Farm-Off-Farm Linkages: Contribution Of Off-Farm Employment To Farm Inputs Expenditure, Shocks Management And Poverty Reduction In Kilombero Valley, Tanzania

ABSTRACT

Livelihoods diversification towards off-farm employment is becoming a norm in rural areas of developing countries. It is, however, unclear as to whether diversification towards off-farm employment activities provides better welfare effects in terms of crop productivity and income shock insurance compared to economic specialization in own farm  activities. Hence, this study was carried out to unveil the effect of off-farm employment on three dimensions of poverty considered as salient features of destitution in the study area; these are farm input expenditure, exposure to income shocks and income poverty. The study adopted a cross-sectional design and was carried out in the Kilombero Valley, one of Tanzania’s high agricultural potential areas in Tanzania. Data were collected using a structured questionnaire from 309 randomly selected households and complemented with in-depth interiviews and focus group discussions. The sampling process involved mutlistage and purposive sampling techniques.  During analysis, the following off-farm employment functional categories were differentiated: non-farm self employment, non-farm wage employment and farm wage employment. The findings show that 82% of the surveyed households were engaged in some form of  off-farm employment.  Based on the logit model, this engagement was positively influenced by a household’s structural and cognivive social capital levels, education and age of household head, land owned under cultivation and access to loans. Results on the input effect show that non-farm-self employment was positive and significant (p ≤ 0.05) in explaining input expenditure, implying farm-off-farm production linkage in which case off-farm income is spent on inputs purchase. On the contrary, engagement in farm wage employment was found to impose labour shortage for households own farm work, leading to a lost labour effect. Despite its undesirable household’s labour withdrawal effect, this employment category (farm wage employement) had a potential consumption smoothing effect against crop income shock thus, playing an ex post risk management role. The findings further reveal that non-farm self-employment has comparably more positive effects on the Foster-Greer-Thorbecke (FGT) poverty measures namely  incidence, depth and severity of poverty than activities related to farm wage  and non-farm wage employment. The main conclusion drawn from the thesis is that, for rural households in the study area, off-farm employment is heterogeneous and its effects on offsetting farm inputs constraints, income shocks and income poverty differs. For example, farm wage employment essentially threatens own farm activities as they compete for household labour. It is thus recommended  that, the issue of rural development should not be viewed as an artificial choice between promoting either off-farm wage labour or off-farm self-employment or subsistence farming alone. The issue is what strategic combinations and interlinkages are required to develop a vibrant diversified rural economy. Therefore,  off-farm employment  in its diversity is a critical component in any such strategy.