Foreword

Empirical evidence highlights the importance of off-farm activities in the income-generating portfolios of rural households in developing countries. It is critical to determine how such activities can be promoted, given the importance of non-farm income as a mechanism whereby rural households can sustain and improve their livelihoods and as a possible path out of poverty. Particular attention needs to be paid to ways in which spin-off activities in the non-farm sector can be promoted through policy and programme action in the presence of agricultural growth. Spin-off activities can emerge from backward and forward production linkages with agriculture, expenditure linkages that come with rising agricultural income, or investment linkages as non-farm income alleviates cash constraints faced by households.

In this publication these dynamic linkages and spin-off activities are explored in a series of case studies in Africa and Latin America. The objectives are: (i) to characterize the spin-off activities in each study area and evaluate their importance to rural employment, incomes and growth; (ii) to describe, compare, analyze and synthesize experiences - successful and unsuccessful - of growth and promotion of linkages in high potential areas; and (iii) to devise policy and programme options that would interest policy-makers looking to achieve agricultural growth in high-potential areas and promote growth and employment opportunities in the off-farm sector in rural economies.

The case studies focus particularly on the institutional, organizational and technological aspects of spin-off activities. This include the rules of the game such as contracts and standards governing economic relations, the players such as associations and intermediaries and the instruments that can be used to translate agricultural sector growth into activities up and down-stream. In order to give adequate consideration to the importance of these aspects under different settings, the case studies include low-income countries such as Ghana and Ethiopia as well as middle-income countries such Peru and Mexico. The challenges in the low-income countries include limited local demand and limited investment funds for spin-off activities. In middle-income countries, the challenge is for spin-off activities to stay local, because there are often incentives for farmers to buy inputs from non-local sources and for processing to take place outside local areas.

The case studies indicate in general that the public sector and non-governmental organizations (NGOs) play an important facilitating role to private initiative in developing linkages between agro-industry and farmers. This role may include organizing farmers or assisting NGOs or private enterprises to take on responsibilities previously discharged by states, providing credit, facilitating access to inputs, providing information on technology and ensuring that contract requirements are met.

Since the present case studies were initiated, interest in overall rural development issues has greatly increased. Rural strategies by development institutions (including development banks) now give a prominent position to the role of agriculture in increasing rural incomes and rural employment through its impact on activities up and down-stream of agricultural production. In publishing this volume, it is our hope to contribute to this debate with more concrete examples and provide incentives for more such undertakings.