Farmers abandon farms for trade, IMF economist says

Rwandan farmers are abandoning agriculture to start small scale businesses at a faster rate than noticed elsewhere, Thomas Alun, a senior economist with the International Monetary Fund (IMF), has said. The economist made the remarks in a new podcast released by IMF at the weekend in which he argues that farmers are leaving farms for better income generating activities off the farm, in the service sector of the economy. In explaining the trend, Alun said that although shifting from agriculture to services and manufacturing is a natural result of structural transformation that has been widely documented elsewhere, what is happening in Rwanda is that ‘it’s been taking place at a fairly quicker pace.’ The expert’s observations are not entirely new as they were contained in a research paper about Rwanda’s changing job market that was published by IMF last year in which he noted a strong movement out of agriculture and into small household enterprises. “You notice that, overtime, people engaging in full-time agricultural practice gradually move away to other nonagricultural activities mainly to improve their household incomes and welfare,” he said. In his paper, published in December, last year, the economist said Rwanda’s rapid economic transformation has also seen a large decline in agriculture’s share of employment creation. The nature of ventures However, Alun noted that the migration from agricultural practice is mainly into low value added services of trade such as road-side vending and limited movement into industry and manufacturing, which have higher job creation capacity. “The trend here heavily contrasts with the experience of many low-income Asian countries that have managed to raise their industrial employment share considerably during the transformation process,” Alun said. However, he points out that these small household enterprises, the majority of which operate in the informal sector, have emerged as a leading alternative to formal sector employment, which is limited in many a country, including Rwanda, because of limited industrialisation. “The puzzle for Rwanda and the region right now is to figure out how to help these small enterprises, the majority of which employ one to three people to expand and take in at least ten to twenty people, even when they grow, many of them get stuck at five or six,” said Alun. Mitra Farahbaksh, the IMF country representative, agreed with Alun’s observation, while Tony Nsanganira, the state minister for agriculture, said the trend should not necessarily be seen as a bad one as it’s in line with the government’s larger plan of creating off-farm jobs. In the second Economic Development and Poverty Reduction Strategy (EDPRSII) concept paper, government notes that land, a basic resource for many people’s rural livelihoods and for new productive activity, is pressured by increasing population density and demographic trends and the growing youth share of population requires at least 200,000 jobs to be created each year. “We are already observing farmers integrating in the service and industry sectors, which is fine. On the other hand, the land left behind by these farmers is consolidated and better managed by cooperatives and in other cases subleased to companies to keep up production,” said Nsanganira. The minister also said given Rwanda’s limited land resource, the only option is to increase productivity of the existing land spaces through modern farm practices that also attracts the youth into agricultural production. “What we are promoting now is modern agricultural practice, that is highly mechanised, commercial oriented and attractive to the youth who can even introduce ICT skills into farm practice, this way, they can take over from their ageing parents currently tilling the land,” said Nsanganira. In a recent interview with The New Times, Asa Giertz, an agricultural expert with the World Bank Group, said the challenge that many countries are struggling with is getting the youth interested in Agriculture. “The average age of farmers now is around 60 years old in sub-Saharan region and 55 years old in the US. In the age of smart phones, fast fashion, and digital entertainment, the question is how you get the youth interested in agriculture,” said Giertz Way forward Modernising agricultural practice and making it fanciful to the educated youth is one way to go through practices such as green-house farming, Nsanganira said. And because of this modernisation of agricultural practice, Innocent Musabyimana, the permanent secretary at the Ministry of Agriculture said farmers can’t be leaving agriculture because of low incomes. “In the last six years, we have been investing in agricultural infrastructure of post harvest storage, providing subsidies to farmers for fertilizers and improved seeds as well as irrigation facilities; farmers now have more confidence in how much they can earn,” he said. Musabyimana added that now that production has increased over the years, the focus is being shifted to value addition and other value chain activities which could attract many a farmer from mainstream farming to processing. “And that is what I am sure is happening, not farmers abandoning farms as it might be perceived by some,” he added. Recent government statistics indicate that Rwanda’s Gross Domestic Product grew from $644 million in 2012 to $701 million in 2013. The service sector, to which many farmers are migrating currently, contributes 48 per cent of the GDP growth while agriculture accounts for 32 per cent. The Industry/manufacturing sector generates 5 per cent. The agricultural population has over the years reduced from 90 per cent to below 80 per cent of Rwanda’s total population but the sector reportedly still meets 90 per cent of the national food needs and generates more than 50 per cent of the country’s export revenues.

News

Farmers abandon farms for trade, IMF economist says