Is off‐farm income reforming the farm? Evidence from Mexico

Abstract

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.

Impact of off-farm income on food security and nutrition in Nigeria

“…That is, when off-farm income increases, not only more food in general, but also more higher-value food is consumed, and again the marginal effects are identical for farm and off-farm income. This is an interesting result, because a priori one might expect that off-farm work could especially be at the expense of livestock and horticultural on-farm activities, as these are particularly labor intensive (e.g., Pfeiffer et al, 2009;Huang et al, 2009). Hence, off-farm income might potentially result in lower household availability of nutritious non-staple foods.…”

“…But there may also be more indirect effects when off-farm activities have an influence on farm income through interlinkages in factor use. When there are labor constraints, off-farm activities will reduce the labor input in farming (Pfeiffer et al, 2009;Huang et al, 2009). On the other hand, when capital is scarce, off-farm income can contribute to higher agricultural input use by relaxing liquidity constraints.…”

“…Nutrition impacts might be positive, because off-farm income contributes to higher household income and therefore better access to food. But the impacts might also be negative, at least when controlling for total household income, as working off the farm could potentially reduce household food availability due to the competition for family labor between farm and off-farm work (e.g., Pfeiffer et al, 2009;Huang et al, 2009). A few empirical studies have looked into related linkages, but all of them are confined to issues of household food expenditure or calorie availability.…”

Investments in agriculture ā€“ case of Poland

“…The total debt ratio amounted to from 0.067 to 0.079 (Table 2). According to the literature, this ratio should fluctuate within the range of 0.57-0.67 [9]. Therefore, there are no threats related to debt payment among the studied holdings.…”

“…Analysis accounted for the value and structure of assets as well as changes over time. Selected methods of financial analysis were also applied [9]. One method of evaluating fixed asset reproduction and development of farms is the fixed asset reproduction rate.…”