Basic alternatives in rural livelihood diversification

Household and individuals can diversify livelihood portfolios in different ways. Several classifications of activities included in rural livelihood portfolios have been proposed (e.g. Hussein and Nelson 1999; Ellis 2000; Barrett, Reardon and Webb 2002), focusing on different criteria (farm vs. non-farm; on-farm vs. off-farm activities; local vs. migratory; self-employment vs. wage labor). All these classifications are useful to make sense of the nature of the choices entailed by rural livelihoods diversification processes. However, the juxtaposition between diversification through wage labor and diversification through development of self-employment enterprises is the one that better captures the basic socio-economic disjunction between:

    i) reproducing and strengthening the profile of the (relatively) independent rural smallholder;

    or

    ii) assuming (at least partially) the connotations of a “semi-proletarian” rural wage earner (De Janvry 1981).

Additional distinctions between local and migratory wage labor and agricultural and non-agricultural self-employment enterprises are also important to capture the spatial and sectoral dimensions of livelihood diversification. This is reflected in the classification of basic alternatives in rural livelihood strategies presented in Figure 1 below.

Figure 1 - Basic alternatives in rural diversification strategies

In this classification, wage labor refers to the provision of work force to agricultural or non-agricultural enterprises owned by non-household employers. Though sometimes employment opportunities are available locally (local wage labor), in the majority of cases jobs are spatially distant from the places of residence and entail seasonal or long-term migration (migratory wage labor). If practiced as part of a rural livelihood diversification strategy, both types of wage labor seldom entail a fully “proletarization” of the rural workers. Rather, as pointed out twenty years ago by Alain De Janvry (1981), remittances of temporary or part-time rural wage labor very often complement an insufficient on-farm production in ensuring the satisfaction of household consumption needs. Moreover, in some instances, savings generated through wage labor (and in particular by migratory wage labor) can re-capitalize impoverished farms and create new opportunities for independent enterprise development

Rural self-employment enterprises refer to activities undertaken by mobilizing labor plus other household capital assets (savings, land, etc.). Rural agricultural enterprises are often based on innovative on-farm agricultural activities (in the form of independent commercial production or contract farming). On the other hand, rural non-agricultural enterprises focus on activities such as processing of agricultural or forestry commodities, petty-trading, handicraft, home-based piecework manufacturing, or delivery of particular services to the community or to outsiders. Such rural enterprises can develop within a single household or involve a wider social network, based on traditional or innovative forms of inter-household cooperation. The latter arrangement is particularly important to make enterprise development viable for household and individuals lacking the capital assets needed to start a self-employment activity on their own.