Nonfarm Employment towards Poverty Alleviation and Agricultural Productivity: The Case of Canaman, Camarines Sur

Abstract ―​

The Community-Based Monitoring System of Canaman for the year 2019 reveals a 22.44% urban-rural poverty gap, and a 64.35% poverty rate in the agricultural sector. Among the rural poor, 58.23% rely mainly on agriculture. With this information, alleviating poverty among rural farm households may lead to significant decreases in the poverty rate, as well as an improvement in the productivity of agriculture in the municipality. The study identified the determinants of sector-specific employment, and then investigated the role of rural nonfarm employment in improving productivity in the agricultural sector and reducing poverty in the municipality. Using a Probit model, it was identified that educational attainment was a significant factor in determining the sector an individual was employed in. Having a junior high school education increased the chance for nonfarm wage employment and self-employment. Having a college education increases the chance of being employed in the nonfarm sector which usually has the best occupations in terms of monetary compensation. Having a primary education increases the chance that an individual is engaged in own-farming while reducing the chance of employment in the nonfarm sector. Using a Tobit regression, it was found that nonfarm wage decreases investment in agricultural equipment such as fertilizer/pesticide sprayers and hand tractors, while nonfarm self-employment improved investment into such equipment. Wage earned as an agricultural wage laborer led to investments into sprayers but not into hand tractors. This reveals that providing nonfarm self-employment capacitation for rural farm households is a potential pathway to improving productivity. In terms of poverty reduction, all forms of employment reduced the probability of being poor except for being a wage worker in the agricultural sector. This tells us that the income from agricultural wage labor falls short of providing local farmers with enough income to meet their basic needs. It is revealed that providing opportunities for nonfarm self-employment can lead to improvements in productivity as well as a reduction in the poverty rate. Providing opportunities for nonfarm employment through higher education may also reduce poverty but would compete with promoting agricultural productivity due to the greater opportunity cost of high wage earners and competing interests.