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This paper investigates the mechanism in which off-farm employment
offsets the effect of crop income shocks. Using data collected from paddy
farming households in Kilombero Valley, Tanzania, we examine the interaction
between seasonal farm and off-employment activities and how
this interaction enables households to address crop income shock. A set of
participatory rural appraisal approaches supported by economic estimation
is used. Results from focus group discussions and seasonal calendars
show that, availability of some off-farm incomes such as those related to
farm wage do not covary with farm income, a feature that is critical for
ex post shock strategies as it enables households to smooth income during
the farming season. Evidence from econometric estimation showed
that engagement in non-farm self-employment, which is largely available
during the farming off-season, plays an essential risk management role
and cushions against crop-based income shocks. These findings imply
that insurability of off-farm employment depends not only on the type
of off-farm activities, but is also shaped by seasonality. Therefore, given the prevailing condition of imperfection in credit and crops insurance
marketin rural areas, formulation of policies that enhance growth and
diversification of income sources out of farming is of utmost importance
in addressing crop related susceptibility. |
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