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Agriculture and Livelihood Diversification among Rural Kenyan Households: Evidence of Agricultural Transformation




Author(s):  Simon C. Kimenju and David Tschirley

Governments throughout the developing world have a keen interest in diversifying their rural economies. One basis for this desire - concern that reliance on a few crops for cash income can lead to instability in income that threatens rural livelihoods – has undoubtedly been accentuated by the worldwide price crises of 2007-08 and 2010-11. It is also true that, for many households that produce primarily for their own consumption, diversifying by adding cash crops (e.g., cotton, tea, coffee, fresh produce) while continuing to produce for their own consumption can lead to greater incomes; diversification into offfarm activities can also greatly increase (and stabilize) total household incomes. Thus, from the perspective of managing risk and associated vulnerability of rural households, and in some cases from a desire to increase incomes, farm diversification makes sense as a policy goal.

Yet to achieve rapid growth in rural areas and the economy as a whole, it is widely recognized that countries must go through an agricultural transformation, which involves more specialization by rural households, not more diversification. Resolving this tension between the clear benefits to rural households in the short- and medium-term from diversification with the long-term need for greater specialization and trade is a major policy challenge for African governments.

This Policy Synthesis addresses this challenge in four ways1. First, it refines the understanding of diversification by identifying and quantifying different types of diversification at the level of the rural household, and by showing that diversification proceeds very differently at this level compared to the broader agricultural sector and the macroeconomy. Second, it links these levels of diversification (farm, agricultural sector, macro economy) to the process of agricultural transformation. Third, it empirically examines diversification trends in rural areas of Kenya from 1997 to 2007 and uses this analysis to make inferences regarding the progress of agricultural transformation in the country. Finally, it draws conclusions regarding the policy and programmatic initiatives most appropriate for Kenya at this specific point in the country’s development.

Agriculture and Livelihood Diversification among Rural Kenyan Households: Evidence of Agricultural Transformation







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