If agricultural production in developing countries can scale up and diversify to meet growing urban food demand, agricultural producers, urban consumers, and the private sector stand to benefit from enhanced food security or increased incomes. However, this growth in agricultural production has the potential to reduce rural poverty more holistically—through the generation of off-farm employment.
Rural off-farm employment, which includes wage-paying work and self-employment in commerce, processing, construction, transport, service, and other sectors, is an important source of income for both farm and other rural families. In some cases, off-farm employment comprises nearly 45 percent of rural household income in developing countries. How is such employment generated? As secondary cities—which bridge the gap between rural and urban areas—expand as a result of urbanization, opportunities grow for these off-farm jobs in quasi-rural regions. Additionally, as agricultural production increases, so do rural economies and industries and the need for off-farm labor.
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Symbiotic Growth in Rural Economies
Agricultural growth can spur development in off-farm activities. Rural industry can flourish where there is surplus farm product to be processed and sold, and where there is a market for farm inputs and equipment. When farmers have extra income to consume local goods and services produced by nonfarm activities, these industries expand further still.
In turn, the creation of rural employment benefits agricultural production. Off-farm activities change the rural landscape—adding commercial stores, repair shops, transportation systems, and banks. Not only do these additions enhance the quality of rural life, but the newfound availability of agriculture-related services—like agroprocessing or distribution—may increase the profitability of agricultural production by providing farm inputs or post-harvest supply chain services. Increased access to such inputs in rural areas will also decrease their prices, further expanding the ability of farmers to make use of them. Additionally, producers who take on rural employment for extra income may have funds to invest in their agricultural productivity. Here, extra cash alleviates the lack of credit available to many small farmers, allowing for much-needed investment in smallholder agriculture.
Nonfarm Employment Has Far-Reaching Benefits
The generation of off-farm employment presents enormous benefits to rural economic growth and poverty reduction. Off-farm activities contribute significantly to household economies and food security, allowing for greater income to be devoted to food purchases. Such employment also enables farmers to generate supplementary income in the off-season or emergency funds in case of a poor harvest or disrupted production. Women may benefit significantly from off-farm employment, given that the majority of women in many developing countries who participate in the labor market do so in non-agricultural activities.
But the benefits of off-farm activity extend far beyond poverty alleviation in rural areas—already an entirely worthwhile goal. Such opportunities may offer better options for personal and professional development for rural people than does agricultural production. With the promise of enhanced economic opportunity within a rural area, many people might opt not to relocate to an urban center—preventing potential consequences of excessive rural-to-urban migration. And, through the strengthening of the food system—from better agricultural productivity and increased access to supply chain services—urban consumers will see lower and more consistent food prices.
On the Path to Poverty Reduction
Given the significant value of off-farm rural activity, any development policy or investment must consider this element in addition to agricultural development to achieve inclusive economic growth. Policies must ensure that rural environments are conducive to job creation—by creating demand for rural services and a taxation system that allows for investment in public goods. Infrastructure—roads, and electrical connections—must be in place to allow for supply chain linkages to function beyond rural areas, creating a regional market for rural goods. And, within rural areas, investment in education, health, and nutrition is critical to allow the poor to take up off-farm employment, as is policy to prevent workplace discrimination or unequal access to such opportunities.
On the whole, off-farm activity in rural areas as well as secondary cities has a substantial poverty reducing effect. Through the promotion of off-farm activity, alongside investments in agricultural development, the international community may see the inclusive growth necessary to lift entire rural regions out of poverty. With 70 percent of the world’s poor currently living in rural areas, this is no small feat, but with access to off-farm employment, alongside so many other inputs necessary for successful agricultural production, rural people may capture the opportunity and meet the challenge of feeding the world’s growing cities.
Read previous posts in the "Growing Food for Growing Cities" blog series:
Engaging the Private Sector
Tackling Food Waste along the Supply Chain
Food System Resilience in the Face of a Changing Climate
Delivering Good Nutrition
Food System Development to Improve Food Security
Urbanization Is an Opportunity for Many Small-Scale Farmers
Food Security in an Urbanizing World