Framework for farm household-level decision making
The Farm Household
The farm household is the level at which most resource allocation decisions are made. Division of roles and responsibilities among different family members occurs naturally among men, women, productive youth, and the elderly. Based on their respective duties, Farm Management Decisions are made (Part I). These may be broken down into: investment and marketing decisions; and production and conservation decisions. See Fig. 1.
Fig. 1: Framework for Analysing Farm Household Decidisions
These decisions are influenced by On-Farm Factors (Part 11), and Off-Farm Factors (Part 111). It should be pointed out that people do not use a linear decision making process. Rather, farmers consider many factors simultaneously. The framework is a tool to help understand these complex farm management decisions so that appropriate extension and development strategies can be developed.
Box 1 Choice of agricultural enterprises · Perennial crops · Annual crops · Livestock/fish · Post-harvest processing Allocation of labour · Family labour · Hired labour · Off-farm employment Allocation of land · By enterprise · By responsibility Allocation of capital · For production · For consumption Acquisition of inputs · Credit · Supplies Marketing · Products · Market channels |
Part I: Farm Management Decisions
Investment and marketing decisions
Box 1 summarizes some of the key resource allocation decisions faced by farm families. For example, if a need or market opportunity is identified for fuelwood, the family will have to choose what specific tree to plant, who will be responsible for its establishment and maintenance, what land will be used, what investment (labour, money and materials) will be required, and how the products will be marketed.
Production and conservation decisions
Given the above investment and market decisions, farmers must also make choices regarding management of the production process. The best farmers will also try to identify means by which production can be sustained from year to year by minimizing damage to their resource base. Box 7 summarizes the sorts of choices they must make.
Box 2 Management of agricultural enterprises · Perennial crops · Annual crops · Livestock/fish · Post-harvest processing Conservation practices · Crop management practices · Erosion control practices Off-farm employment · Seasonal employment · Regular employment |
Decisions related to the management of perennial crops for fuelwood, may be related to stabilization of terraces, provision of dry-season fodder for livestock, and spatial arrangement of fuelwood trees so that they do not interfere too much with food crop production.
Conservation practices such as contour planting, vegetative erosion control and construction of drop structures all require additional labour and investment. Such investment must be weighed in relation to other income generating opportunities such as off-farm employment or home-based industries that ensure guaranteed sources of revenue. For example, processing of charcoal is an off-season enterprise that may attract farmers' attention away from longer-term conservation activities.
Box 3 Assets · Land stewardship - Tenure status - Areas and types (rainfed, irrigated, etc.) · Livestock and crop rights - Ownership status - Profit sharing · Buildings and farm implements - House, barns, etc. - Machinery, tools, etc. Household members · Composition (men, women, children, elderly) · Age distribution · Gender roles · Health · Education/skills Cultural/individual attributes · Attitudes · Beliefs · Aspirations for the future Risk tolerance · Availability of savings (cash, timber, etc.) · Need for food security · Subsistence vs. market orientation Debts and obligations · Institutional debts and obligations · Individual debts and obligations Off-farm employment and income · Dependence on off-farm income · Type(s) of off-farm activities |
Part II: On-farm Factors
On-farm conditions affecting decision making are broadly divided into socioeconomic and biophysical factors. See Fig. 2.
Fig. 2: On-farm Conditions Affecting Household Decision-making.
Socioeconomic
A central factor affecting investment, production, and conservation decisions is the farmer's level of control over his land (see Box 3). A farmer with secure tenure is much more likely to think of long-term production and conservation activities than are sharecroppers or migrant laborers. The amount and types of land under stewardship of the farm household is critical.
Household composition and allocation of responsibilities to different family members is also important in making farm management decisions. Division of family chores by gender partially determines how resource allocation decisions are made. It should be emphasized that "gender" refers to age and status as well as sex. For example, studies have shown that women tend to prefer the planting of trees for fuelwood, fodder and fruit while men are said to prefer the production of timber that can be sold commercially. This has much to do with women's role in fodder and fuelwood collection; a role that can take them far away from the farm and require heavy labour. Likewise, children often play an important role in caring for livestock.
Subsistence farmers typically have different aspirations from market-oriented or commercial farmers. These ambitions are reflected in their beliefs, attitudes, and investment patterns Different farmers also have varying risk tolerance levels based on savings and basic food security. Subsistence farmers tend to have less tolerance for risk because they are closer to the borderline in terms of savings and liquid assets. Off-farm employment is attractive because it is associated with low risk. Also, farmers with heavy debts and obligations cannot afford to risk their family welfare with untested technologies.
Box 4 Moisture · Rainfall level and distribution · Irrigation Soil · Depth · Stability · Fertility · Texture Slope · <7% · 15-30% · 30% Altitude · <300 m · 300-900 m · >900 m Aspect · North/South orientation · Wind direction Biological factors · Pests · Diseases |
Biophysical
Biophysical factors are, for the most part, beyond the control of the farm family. These factors, as described in Box 4, have a direct influence on selection of a crop. There is, however, usually considerable variation in the microclimate of different parts of the farm. For example, the home garden is usually located near or around the household residence. It tends to get closer attention from women, receives more regular watering and fertilizing, and is more closely associated with subsistence than commercial objectives. Water, however, is nearly always the prime limiting factor. Soil, slope, temperature distribution and altitude are also influential for perennial crops. Finally, trees and some annual crops are sensitive to sun and wind exposure as well as biological factors. There are a number of tools available for matching species with biophysical factors but, as discussed earlier, the socioeconomic factors must be considered at the same time. Farmers do this intuitively and they almost always have good reasons for their decisions.
Part III: Off-Farm Factors
Off-farm factors have an influence on farm household decision making as represented in figure 3:
Markets and market channels
Farm families need outside information for making investment and marketing decisions. Even though not all farmers do detailed cost-benefit analyses, they usually make a budget "in their heads". Often they also make rough budgets on paper before making a decision. Box 5 presents some of the market options that the farmer has.
Fig. 3: Off-farm Factors Affecting Household Decisions
Farmers seek market information from middlemen, producers associations, retailers, wholesalers, processors, manufacturers and other farmers. A competitive market is, unfortunately, not always present. Having said this, there is usually great opportunity to tap into domestic and international markets.
Small farmers who are not organized into groups will find it difficult to achieve the scale of production that is demanded by more up-scale markets. Group organization under these conditions, therefore, becomes a key element.
Box 5 Local · middlemen · producers associations · local industry Provincial and National · brokers and traders · large-scale industries International · commodities exchanges · multinational corporations |
Policies, Rules and Regulations
Household decisions are also affected by policies, rules, and regulations that are enforced by the state and community. Examples are given in Box 6. These may be enforced either at the local or the national level. For example, teak in most countries requires a permit to be felled and transported. This is a constraint for farmers who are exploited by unscrupulous officials. These laws are, however, necessary to protect public forest resources.
Apart from formal legislation and policies, there are traditional customs and practices that govern management of agricultural lands. User rights are particularly important for farmers who live on the fringes of state forests and have a ready supply of fuelwood.
Box 6 Traditional laws and common practices · social norms · customs Written legislation · national local · international |
Support Services
External support services are often needed to take advantage of market and production opportunities. Lack of roads for transport of farm produce to the market is a clear constraint in some locations.
Other factors such as those highlighted in Box 7, however, are also important. Depending on the extension strategy and readiness of the farm household to respond to market forces, different support services will play varying roles.
Box 7 · Roads · Credit institutions · Suppliers · Subsidies · Farmers associations · Middlemen and brokers · Market information services Extension services |
Technical Information
Issues covered under this heading include information on different aspects of growing crops such as propagation techniques, nutrient requirements and harvesting technologies. Information can be provided from sources such as successful farmers, researchers, extension workers and private industry (see Box 8). An example of how technical information can influence a farmer's decision is mango planting. On poor soil with a pronounced dry season, mango seedlings die if appropriate technologies are not used for establishment. In Central Java farmers dig a hole of 1 x 1 x 1 meter, remove the poor soil and replace it with fertile red soil and organic manure. The next year, farmers dig 4 to 6 one-meter deep drills around the tree and add more organic manure. The purpose for this is to prevent mango roots from growing upwards seeking surface moisture and nutrients. Roots that are enriched with manure grow downwards seeking nutrients at deeper soil levels.
Box 8 · From other farmers (indigenous) · From researchers and extension workers (introduced from research) · From industry and brokers (introduced by industry) |
To summarise
The interaction between all the of factors discussed above is presented in figure 4. This may also be used as a framework for the selection of extension strategies which is discussed below.
