2007). Farm households that are engaged in non-farm activities could replace hand weeding by herbicides. In that situation, non-farm activities would threaten the sustainability of agricultural practices.