Rural Economic Diversification

Rural economic diversification is a process with the goal of building a community that has a broad economic base with a variety of income and employment opportunities and long term sustainability and resilience in the face of change.

 

Rural diversification follows a sequence of progressive steps: from staple grains to higher-value goods; from commodity production to a more sophisticated serving of the value chain; from agriculture-based activities to non-farm rural value added; and from production for the local and the national markets to global integration, as feasible in given settings. The specific steps depend on population density, infrastructure, and quality of human capital, spatial/geographic variables, and structure of the economy.

 

Rural diversification and income growth, as well as food production growth, which will lower prices, will contribute to raising food security directly as well as indirectly through growth with price stability in urban sectors.

 

Farmers in areas of good agricultural potential and with access to markets face encouraging opportunities today. By diversifying to higher-value products, they can capitalize on new markets brought about by rapid income growth and urbanization, thus in effect diversifying their operations. Especially in transforming economies, dietary patterns are shifting away from cereals, tubers, and pulses to livestock products, fruits and vegetables, thus creating a demand pull favoring diversification.

 

Horticulture is one of the fastest growing agricultural markets in developing countries. Relative to cereals, horticulture increases the returns on land by several magnitudes. It also generates considerable employment through production (about twice the labor input per hectare of cereals) and more off-farm jobs in processing, packaging and marketing. Growth in livestock and aquaculture has also been notable, increasing income-generating opportunities. Moreover, these high-value products make up a rapidly growing share of international trade in agricultural products.