8.2 Study sites and data collection
8.3 Investment and socio-demographic traits of peasant households
8.4 Investment and characteristics of the households' production activities
8.5 Investment and income structure
8.6 Comparing investment data to the Agricultural Census
A survey of 155 small agricultural producers in the Central Sierra of Peru found that the majority of families invest less than US$385 per year (based on the 1996/97 agricultural year). Characteristics of investing (52 percent) and non-investing households (48 percent) are investigated. Income, savings and credit are all higher among investing households than non-investing households. Among the findings are that female-headed are more likely to invest than male-headed households and Quechua-speaking households are more likely to invest than Spanish-speaking households. The survey reveals that the majority of agricultural investments (69 percent by value) are not registered in the national agricultural census, indicating a serious omission in the national database. The survey also reveals the importance of local funding to finance small producers' investments. Nearly three-quarters (71 percent) of the investments were financed with family or communal funds. In addition, 45 percent of investments occurred with communal assistance, such as labour or sponsorship, indicating the importance of social networks. When asked about investment priorities, reforestation was the most desired future investment, followed by acquisition of more breeding livestock.
For small agricultural producers food security is synonymous with adequate production. They may eat much of what they produce or sell it to buy food and other items. Their ability to produce enough to ensure household food security depends on the amount and quality of resources they have available (land, labour, seed, tools, etc.). Investments in the quantity or quality of household resources enhance their production capacity. For example, small producers can acquire more land or improve existing land by fencing, irrigation, terracing, or other methods.
In order to understand how agricultural investments enhance production capacity and productivity, one must have accurate data on investments and understand what factors influence decisions to invest. Most countries collect data on land use and improvements, agricultural machinery and livestock. Changes in these series reflect gross agricultural investment. However, these series reflect the investments of larger producers rather than the more vulnerable small producer. For example, many small producers may not utilize machinery, but do invest in manual tools to enhance production. In addition, national data series on investment reflect an exploitative rather than regenerative relationship with natural resources. Land "improvements" generally include clearing land of natural vegetation, but not reforestation.
The primary objective of this study is to determine what factors influence the investment decisions of the most vulnerable group of agricultural producers, small peasant households. In addition, future investment priorities of small producers are investigated. A second overall objective is to determine what types of small-producer investments are captured by and reflected in the Agricultural Census, as well as to estimate their value. This has implications for tracking small producers' investments that in turn are necessary to implement programmes and policies to encourage investment and enhance productivity.
These questions will be investigated utilizing a survey of 155 small producers in the Central Sierra of Peru. Households in this region rely upon agriculture as the primary source of income and food. Agriculture is dominated by small producers in the region, most of whom produce for autoconsumption. Two representative communities were interviewed: Quilcas and Pazos, in the Departments of Junín and Huancavelica, respectively. These communities differ in their proximity to the major market of Huancayo as well as in ethnicity. Quilcas is exclusively Spanish-speaking, while Pazos has a large Quechua-speaking population.
The sample has been divided into two groups: households that made investments and those that made no investments in their production capacity during the 1996/97 crop year. Characteristics of each group are identified and compared. Variables considered include: the frequency of various types of investments, the demographic and production-related characteristics of the households, their sources of income, savings and borrowing patterns, capital assets, the way in which the women's time was distributed and decision-making roles with regard to various farm tasks.
The following section describes how the survey data were collected and provides general information about the areas selected for the study. The subsequent sections investigate characteristics of investing and non-investing small producers including socio-demographic traits of the households, characteristics of their production activities and amount and sources of income. The survey findings are compared with the Agricultural Census returns in order to determine what types of investments made by small-scale producers are reflected in national statistics. Correlation statistics of investment and particular variables are calculated. The role of women in investment decision-making and how it is related to their time use is also investigated.
The study entailed working with rural households in the highlands of Peru. These households rely primarily on agriculture, are poor and have small landholdings. Much of their production is for autoconsumption. Their use of inputs and levels of investment are lower than in the export oriented coastal regions.
Huancayo is the capital city of the Department of Junín located in the central highlands of Peru. It is typical of the highlands of Peru. Due to the mountainous terrain, Huancayo is accessible primarily by ground transportation. It is located about eight hours east of Lima.
The town of Quilcas was chosen as the site for the pilot survey. Quilcas is located at a distance of three km from Huancayo at an altitude of 3 300 metres above sea level. In 1993, the district of Quilcas had a population of 3 508, with 53 percent of the population living in town and 47 percent in the outlying, rural area (INEI, 1996).
For purposes of comparison, a second community located at a distance from Huancayo was sought and the institutional contacts that were made led to the selection of the community of Pazos. The community of Pazos is located in Tayacaja Province in the Department of Huancavelica at a distance of 26 km from the city of Huancayo and at an altitude of 3 840 metres above sea level. As of 1993 (INEI, 1996), it had a population of 7 805, with 22 percent of the inhabitants living in town and 78 percent in the rural zone. Quechua is the mother tongue for 47 percent of the population, followed by Spanish with 35 percent.
The relative distance separating these two communities from the city of Huancayo represents their ability to market their agricultural products, seek off-farm income, purchase needed productive inputs and access services. By public transportation it takes only 15 minutes to reach Quilcas from Huancayo, whereas the trip to Pazos takes an hour. Quilcas can be reached via regularly scheduled public transportation that operates all day, every day (until 2200 hours). Pazos, on the other hand, has regularly scheduled transportation service only between 0600 hours and noon on Saturdays (the day the open-air market is held). During the rest of the week, transportation is via private vehicle (farm trucks and vans) or buses that occasionally pass through the town.
Both communities rely predominantly on agriculture for income. In Quilcas, 61 percent of the economically active population is employed in resource-based industries (agriculture, livestock, hunting, forestry and mining and quarrying), 25 percent in service activities and 14 percent in manufacturing. Most agricultural producers have small landholdings and are poor. A total of 80.2 percent of the children in the first year of primary school suffer from chronic malnutrition and women head 34.4 percent of households. As an indicator of housing conditions, 27 percent of the households in the district of Quilcas lack sewers, running water and electricity, 40 percent have neither running water nor sewer systems and 52 percent do not have electricity. Regarding education, 13 percent of the population aged five and above has had no education, 55 percent have a primary education and 22 percent have a secondary education (INEI, 1994).
In Pazos, an estimated 89 percent of the economically active population is employed in resource-based industries (agriculture and livestock), seven percent in services and four percent in manufacturing. A total of 78 percent of the children in the first year of primary school are chronically undernourished and women head 23.5 percent of households. With regard to housing conditions, 53 percent of the households lack sewers, running water and electricity, 57 percent have neither running water nor sewer systems and 85 percent do not have electricity. As for education, 22 percent have had no education, 56 percent have a primary education and 16 percent have a secondary education (INEI, 1994).
The differences between the two areas can be accounted for by Quilcas' proximity to the bustling urban centre of Huancayo. In relative terms, when compared with the population of Pazos, the people of Quilcas are more educated and have greater access to running water, sewer systems and electricity. In economic terms, the population of Pazos is primarily rural and farming and animal husbandry are the main occupations. In contrast, the population of Quilcas is fairly evenly distributed between rural and urban areas and is more diversified among farming, animal husbandry, manufacturing and services.
The size of the sample was set at 155 households: 85 in Pazos and 70 in Quilcas (the difference in number being justified by the fact that Pazos has a larger population). In making up the survey sample, the following selection criteria were used:
The following sections are based on the survey results for the sample, which was divided into those households that made some sort of productive investment in the 1996/97 crop year and those that did not. These represent profiles of investor and non-investor families. As part of this analysis, an attempt will be made to identify particular features of each of the two groups.
The investments made by these households on their farms mainly involved the construction of boundary markers, fences, ditches or channels and irrigation infrastructure (Velazco, 1998, Table 6.1.2). The average value of those families investing was 692 New Soles2 (US$266). Table 8.1 shows the different ranges of investment levels, broken down by district. The results show that 31 percent of the households in Pazos made no investment while 69 percent did invest. As for the amounts invested, 53 percent of the latter category of households invested less than 200 New Soles, 29 percent invested between 200 and 1 000 New Soles and 18 percent invested more than 1 000 New Soles.
TABLE 8.1
Distribution of the Value of Investment by Community
Pazos |
Quilcas |
Total |
||||
Cases |
Percent |
Cases |
Percent |
Cases |
Percent |
|
No investment |
26 |
30.6 |
49 |
70 |
75 |
48.4 |
1-50 New Soles |
11 |
12.9 |
8 |
11.4 |
19 |
12.3 |
51- 200 New Soles |
20 |
23.5 |
4 |
5.7 |
24 |
15.5 |
201-500 New Soles |
8 |
9.4 |
2 |
2.9 |
10 |
6.4 |
501-1 000 New Soles |
9 |
10.6 |
3 |
4.3 |
12 |
7.7 |
1 001-2 000 New Soles |
5 |
5.9 |
1 |
1.4 |
6 |
3.9 |
2 001-3 000 New Soles |
4 |
4.7 |
1 |
1.4 |
5 |
3.2 |
> 3 000 New Soles |
2 |
2.4 |
2 |
2.9 |
4 |
2.6 |
Total |
85 |
100 |
70 |
100 |
155 |
100 |
Note: At the time of the survey, the exchange rate was US$1.00 = 2.6 New Soles.
In the case of Quilcas, 70 percent of the households did not make any investment and 30 percent did. The breakdown of the sums invested is as follows: 57 percent invested less than 200 New Soles, 24 percent invested between 200 and 1 000 New Soles and 19 percent invested more than 1 000 New Soles.
The distribution of investment levels in the two communities is apparently similar, although a majority of the households in Quilcas did not make any investment. When household members were asked to state the main reason why they did not make any investment in their farm, 61 percent of all the non-investor households felt "it wasn't necessary" and 34 percent said it was because of a "lack of money".
In order to examine how farm income is related to investment, Table 8.2 shows what the farmers thought about the prices received for the agricultural products they sold. A majority thought that the price levels for the 1996/97 crop year were not good. Investors and non-investors alike shared this opinion. Thus, invest-ments were not being driven by exclusively by returns to products.
TABLE 8.2
Small-Producer Opinions about Prices Received for Agricultural Products
Prices were good |
Prices were not good |
Total |
|
Pazos families |
|
|
82 |
Quilcas families |
|
|
31 |
All families |
|
|
113 |
In both Quilcas and Pazos, the population is organized on the basis of farm family units. Insofar as the household structure is concerned (Table 8.3), the average size of the investor families is 5.57 members and that of the non-investor families is 5.65. The average number of children per family is 4.03 and 3.65, respectively.
TABLE 8.3
Demographic Characteristics of Survey Households
Investors |
Non-investors |
|||||
Pazos |
Quilcas |
Total |
Pazos |
Quilcas |
Total |
|
Number of households |
59 |
21 |
80 |
26 |
49 |
75 |
Household size |
5.5 |
6.4 |
5.8 |
5.4 |
5.8 |
5.7 |
Number of children |
4.0 |
4.1 |
4.03 |
3.6 |
3.7 |
3.65 |
Household head |
||||||
Age (years) |
42.2 |
45.5 |
43.1 |
40.7 |
44.6 |
43.2 |
Years living in community |
38.6 |
35.1 |
37.7 |
38.7 |
40.8 |
40.1 |
Male HH heads (percent) |
78 |
57 |
73 |
80 |
76 |
77 |
Female HH heads (percent) |
22 |
43 |
28 |
20 |
24 |
23 |
Level of education (percent): |
||||||
None |
10 |
14 |
11 |
0 |
7 |
4.2 |
Primary |
34 |
48 |
38 |
40 |
50 |
46.5 |
Secondary |
54 |
38 |
50 |
56 |
41 |
46.5 |
Technical |
0 |
0 |
0 |
4 |
0 |
1.4 |
University |
2 |
0 |
1 |
0 |
2 |
1.4 |
If not completed primary school, can (percent): |
||||||
Read a newspaper |
67 |
64 |
66 |
63 |
56 |
58 |
Write a letter |
67 |
64 |
66 |
50 |
63 |
58 |
Speak fluent Spanish |
79 |
100 |
86 |
88 |
100 |
96 |
Mother tongue (percent): |
||||||
Spanish |
30.5 |
95 |
47.5 |
40 |
100 |
79 |
Quechua |
69.5 |
5 |
52.5 |
60 |
0 |
21 |
A majority of household heads is male. However, in the case of Quilcas, far more heads of investing households were female (43 percent) than in Pazos (22 percent). Among investor families, 11 percent of the heads of household have had no formal education at all, 37.5 percent have a primary education and 50 percent have a secondary education. Among the non-investor families, 4.2 percent of the heads of household have had no formal education whatsoever and 46.5 percent have attended primary and/or secondary school.
An examination of the activities performed by these households attests that the chief activity of the households is agriculture. Given the environment in which these families live, the most significant development to be noted is how they have diversified their production activities around their agricultural, land-based core activity (Table 8.4). Most of the crops are rain-fed; the use of irrigation is very limited. The types of crops vary, but the most common ones are potatoes, maize and natural pastures (Table 8.5).
TABLE 8.4
Distribution of Household Income and Expenses (percent)
Investors |
Non-investors |
|||||
Quilcas |
Pazos |
Total |
Quilcas |
Pazos |
Total |
|
Income Source |
||||||
Crops |
32 |
57 |
48 |
51 |
59 |
55 |
Crop derivatives |
<1 |
4 |
2 |
1 |
7 |
3 |
Livestock products |
8 |
1 |
4 |
4 |
1 |
3 |
Wages |
27 |
20 |
22 |
33 |
24 |
29 |
Occasional activities |
1 |
1 |
1 |
<1 |
0 |
0 |
Sale of animals |
32 |
17 |
23 |
11 |
9 |
10 |
Agricultural Expenses |
||||||
Livestock purchases |
22 |
22 |
22 |
22 |
4 |
16 |
Crop activities |
48 |
68 |
56 |
65 |
88 |
73 |
Livestock activities |
30 |
10 |
22 |
13 |
8 |
11 |
TABLE 8.5
Distribution of Principle Crops as a Percent of Cultivated Parcels (percent)
Investors |
Non-investors |
|||||
Pazos |
Quilcas |
Total |
Pazos |
Quilcas |
Total |
|
Potato |
62 |
33 |
55 |
64 |
31 |
45 |
Maize |
4 |
46 |
12 |
2 |
41 |
25 |
Peas |
3 |
3 |
3 |
1 |
2 |
|
Beans |
7 |
8 |
7 |
7 |
7 |
7 |
Olluco (a tuber) |
7 |
4 |
6 |
2 |
2 |
2 |
Barley |
1 |
1 |
5 |
1 |
2 |
|
Oca oxalis (a tuber) |
3 |
3 |
3 |
1 |
||
Oats |
3 |
3 |
4 |
|
2 |
|
Quinoa (a grain) |
1 |
1 |
3 |
1 |
||
Natural pasture |
7 |
9 |
7 |
3 |
15 |
10 |
Improved pasture |
1 |
1 |
1 |
2 |
2 |
|
Mashwa (a tuber) |
1 |
1 |
3 |
1 |
||
Land is an asset that is in scarce supply, but even though it is a highly limited factor of production, it serves as the foundation for the principal activity of these family units. Most farms are very small (Table 8.6). Of the investor families, 28.75 percent own less than one hectare, 42.5 percent own one to three hectares and 29 percent own more than three hectares. Among non-investor families, 66.7 percent own less than one hectare, 15 percent own one to three hectares and 19 percent own more than three hectares. Not all the plots of land owned by these families are similar in size or soil quality. These circumstances are reflected in differences in production and income-generation among the households. The area of cultivated land is related significantly to investment of the overall sample and Quilcas, in particular.
TABLE 8.6
Production Characteristics of Households
Investors |
Non-investors |
|||||
Pazos |
Quilcas |
Total |
Pazos |
Quilcas |
Total |
|
Households |
59 |
21 |
80 |
26 |
49 |
75 |
Cultivated area (ha) |
2.2 |
1.3* |
1.97* |
1.5 |
0.7* |
0.99* |
Parcels per household |
8.2 |
5 |
7.4 |
8.7 |
4.8 |
6.2 |
Farm Size (percent): |
||||||
< 0.5 ha |
5 |
57 |
19 |
27 |
63 |
51 |
0.5-1.0 ha |
12 |
5 |
10 |
23 |
12 |
16 |
1.1-2.0 ha |
34 |
5 |
26 |
19 |
4 |
9 |
2.1-3.0 ha |
17 |
14 |
16 |
4 |
6 |
5 |
3.1-4.0 ha |
8 |
5 |
8 |
4 |
2 |
3 |
>4.0 ha |
24 |
14 |
21 |
23 |
13 |
16 |
Production 1996/97: |
||||||
Potato area (ha) |
0.41 |
0.57 |
0.43 |
0.33 |
2.62 |
1.23 |
Potato yield (kg/ha) |
8 333 |
9 648 |
8 491 |
10 151 |
17 050 |
12 860 |
Maize area (ha) |
0.28 |
0.15 |
0.18 |
0.15 |
0.11 |
0.11 |
Maize yield (kg/ha) |
3 769 |
7 197 |
6 297 |
13 226 |
8 277 |
8 442 |
Bean area (ha) |
0.34 |
0.25 |
0.32 |
0.12 |
0.09 |
0.10 |
Bean yield (kg/ha) |
7 444 |
4 504 |
6 686 |
10 321 |
16 350 |
13 697 |
Crop Utilization (percent): |
||||||
Potato |
||||||
Autoconsumption |
13 |
12.5 |
12.9 |
12 |
17.5 |
14.7 |
Sale |
75 |
80.8 |
76.2 |
70.6 |
66 |
68.4 |
Barter |
1 |
0.4 |
0.9 |
0.9 |
0.5 |
0.7 |
Seed |
11 |
6.3 |
10.0 |
16.5 |
16 |
16.2 |
Maize |
||||||
Autoconsumption |
9.7 |
53.7 |
32.3 |
11.3 |
45.9 |
42 |
Sale |
81.9 |
26.1 |
53.3 |
84 |
38.6 |
44 |
Barter |
0 |
4.8 |
2.5 |
0.25 |
2.4 |
2.1 |
Seed |
8.4 |
15.4 |
11.9 |
4.45 |
13.1 |
11.9 |
Beans |
||||||
Autoconsumption |
37.1 |
47.7 |
37.9 |
20.7 |
54.2 |
47 |
Sale |
54.4 |
25.2 |
52.1 |
68.9 |
30.4 |
38.6 |
Barter |
0.7 |
0.9 |
0.7 |
2.1 |
2.7 |
2.5 |
Seed |
7.8 |
26.2 |
9.3 |
8.3 |
12.7 |
11.9 |
*significant at five percent level
TABLE 8.7
Availability of Water and Use of Fertilizers on Parcels of Survey Households
Investors |
Non-investors |
|||||
Pazos |
Quilcas |
Total |
Pazos |
Quilcas |
Total |
|
Availability of water: |
||||||
Year-round |
131 |
18 |
149 |
45 |
9 |
54 |
Part of year |
80 |
24 |
104 |
29 |
129 |
158 |
Dryland |
274 |
63 |
337 |
151 |
99 |
250 |
Total parcels |
485 |
105 |
590 |
225 |
237 |
462 |
Type of fertilizer used for crops: |
||||||
Organic |
76 |
30 |
106 |
22 |
53 |
75 |
Chemical |
111 |
18 |
129 |
58 |
39 |
97 |
Both |
129 |
40 |
169 |
57 |
84 |
141 |
Neither |
62 |
9 |
71 |
14 |
35 |
49 |
Total parcels |
378 |
97 |
475 |
151 |
211 |
362 |
TABLE 8.8
Use and Tenancy of Land of Survey Households
Investors |
Non-investors |
|||||
Pazos |
Quilcas |
Total |
Pazos |
Quilcas |
Total |
|
Number of Parcels |
485 |
105 |
590 |
225 |
237 |
462 |
Use of Parcel: |
||||||
Crops |
348 |
89 |
437 |
144 |
178 |
322 |
Fallow |
104 |
6 |
110 |
74 |
25 |
99 |
Pasture |
27 |
8 |
35 |
7 |
31 |
38 |
Temporary Pasture |
6 |
0 |
6 |
0 |
0 |
0 |
Crops and Pasture |
0 |
0 |
0 |
0 |
3 |
3 |
Brick making |
0 |
2 |
2 |
0 |
0 |
0 |
Type of Tenancy: |
||||||
Owned |
431 |
86 |
517 |
179 |
186 |
365 |
Rented |
15 |
14 |
29 |
2 |
30 |
32 |
Share-cropped |
14 |
4 |
18 |
6 |
19 |
25 |
Communal |
22 |
0 |
22 |
38 |
2 |
40 |
Partially rented |
0 |
1 |
1 |
0 |
0 |
0 |
Appropriated |
3 |
0 |
3 |
0 |
0 |
0 |
Surprisingly, the yields of the non-investor households' potato, maize and broad bean crops were higher than those of investors. In addition, the coefficients of variation for these households were higher as well, which indicates that the yields per hectare vary more. These yield differences occur despite the fact that investors (20 percent) are more likely than non-investors (12 percent) to have water year round (Table 8.7). There were no differences in how the land was distributed among uses (Table 8.8). Nor were there differences found between the two types of households' patterns of fertilizer use (Table 8.7). Investors tend to own a higher proportion of their land (88 percent) than non-investors (79 percent) do (Table 8.8).
Little difference was found in how the crops were utilized (Table 8.6). In the case of potatoes, the percentage of output that was sold was somewhat higher (77 percent) for investor households than non-investor households (68 percent), while the proportion used in barter was similar: 0.7 percent for non-investor households and 0.9 percent for investors. On-farm consumption was similar, 12.9 percent of production for investor households and 14.7 percent for non-investor households. A smaller proportion of potato seed was used among investor households, ten percent versus 16 percent for non-investors. This is consistent with the larger landholdings of investor families.
In the case of maize, on-farm consumption amounted to 32 percent for investor households and the amount sold represented 53.3 percent of total output. In the non-investor group, a similar pattern was found: 44 percent of the harvest was sold, 42 percent was used for on-farm consumption and the rest was used for barter and seed. Thus, a key conclusion to be drawn with regard to the use of farm output is that there is little difference between non-investor and investor households. The largest proportion of production is sold, followed by autoconsumption, seed and barter. In the case of maize and potato, the community of Pazos sells a larger percent. Given the greater proportion of potato sold in both communities, potatoes represent an important source of agricultural income.
It is interesting to note that the community that is farther away from Huancayo, Pazos, uses this city as a commercial centre for the sale of its agricultural produce and processed goods, whereas the settlement that is closer to Huancayo, Quilcas, tends to sell its output within the community. When asked about where they sell their potatoes, 84 percent of the peasant farmers from Pazos said that they sell them in Huancayo and five percent said they market them within the community. In the case of Quilcas, the situation was more variable, with 18 percent selling their output in Huancayo, 18.2 percent marketing it outside the community, 32 percent in the community and 14 percent selling their produce on their farm to dealers (Velazco, 1998, Tables 2.5.1.3-2.5.3.6).
In the case of maize, 78 percent of the farmers from Pazos sell their output in Huancayo and the rest market it in the community. For the marketing of processed products (chuño, dried potatoes and poultry baskets), the main point of sale for Pazos' farmers is Huancayo (75 percent). For producers in Quilcas, these products are mainly offered within the community. In Pazos, animal products (milk, wool, cheese and eggs) are sold both in the community and in Huancayo, especially in the case of meat. In Quilcas, these products are offered chiefly within the community (Velazco, 1998, Tables 2.5.1.3-2.5.3.6).
An analysis of the income structure in these communities demonstrates just how diversified are the activities conducted by these farm families (Table 8.4). In Quilcas, the investor households derive the largest portion of their income from the sale of farm animals (32 percent); their crops provide 31 percent of their income and wages are the source of 27 percent. For the non-investor households, livestock provides 11 percent of their income, crops generate 51 percent and wage labour accounts for 33 percent. In Pazos, the investor households obtain 57 percent of their monetary income from their crops, 20 percent from wage labour and 17 percent from livestock. The non-investor households follow the same pattern, with the corresponding figures being 59, 24 and nine percent, respectively.
Generally speaking, crops and livestock provide the bulk of these households' income. The amount of income derived from wages indicates the importance of labour migration as an income-supplementation strategy. Very little income is earned from products derived from crops or livestock.
The sale of farm animals is an important strategy, along with the sale of casual labour. In most cases livestock is the second-most important source of income, after crops. The survey did not reveal any significant difference between the two communities' patterns of livestock ownership (Velazco, 1998, Tables 2.7.2 and 2.7.3). In both cases the main types of animals that are raised are sheep, poultry, guinea pigs and pigs. Large livestock (oxen, horses and donkeys) are used as draught animals as well as a source of food and processed products for on-farm consumption or sale.
Livestock's importance as an income-generating strategy derives chiefly from the possibility of raising stock and smaller animals (poultry and guinea pigs) that can then be sold at the Sunday market; the income earned from their sale is used to purchase a limited amount of essential goods. In addition, they are an important source of protein for the family.
The ownership of livestock can be regarded as a form of savings for farm households. The main advantage is that in times of economic difficulty, the animals can be sold off and they thus offer the household a rapid and certain way of obtaining cash. Given the relatively greater importance of livestock sales to investor households, livestock sales may serve as a means of financing investments.
The Agricultural Census gathers information on both modern and traditional types of capital assets used in crop farming and stock raising. The 1994 Census returns were largely corroborated by the survey findings in Pazos and Quilcas. The farmers own very little heavy agricultural machinery (only three tractors, one harvester, one electric generator and four pick-up trucks were counted) but own considerably more traditional types of equipment, including such implements as pitchforks, shovels, machetes, sickles, scythes, hand-held ploughs, picks and hoes. The types of capital goods used in livestock activities include harnesses, reins and straps, layer hens, improved stock, knives, milking machines, buckets, sacks, bags, shears and milk cows. The information collected in the survey also covers the condition of the equipment; most of the traditional equipment was classified as "used."
The Agricultural Census does not cover capital goods or assets relating to processing agricultural products. This omission may have serious implications in terms of those rural households that have diversified their activities and supplement crop-farming and stock-raising activities with income earned by the same household from the processing of agricultural inputs. In the Quilcas and Pazos survey, the following assets were identified: saws, hammers, sewing machines and milk containers, among others.
The items covered in both the survey of small-scale producers and the national census are: purchase of breeding stock, purchase of milk cows, nurseries, seedbeds, stables, dipping tanks, water troughs, fences, retaining walls, storehouses or tanks and workshops (INEI, 1996, section XIV, question 98). However, the Agricultural Census does not specify whether the purchases are recent or not (INEI, 1996, section VII, question 71), making it impossible to assess when investments were made. The survey of small-scale producers identifies investments made in the 1996/97 crop year.
Another serious consideration is that the quantity of the investment is recorded in the Agricultural Census, but not its value. For example, under agricultural facilities, the options given are storerooms or barns, shearing sheds, silos, reservoirs, chicken coops, milking sheds, dipping tanks, barbed-wire fences, electrified fences, chicken-wire fences, scaffolding and terraces (INEI, 1996, section XIV, question 98). The advantage offered by the survey of farm households is that it includes the cost of improvements, additional investments, investment financing and the households' or the community's participation in their execution.
In addition some of the items not covered in the Agricultural Census which are included under "investments and improvements" in the survey of small-scale producers are:
Using the data from the small-scale producer survey, Table 8.9 presents the value of the investments that are included in the Agricultural Census as well as those that are not. An average of only 31 percent of the value of the investments made by small-scale farmers would be recorded by the Census, which means that 69 percent was not. When broken down by community, only 17 percent of the investments in Quilcas would be recorded by the Agricultural Census, whereas 39 percent would be recorded in Pazos. This indicates that a majority of the investments made by small-scale producers are being omitted in the agrarian statistics compiled nationally.
Table 8.9 Value of Small-Scale Agricultural Investments (in New Soles)
Community |
Total |
Recorded in Census |
Not recorded |
Quilcas |
15 898 |
2 820 |
13 078 |
Pazos |
28 720 |
11 094 |
17 626 |
Total sample |
44 618 |
13 914 |
30 704 |
Note: "Recorded" covers the items included in the 1994 Agricultural Census schedule: breeding stock, retaining walls, nurseries, seedbeds, dipping tanks, storehouses or tanks and workshops, fences and soil improvement. "Not Recorded" includes: reforestation, improvements in permanent crops, ditches and channels, roads, bridges, running water, electricity hook-ups, training courses, cropping improvements, home construction and improvements and others.
In the case of Pazos, the main investment items recorded include dipping tanks (36 percent), the construction of nurseries and seedbeds (27 percent) and retaining walls (13 percent). In all, 32 percent of the investments were carried out with help from the community and 64 percent were not. Some of the main types of investments that were not recorded were the construction of housing (24 percent), reforestation (21 percent), ditches and channels (14 percent) and improvements in the production of permanent crops (21 percent). On average, 32 percent of these investments were completed with community assistance and 63 percent were not.
In Quilcas, the recorded investments included the following items: dipping tanks (36 percent), nurseries and seedbeds (23 percent) and the purchase of milk cows (17 percent). In value terms, the community was involved in 35 percent of these investments and the investor households made 65 percent of these investments on their own. The unrecorded investments included the category "other"2 (46 percent), roads and bridges (38 percent) and electricity hook-ups (12 percent). Community involvement was greatest in these cases (85 percent), since the community did not assist with only 15 percent of these investments, measured in terms of value.
The survey also revealed future investment priorities. In both communities, reforestation was the highest priority investment; 43.5 percent of households in Pazos and 24.3 percent in Quilcas chose it. This is particularly revealing that the highest investment priority of these small-scale producers is not identified in the national database as an investment. Clearly, this puts policy-makers and project designers at a disadvantage when attempting to develop appropriate policies and projects.
Purchase of breeding stock came in as the second most important priority for future investment for both Pazos' (29.4 percent) and Quilcas' (23 percent) households. Rounding out the third and fourth highest priorities for Quilcas were ditches and channels for irrigation (16 percent) and training course (11.4 percent) of households, respectively. Households in Pazos were in agreement about a larger array of future investment priorities: training courses (19 percent), fencing (19 percent), purchase of milk cows (19 percent) and ditches and channels for irrigation (18 percent).
Table 8.10 provides a comparison of the average values of a series of variables for the investor and non-investor households. In the community of Pazos, investor households have more cash savings than non-investor households do. They also have greater access to credit, have higher levels of on-farm consumption and more cash and total farm income. In addition, investor households have more agricultural assets and more assets of the types used in the production of derived products, measured in terms of value. However, non-investor households have more livestock-related assets measured in value terms.
TABLE 8.10
Indicators of Average Household Investment (in New Soles)
Investors |
Non-investors |
|||||
Pazos |
Quilcas |
Total |
Pazos |
Quilcas |
Total |
|
Households (number) |
59 |
21 |
80 |
26 |
49 |
75 |
Investment |
622 |
888 |
692 |
|||
Cash Savings |
298 |
785 |
426 |
171 |
0 |
59 |
Cash Credit |
548 |
187 |
453 |
289 |
278 |
282 |
Autoconsumption |
4 217 |
3 569 |
4 047 |
2 380 |
2 523 |
2 473 |
Agricultural Income |
5 353 |
8 116 |
6 078 |
3 823 |
3 092 |
3 345 |
Cash Income |
6 742 |
11 280 |
7 933 |
5 004 |
4 600 |
4 740 |
Total Income |
10 959 |
14 849 |
11 980 |
7 384 |
7 123 |
7 213 |
In Quilcas, only investor households have cash savings. However, non-investor households have access to higher levels of credit. This situation may have something to do with this community's more diversified income structure, in which non-agricultural rural activities may demand more of these house-holds' time and effort. As in the case of Pazos, the investor households have higher levels of on-farm consumption, agricultural income and total income. The non-investor households, on the other hand, have considerably higher levels of crop-farming, livestock and derived-product assets. This situation may reflect the relatively lower demand for production-related investments existing among the households in Quilcas, where many households said they had not invested because "it wasn't necessary;" in other words, they already had the production equipment and assets they needed.
TABLE 8.11
Correlation Coefficients of Total Household Investment and Other Variables
Variable |
Total sample |
Quilcas |
Pazos |
Crop-farming income |
0.315* |
0.45* |
0.12 |
Agricultural income |
0.291* |
0.38* |
0.14 |
Total monetary income |
0.272* |
0.35* |
0.15 |
Spending on education |
0.256* |
0.33* |
0.17 |
Total savings |
0.438* |
0.51* |
0.31* |
Hectares under cultivation |
0.33* |
0.56* |
0.11 |
Education - head of household |
0.083 |
0.03 |
0.19 |
Total value of assets |
- 0.037 |
0.04 |
-0.01 |
*significant at five percent
Simple correlation coefficients are presented in Table 8.11 to identify relationships between household investment levels and other variables. This is done for the whole sample, investor households in Quilcas and investor households in Pazos. Although simple correlation statistics only identify linear relationships and do not determine causality, the following relationships were identified. A positive, statistically significant linear correlation exists between household investment and crop income, agricultural income and total cash income. The coefficients are statistically significant at 95 percent for the total sample and Quilcas; the degree of significance is lower for Pazos, but the direct correlation is still evident.
Investor households have the larger farms, that is, greater number of hectares under cultivation. Larger farms require more investment, and may generate sufficient income necessary to enable investment. The latter is supported by the fact that investor households have significantly more savings in both communities. This underscores the importance of savings as a source of investment financing.
The level of education of the household head and the value of total assets do not have any significant relationship with the households' decisions regarding productive investments. However, spending on education is significantly correlated with household investment for the whole sample and the community of Quilcas. Therefore, households with the predisposition and ability to invest in agriculture are also investing in human capital.
TABLE 8.12
Amount of Investments According to Source
of Funds for Crop Year 1996/97 (in New Soles)
Pazos |
Quilcas |
Total |
||||
Amount |
Percent |
Amount |
Percent |
Amount |
Percent |
|
Family savings |
10 228 |
35.5 |
7 125 |
45 |
17 353 |
39 |
Personal savings |
3 128 |
11 |
523 |
3 |
3 651 |
8 |
Community |
3 806 |
13 |
7 070 |
44 |
10 876 |
24 |
Personal loans |
2 000 |
7 |
350 |
2 |
2 350 |
5 |
International cooperation |
4 200 |
15 |
0 |
0 |
4 200 |
9 |
NGOs |
2 500 |
8.5 |
0 |
0 |
2 500 |
7 |
Other |
2 858 |
10 |
830 |
6 |
3 688 |
8 |
Total |
28 720 |
100 |
15 898 |
100 |
44 618 |
100 |
To investigate how investments and improvements have been financed, Table 8.12 shows the importance of local or internal financing. In Pazos, 60 percent of the funding for the investments made during the last crop year came from within the community itself (36 percent from household savings, 11 percent from personal savings and 13 percent from the community). Funding from external sources (NGOs, international cooperation, government agencies and personal loans) financed 40 percent of the investments in terms of value.
In Quilcas, few external sources of financing were found to exist, as attested to by the fact that 92 percent of the investments were funded internally (Table 8.12). Household savings provided 45 percent of the funding for improvements and investments, the community was the source of another 44 percent and personal savings accounted for three percent. It would appear that community and household savings are the main strategy used for financing productive investments.
In addition to providing financial support, the community is also important in providing the social support and organization to assist household investment. By value, 44.3 percent of household investments were carried out with community assistance (Velazco, 1998, Tables 6.1.3.1 and 6.1.3.5). Community assistance is particularly important in Quilcas where 65 percent of investments are community assisted. The level in Pazos is just 35 percent indicating potential for development of community assistance projects. Because much of this work is non-monetary in nature, either through provision of labour or facilitation, this form of investment is not identified in censuses or official statistics. Therefore, they undercount the level of productive investments made by households. Investments in which the community participates include the following: reforestation, permanent crops, ditches and channels, roads, bridges, nurseries, seedbeds, dipping tanks and training courses.
An examination of the involvement of men and women in the types of investments and improvements made indicates that they participated to a similar degree in the following types of investments: reforestation, permanent crops, roads, bridges, nurseries, seedbeds, dipping tanks, training courses and home construction and improvements (Table 8.13). Males were more actively involved in the following categories: purchase of breeding stock and of milk cows, digging of irrigation ditches and channels, connections for running water, construction of retaining walls, storehouses and workshops, fencing and improvements in crop production and in soil quality.
Gender differentiation in investment decisions is related to differentiation of daily responsi-bilities. Women are primarily responsible for domestic matters and therefore actively participate in decisions related to domestic matters as well as closely related activities such as the distribution of production, pasturing, small-scale marketing and the production of handicrafts. Decisions usually made by the men are related to their daily responsibilities such as the assignment of field work, the purchase of fertilizers, the use of fields, the purchase of seeds and the completion of paperwork and procedural arrangements.
TABLE 8.13
Participation in Investment and Improvement
During 1996/97 Crop Year (percent)
Males |
Females |
Children |
|
Reforestation |
50 |
47 |
3 |
Perennial plantings |
58 |
40 |
2 |
Purchase breeding stock |
75 |
25 |
|
Purchase dairy cows |
100 |
|
|
Irrigation canals |
66 |
34 |
|
Roads and bridges |
51 |
49 |
|
Water installation |
100 |
||
Retaining walls |
85 |
15 |
|
Nurseries, seedbeds |
53 |
44 |
3 |
Electrification |
100 |
||
Dipping tanks |
60 |
40 |
|
Water troughs |
37 |
50 |
13 |
Storage sheds |
87 |
13 |
|
Training courses |
59 |
41 |
|
Fencing |
59 |
18 |
23 |
Soil improvements |
74 |
26 |
Household income and the production system influence gender specialization of tasks. In poorer families, more active participation by all the members of the household is called for. Therefore, women play a more important role and often stand in for their sons or husbands. In the case of crops, men mainly do land preparation, while women are in charge of seed selection. In the area of animal husbandry, men are usually responsible for dipping animals and administering medicine, shearing and tending wounds; women are generally in charge of milking, feeding and pasturing. In the case of domestic chores, men are mainly responsible for carpentry, fencing and the hauling manure, while women and children cook and do laundry.
The survey corroborated the findings of previous studies that have demonstrated the economic importance of peasant women (Zevallos, 1994). The role played by these women is not limited to the types of domestic activities involved in reproduction and the daily and generational maintenance of the family but also includes a visible and active presence in production activities.
TABLE 8.14
Women's Time Use During Different Periods of 1996/97 Crop Year
Harvest season |
Planting season |
Rest of year |
||||
Hours |
Percent |
Hours |
Percent |
Hours |
Percent |
|
Quilcas: |
||||||
Productive activities: |
10 |
42 |
10 |
42 |
2.5 |
10.5 |
Planting |
0 |
0 |
10 |
42 |
0 |
0 |
Harvesting |
10 |
42 |
0 |
0 |
0 |
0 |
Livestock |
0 |
0 |
0 |
0 |
2.5 |
10.5 |
Domestic activities: |
6 |
25 |
6 |
25 |
13 |
54 |
Cooking |
6 |
25 |
6 |
25 |
9.5 |
40 |
Wash clothes |
0 |
0 |
0 |
0 |
1.5 |
6 |
House cleaning |
0 |
0 |
0 |
0 |
2 |
8 |
Leisure: |
8 |
33 |
8 |
33 |
8.5 |
35.5 |
Eating |
2 |
8 |
2 |
8 |
2.5 |
10.5 |
Sleeping |
4 |
17 |
4 |
17 |
4.5 |
19 |
TV |
2 |
8 |
2 |
8 |
1.5 |
6 |
Total |
24 |
100 |
24 |
100 |
24 |
100 |
Pazos: |
||||||
Productive activities: |
10 |
42 |
9 |
37.5 |
1.5 |
6 |
Planting |
0 |
0 |
9 |
37.5 |
0 |
0 |
Harvesting |
10 |
42 |
0 |
0 |
0 |
0 |
Livestock |
0 |
0 |
0 |
0 |
1.5 |
6 |
Domestic activities: |
6 |
25 |
5 |
21 |
11.75 |
49 |
Cooking |
4 |
17 |
4 |
17 |
8 |
33.3 |
Wash clothes |
0 |
0 |
0 |
0 |
2.5 |
10.4 |
House cleaning |
0 |
0 |
0 |
0 |
1 |
4.2 |
Child care |
1.5 |
6 |
0 |
0 |
0 |
0 |
Husband care |
0.5 |
2 |
1 |
4 |
0.25 |
|
Leisure: |
8 |
33 |
10 |
41.5 |
10.75 |
45 |
Eating |
4 |
16.5 |
6 |
25 |
4 |
17 |
Sleeping |
4 |
16.5 |
4 |
16.5 |
5 |
21 |
TV |
0 |
0 |
0 |
0 |
1.25 |
5 |
Conversation |
0 |
0 |
0 |
0 |
0.25 |
1 |
Listen to radio |
0 |
0 |
0 |
0 |
0.25 |
|
Total |
24 |
100 |
24 |
100 |
24 |
100 |
Peasant women work alongside their husbands in the various stages of the agricultural production process (planting, harvesting, threshing, tending stock, cutting fodder, etc.). The range of production activities performed by women extends beyond crops to include handicrafts and raising livestock as well.
An examination of how women allocated their time to agricultural work shows that they work approximately ten hours a day during the harvest and 9.5 hours a day during the planting season. During the rest of the year their time is devoted mainly to domestic chores and care of animals. The time use data is reflective of their involvement in household decisions. They are involved in most agricultural decisions, but to a somewhat lesser degree than men. Women dominate domestic decisions; however, men have substantial control over spending decisions, even those related to domestic activities.
Table 8.14 indicates how women distribute their time among productive, reproductive and leisure activities. For women in Quilcas, during harvest and planting, production activities accounted for 42 percent of their day, reproductive activities for 25 percent, while leisure and personal care accounted for 33 percent of their day. During the rest of the year, production activities took up 10.5 percent of their time, reproductive activities accounted for 54 percent and personal care and leisure account for 35.5 percent. In Pazos, except during harvest, women spent somewhat less time than women in Quilcas did in productive and reproductive tasks.
The time use data indicate that women spend a substantial amount of time in domestic activities, particularly cooking. This severely limits their ability to devote time to productive activities. Even during the busy periods of harvest and planting, six hours a day are devoted to cooking. This time cannot be viewed as available for productive activities unless labour saving devices become available to reduce the domestic workload. In addition, childcare is generally a secondary activity masked by other domestic activities and may constrain women's ability to increase hours worked outside the home. Policies aimed at increasing women's involvement in agriculture need to take into account their domestic responsibilities because these have a direct impact on the well being of family members, particularly children.
The purpose of this paper was to investigate what investments small-scale producers make, what factors influence investment and whether they would be captured in the national agricultural database. To this end a survey of 155 households was conducted in two rural communities in the Peruvian highlands in February through March of 1998. The types of investments made by small-scale producers were compared to official statistics. The form used for the 1994 Agricultural Census was the main instrument employed for purposes of comparison because it is the most up-to-date reference available for rural households in Peru.
Overall, the level of investment was small, 82 percent of the households invested less than 1 000 New Soles (US$385) during the previous crop year. The average amount invested was US$266. The distribution of investments in terms of the sums involved follows a similar pattern in the two communities. Nearly 52 percent of all households did not invest at all during the 1996/97 crop year. The majority of the households in Quilcas did not make any investment (70 percent), versus only 31 percent in Pazos.
No major differences in terms of household composition, number of children, educational level of the head of household, or use of crops appear to exist between investor and non-investor families in these two communities. However, female-headed households, particularly in Quilcas were more likely to invest. In addition, Quechua-speaking households were more likely to invest than Spanish-speaking households were.
Factors related to whether a household invested included: possession of more cultivated lands, livestock sales, more savings (chiefly from household or community sources) and higher farm income.
The survey data indicated that households rely on a combination of the households' own funds and contributions or inputs from the community, with little input from external public and private agencies. The importance of community assistance is demonstrated by the fact that during the 1996/97 crop year 45 percent of the investments and improvements made were carried out with community assistance. The construction of infrastructure for public use, in particular, tends to be carried out as a community investment. This includes reforestation, ditches and channels, roads, bridges, nurseries, seedbeds, dipping tanks and training courses. The survey results demonstrate the importance of community organization in gaining access to public assets and in improving agricultural infrastructure.
It was found that the information compiled in the Agricultural Census does not cover assets or infrastructure used in the processing activities involved in producing derived farm or livestock products. While the investment information provided by the Agricultural Census covers the quantities of available agricultural infrastructure, the value of those investments is not indicated. A comparison of the Agricultural Census records on investment variables and those of the survey showed that, on average, 31 percent of the value of the investments made by small-scale producers was registered in the Agricultural Census. This situation gives cause for concern in terms of the formulation of policy recommendations for investment programmes intended for small-scale agriculture. The official statistics would appear to be somewhat unreliable, since they omit the majority of investment needs. In view of these circumstances, it is clear that more specific studies need to be conducted in order to determine the actual requirements of poor farm families.
INEI (Institución Nacional de Estadística e Informática). 1994. Censos Nacionales 1993. IX de Población y IV de Vivienda. Lima, INEI, September.
INEI. 1996. Censo Nacional Agropecuario III, 1994, resultados definitivos. Lima, INEI.
Velazco, J. 1998. Estadística descriptiva: Encuesta regional a pequeños productores sobre determinantes de la inversión agropecuaria en pequeñas parcelas. An unpublished report to the Food and Agriculture Organization, May 1998.
Zevallos, E. ed. 1994. De la costa a la sierra: mujer campesina. Lima, Stilo Novo y CEDEP.
1 The authors are grateful to all the following individuals who gave freely of their time and effort. Officials of SEPAR (an NGO based in Huancayo) provided contact with Ifigenia Meza of Quilcas and Irene Castro of Pazos, women leaders of the peasant community who played a key role in introducing the survey team to members of the communities. Gratitude is expressed to the Mayor of Quilcas, Daniel Rivas, for permission to use the Municipality's facilities while we were conducting the fieldwork in his community. Thanks are also due to the Mayor of Pazos, Zócimo Romero, the leaders of the peasant communities and each and every one of the 155 families who invited us into their homes and who shared their problems and hopes.
The Universidad Nacional del Centro participated in the study through the Dean of Social Sciences and, in particular, through Professor Norma Condezo, who was invariably willing to provide whatever assistance was required. The field work could not have been completed successfully without the efficiency, enthusiasm and hard work of the students of the Universidad Nacional del Centro of Huancayo who worked as interviewers: Angel Ccari (field supervisor), Daniel Rodríguez, Liz Obispo, Maribel Huarcaya, Luis Fabián, Cristina Navarro, Zulma Tiana and Nilda Paytan. Alberto Núñez was involved in all phases of the study and was in charge of processing the survey results. He was assisted in this task by Verónica Laos and Iván Rivera.
2 This category includes drainage ditches, growing potato crops for the use of the community, dredging ditches and channels, holding workshops and cleaning out gutters.
3 At the time the survey was conducted, February-March 1998, the exchange rate was US$ 1.00 = 2.60 New Soles.
