Rural Non Farm Rural Non Farm Employment – Employment – getting the getting the jobs done jobs done Joachim von Braun Joachim von Braun Director General Director General International Food Policy Research Institute International Food Policy Research Institute Grupo de Análisis para el Desarrollo (GRADE) y Grupo de Análisis para el Desarrollo (GRADE) y Seminario Permanente de Investigación Agrícola Seminario Permanente de Investigación Agrícola (SEPIA) (SEPIA) Lima, April 24 Lima, April 24 th th 2006 2006
Transcript
Rural Non Farm Employment – Rural Non Farm Employment – getting the jobs donegetting the jobs done
Joachim von BraunJoachim von BraunDirector GeneralDirector General
International Food Policy Research InstituteInternational Food Policy Research Institute
Grupo de Análisis para el Desarrollo (GRADE) y Seminario Grupo de Análisis para el Desarrollo (GRADE) y Seminario Permanente de Investigación Agrícola (SEPIA)Permanente de Investigación Agrícola (SEPIA)
Lima, April 24Lima, April 24thth 2006 2006
OverviewOverview
1.1. Definition and conceptual issuesDefinition and conceptual issues
2.2. Dimensions and changeDimensions and change
3.3. On linkages (of various types)On linkages (of various types)
4.4. Policy considerationsPolicy considerations
““Creating” Employment high on the global Creating” Employment high on the global policy agenda 2005/6policy agenda 2005/6
The 2005 World Summit:The 2005 World Summit:• ““Strong support for fair globalization and resolve Strong support for fair globalization and resolve
to make the goals of full and productive to make the goals of full and productive employment and decent work for all”employment and decent work for all”
• ““Promoting women’s equal access to labor Promoting women’s equal access to labor markets, sustainable employment and adequate markets, sustainable employment and adequate labor protection”labor protection”
Davos 2006 World Economic Forum: Davos 2006 World Economic Forum: • Employment is one of the top themesEmployment is one of the top themes
Definition of rural non farm employmentDefinition of rural non farm employment
RuralRural NonNon--FarmFarm Employment Employment (RNFE)?(RNFE)?• Defining by exclusion? “Non-farm”Defining by exclusion? “Non-farm”• Mixing sectors and spatial geography “Rural”Mixing sectors and spatial geography “Rural”• Its not a sector, but a “segment “ of the economyIts not a sector, but a “segment “ of the economy• Operationally not helpfulOperationally not helpful
Alternative: Alternative: “employment in services and “employment in services and industries in rural areas”industries in rural areas” (ESIRA) (ESIRA)
General Characteristics of RNFEGeneral Characteristics of RNFE
• Surveys suggest: RNFE accounts for approx. Surveys suggest: RNFE accounts for approx. 25% of full time rural employment in 25% of full time rural employment in developing countries (global estimate =19%)developing countries (global estimate =19%)
• RNFE is a diverse set of activities, services are RNFE is a diverse set of activities, services are 2-3 times more important than manufacturing2-3 times more important than manufacturing
• RNF income share has increased over timeRNF income share has increased over time
Source: Haggblade, Hazell and Reardon 2005Source: Haggblade, Hazell and Reardon 2005
General Characteristics of RNFE (Cont’d)General Characteristics of RNFE (Cont’d)
• Although most RNFE firms are small, large firms Although most RNFE firms are small, large firms dominate many activities and often have strong market-dominate many activities and often have strong market-chain links to small firmschain links to small firms
• Much RNFE clusters in small towns and market centers Much RNFE clusters in small towns and market centers to access markets and capture economies of scale and to access markets and capture economies of scale and agglomeration; agglomeration;
• Much RNFE outputs are non-tradable and are Much RNFE outputs are non-tradable and are consumed within their producing regions. consumed within their producing regions.
Source: Haggblade, Hazell and Reardon 2005Source: Haggblade, Hazell and Reardon 2005
OverviewOverview
1.1. Definition and conceptual issuesDefinition and conceptual issues
2.2. Dimensions and changeDimensions and change
3.3. On Linkages (of various types)On Linkages (of various types)
4.4. Policy considerationsPolicy considerations
Big picture on population and employmentBig picture on population and employment 2005 – 2020 (Shares) 2005 – 2020 (Shares)
Source: author’s calculations based on Tarantino 2005, UN World Population Prospects and ILO Labor Statistics Database
Evidence from Latin America shows that: Evidence from Latin America shows that:
• The great majority of RNF income in LAC is earned in The great majority of RNF income in LAC is earned in the the serviceservice sector and in sector and in wage employmentwage employment. .
• The share and level of RNF income The share and level of RNF income rises with household rises with household incomes. incomes.
• The share of RNF income The share of RNF income drops as landholdings drops as landholdings increase.increase.
• LandlessLandless tend to earn considerable non farm income tend to earn considerable non farm income and rely strongly on it. and rely strongly on it.
Sources: Reardon, Berdegué and Escobar 2001, Dirven 2004 and IDB/FAO/ECLAC/RIMISP 2004Sources: Reardon, Berdegué and Escobar 2001, Dirven 2004 and IDB/FAO/ECLAC/RIMISP 2004
Facts about Rural Non Farm Employment in Latin Facts about Rural Non Farm Employment in Latin AmericaAmerica
Rural Non Farm Employment in Latin AmericaRural Non Farm Employment in Latin America
Early 1990s Late 1990s
Men Women Men Women
Bolivia 18 16
Brazil 26 47 24 30
Chile 19 67 26 65
Colombia 31 71 33 78
Costa Rica 48 87 57 88
El Salvador 33 81
Honduras 19 88 21 84
Mexico 35 69 45 67
Panama 25 86 46 93
Dominican Republic 55 92
Venezuela 34 78 35 87
Source: Reardon, Berdegué and Escobar 2001
Labor allocation of Peruvian rural householdsLabor allocation of Peruvian rural households
1985-86 1997
Self-employment 90.490.4 90.5
Agricultural activities 75.8 64.7
Non Agricultural activities 14.6 25.8
Wage employment 9.6 9.5
Agricultural activities 4.34.3 4.8
Non Agricultural activities 4.3 4.7
Source: Escobal 2001
How many farms in the world?How many farms in the world?
Farm Size (ha)Farm Size (ha) % of all farms% of all farms Number of farms Number of farms (millions)(millions)
< 2< 2 8585 387.24387.24
2 - 102 - 10 1212 54.0554.05
10 - 10010 - 100 2.72.7 12.5112.51
> 100> 100 0.50.5 2.282.28
TotalTotal 100100 456.07456.07
Source: Von Braun 2003, derived from national data and FAO World Agricultural Census, various Source: Von Braun 2003, derived from national data and FAO World Agricultural Census, various yearsyears
Non farm share of rural incomeNon farm share of rural income
RegionRegion Average ShareAverage Share
Latin AmericaLatin America 4040
AfricaAfrica
East and South AfricaEast and South Africa
West AfricaWest Africa
4242
4545
3636
AsiaAsia
East AsiaEast Asia
South AsiaSouth Asia
3232
3535
2929
Source: Reardon et al. 1998
Rural Non Farm Income in Latin AmericaRural Non Farm Income in Latin America
Share of RNFI in rural incomes(mid and late 1990s)
Weighted average 40
Peru 50
Brazil 39
Chile 41
Colombia 50
Costa Rica 59
Ecuador 41
El Salvador 38
Haiti 68
Honduras 22
Mexico 55
Nicaragua 42
Panama 50Source: Reardon, Berdegué and Escobar 2001, Dirven 2004
OverviewOverview
1.1. Definition and conceptual issuesDefinition and conceptual issues
2.2. Dimensions and changeDimensions and change
3.3. On Linkages (of various types)On Linkages (of various types)
4.4. Policy considerationsPolicy considerations
1. Agricultural growth linkages – 1. Agricultural growth linkages – powerful but changingpowerful but changing
Regional income multipliers from agricultural Regional income multipliers from agricultural growth: typical magnitudesgrowth: typical magnitudes
• Asia: 1.6 – 1.9 Asia: 1.6 – 1.9 (each additional $1 of income generated in agriculture (each additional $1 of income generated in agriculture leads to another $ .6 to .9 of income in the local RNFE)leads to another $ .6 to .9 of income in the local RNFE)
• Africa: 1.3 - 1.5Africa: 1.3 - 1.5
• Latin America: 1.4 – 1.6Latin America: 1.4 – 1.6
Source: Source: Haggblade, Hazell and Reardon 2005Haggblade, Hazell and Reardon 2005
• Consumption linkages dominate: typically Consumption linkages dominate: typically account for 70 - 80% of the total multiplieraccount for 70 - 80% of the total multiplier
• Rural services and commerce account for the Rural services and commerce account for the majority of rural nonfarm linkagesmajority of rural nonfarm linkages
• Why are multipliers weaker in Africa? Why are multipliers weaker in Africa? - low use of purchased inputslow use of purchased inputs- more poorly developed rural towns and agro-more poorly developed rural towns and agro-
industryindustry- higher transport costshigher transport costs
2. Challenging linkages to agro-processing and 2. Challenging linkages to agro-processing and retail industryretail industry
• Shrinking Shrinking farmsfarms• Growing food Growing food processorsprocessors• Even more growing Even more growing retailersretailers
Farm Size by World RegionsFarm Size by World Regions
World RegionWorld Region Average Farm Size (ha)Average Farm Size (ha)
AfricaAfrica 1.61.6
AsiaAsia 1.61.6
Latin America and Latin America and CaribbeanCaribbean
67.067.0
EuropeEurope 27.027.0
North AmericaNorth America 121.0121.0
Source: Calculated from FAO World Agricultural Census, various yearsSource: Calculated from FAO World Agricultural Census, various years
Consolidation in retail and processing — Consolidation in retail and processing — Shrinking share of the bottomShrinking share of the bottom
Expanding share of supermarkets and processing Expanding share of supermarkets and processing firms in food markets of developing countriesfirms in food markets of developing countries
Supermarkets share of retailSupermarkets share of retailPastPast PresentPresent Growth RateGrowth Rate
Source: China – Hu et al 2005, India – Chengappa 2005, Euromonitor 2004, Argentina – Gutnam 2002, Indonesia – GAIN Report 2003, Guatemala – Reardon et al 2002
The dynamics of linkages: The dynamics of linkages: Between farms and food industriesBetween farms and food industries
Large retailers and Processors
Shrinking bottom
Consolidation of retail & processing – FDI influence (China: 40% retail growth after FDI entry in 1992)
Fragmentation in farming
Expanding bottom:
Increasing share of small holders
Forward pyramid: Retailers/ processors
Emerging mutual need for linkages
Farmers pyramid
Source: Gulati 2005
3. Services and industry – linkages3. Services and industry – linkages
• Finance and creditFinance and credit• Insurance services in rural areas (facilitating Insurance services in rural areas (facilitating
more risky employment) more risky employment) • Infrastructure (transport, communications)Infrastructure (transport, communications)
4. Human capital conditioned employment 4. Human capital conditioned employment linkageslinkages
• NutritionNutrition• HealthHealth• Education (and, for instance, child labor) Education (and, for instance, child labor)
OverviewOverview
1.1. Definition and conceptual issuesDefinition and conceptual issues
2.2. Dimensions and changeDimensions and change
3.3. On Linkages (of various types)On Linkages (of various types)
4.4. Policy considerationsPolicy considerations
What policy makers want …What policy makers want …
• Policy makers - facing elections - want to Policy makers - facing elections - want to “create” jobs “create” jobs
• ““Pro-poor growth” is not enough for policy Pro-poor growth” is not enough for policy makers, if it does not include broad based job makers, if it does not include broad based job creation creation
• ““pro-jobs” growth ? pro-jobs” growth ?
A challenge for sound development policy !A challenge for sound development policy !
May be a threat to market oriented policies ?May be a threat to market oriented policies ?
The range of actions for rural employmentThe range of actions for rural employment
1.1. Broad based market oriented (growth) Broad based market oriented (growth) policiespolicies
2.2. Investments in public goods for rural Investments in public goods for rural employment facilitationemployment facilitation
4.4. Public employment (works) programsPublic employment (works) programs
High Diversity of policies & strategies to High Diversity of policies & strategies to “create” employment to be expected…“create” employment to be expected…
Approaches will be determined by Approaches will be determined by • Structural realities (assets; income levels)Structural realities (assets; income levels)• Political power of labor (urban, rural)Political power of labor (urban, rural)• Knowledge base for policy formulation and Knowledge base for policy formulation and
What where? (1) Strategies in remote areasWhat where? (1) Strategies in remote areas
• Emphasis on small scale agriculture that will Emphasis on small scale agriculture that will fuel the diversification of the rural economy.fuel the diversification of the rural economy.
• Investments in:Investments in:- RoadsRoads- Electricity and telecommunications at local levelsElectricity and telecommunications at local levels- Education and healthEducation and health- Activation of financial and land marketsActivation of financial and land markets
What where? (2) Strategies in agriculturally What where? (2) Strategies in agriculturally prosperous areasprosperous areas
• Rural enterprises often involve overlapping Rural enterprises often involve overlapping institutional activities:institutional activities:- Sub-contractingSub-contracting- Sub-sectoral promotionSub-sectoral promotion- ClusteringClustering
• Scope for Public Private PartnershipsScope for Public Private Partnerships
Employment for poverty reduction: Linkages and Employment for poverty reduction: Linkages and program concernsprogram concerns
Source: Adapted from von Braun 1995
RESOURCES
• Capital
• Labor
• (Food-) cash Wages
• Organizations
EMPLOYMENT
PROGRAMS
• Program choices
• Implementation choices
Employment
Assets
HouseholdIncome
and RiskInsurance
Re-run of Public Employment Programs: Re-run of Public Employment Programs: a comeback? a comeback?
• Not to be re-invented, but to be adaptedNot to be re-invented, but to be adapted• Decentralization of gov. in the past 20 years Decentralization of gov. in the past 20 years
can help better implementation now can help better implementation now • Role of community versus households in Role of community versus households in
targeting (Africa)targeting (Africa)• In need of innovations in program design (e.g In need of innovations in program design (e.g
combinations with conditional transfer combinations with conditional transfer programs?)programs?)
• Scope for experimentation and scaling up (the Scope for experimentation and scaling up (the Chinese experience may matter for others)Chinese experience may matter for others)
Conclusions: so where, for whom, how Conclusions: so where, for whom, how to “create” employment?to “create” employment?
1.1. Urban ? Urban ? RuralRural ? ?
2.2. City? City? TownTown? ? VillageVillage??
3.3. Women ? Men? Women ? Men? YouthYouth? Children? ? Children?
4.4. Strengthened local government Strengthened local government
5.5. RNFE policy is knowledge intensive, filling RNFE policy is knowledge intensive, filling the knowledge gaps requires multi-sector, the knowledge gaps requires multi-sector, spatial, and institutional data frameworksspatial, and institutional data frameworks
6.6. Sound research on “RNFE” … ESIRASound research on “RNFE” … ESIRA
