Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=cbie20
Download by: [Universitas Maritim Raja Ali Haji] Date: 19 January 2016, At: 20:25
ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
THE CHANGING ROLE OF NON-FARM ACTIVITIES
IN AGRICULTURAL HOUSEHOLDS IN INDONESIA:
SOME INSIGHTS FROM THE AGRICULTURAL
CENSUSES
Anne Booth
To cite this article: Anne Booth (2002) THE CHANGING ROLE OF NON-FARM ACTIVITIES IN AGRICULTURAL HOUSEHOLDS IN INDONESIA: SOME INSIGHTS FROM THE
AGRICULTURAL CENSUSES, Bulletin of Indonesian Economic Studies, 38:2, 179-200, DOI: 10.1080/000749102320145048
To link to this article: http://dx.doi.org/10.1080/000749102320145048
Published online: 17 Jun 2010.
Submit your article to this journal
Article views: 114
View related articles
ISSN0007-4918print/ISSN1472-7234online/02/020179-22 ©2002Indonesia ProjectANU INTRODUCTION
The25yearsfrom1970to1995witnessed dramaticchangesintheroleofagricul -tureintheIndonesianeconomy.There wasamarkeddeclineintheproportion ofnationaloutput(GDP)accruingfrom theagricultural sector,andthepropor -tionofthelabourforceemployedinagri -culturealsofell.By1990,justunderhalf oftheemployedlabourforcewaswork -inginagriculture,accordingtothepopu -lationcensusofthatyear.Between1990 and1995theabsolutesizeoftheagricul -turallabourforcedeclined,andby1995 only44%oftheemployedlabourforce wasreportedintheintercensal popula -tionsurvey(Supas)as‘workinginagri -culture’.Thispercentagewaslowerfor thedenselypopulated inner islandsof JavaandBali,wheretheprocessofstruc -tural change and diversification away fromagriculturewasespeciallyrapid.If the absolute increase in the employed labourforcefrom1990to1995isdistrib
-utedbetweenurbanandruralareasand amongeconomicsectors,itisclearthat muchoftheriseinthenon-agricultural labourforceoccurredinurbanareas.In ruralareas,which accountedforabout one-thirdofthetotalincreaseinemploy -mentoverthesefiveyears,muchofthe growthoccurredinthetradeandservices sector (BPS 1992: tables 41.1–41.9; BPS 1996a:tables41.1–41.9).1
In 1995, the Supas reported that slightlyover50%ofallruralhouseholds in Indonesia(and almost 64% of rural householdsinJavaandBali)eitherdid not own agricultural land at all, or ownedlessthan0.25hectares.Itseems reasonabletoconcludethatmostofthese households would be earning at least partoftheirincomesfromnon-agricul -turalsources,andindeedtheSupasin -dicated that only 46% of households locatedinruralareas(ruralhouseholds constitute 65%ofallhouseholds) gave
THE
CHANGING
ROLE
OF
NON
-
FARM
ACTIVITIES
IN
AGRICULTURAL
HOUSEHOLDS
IN
INDONESIA:
SOME
INSIGHTS
FROM
THE
AGRICULTURAL
CENSUSES
AnneBooth
SchoolofOrientalandAfricanStudies(SOAS),UniversityofLondon
Theliteratureonoff-farmsourcesofincomeinruralareasofdevelopingcountries
continuestogrow.Thispaperusesdatafromthehouseholdincomesurveys car
-riedoutaspartofthe1983and1993agricultural censusestoexploreaspectsofthe
changingroleofoff-farmincome sourcesforagricultural householdsindifferent
partsofIndonesia.Thepaper examinesvariationsintheratioofoff-farmtototal
agricultural household incomeby holdingsize,by totalhouseholdincomeclass
and by province.Italsoexamines thelinkages between on-farmand off-farm
incomegrowth.Comparisons aremadewithfindingsfromotherpartsofAsiaand
elsewhereinthe developing world.
TABLE1 HouseholdIncomeSourcesandOwnershipofAgricultural Land,1995 (%ofhouseholds)
Urban Rural Urban+Rural
Indonesia Java–Bali Indonesia Java–Bali
Income source
Non-agricultural 29.4 17.8 47.2 52.5
Agricultural 2.1 30.1 32.2 24.9
Mixed
Mainly agricultural 0.9 8.6 9.5 9.9
Mainly non-agricultural 2.6 8.5 11.1 12.7
Total 35.0 65.0 100.0 100.0
Agriculturalland owned
None 89.1 37.3 44.3
Lessthan0.25hectares 3.7 13.2 19.5
Source:BPS(1996a):tables59.1–59.3,60.1–2.
theirsoleincomesourcein1995asagri -culture(table 1).Onthe otherhand,of the73%ofruralhouseholdsthatearned atleastpartoftheirincomefromagricul -ture,themajorityreportedthatagriculture waseitherthesoleorthemainsourceof theirincome.Clearlyitwouldbewrong toarguethattheagriculturalsector,even beforethecrisisof1997,wasnotanim -portant sourceof incomefor the great majorityofruralhouseholdsinIndone -sia,especiallyoutsideJavaandBali.2
Evenso,theevidencefromtheearly partofthe1990sshowsthatagriculture wasinsteadydecline,bothasasourceof employmentandasasourceofhouse -holdincome.Thisindeediswhatwould be expected given the rapid economic growthIndonesiaexperiencedfrom1970 to1995.Butthesebroadtrendsprovoke anumberofquestions.Howhasthede -clineinagricultureasasourceofemploy -ment and household income varied acrossIndonesia’svastarea?Hasitbeen confinedonlytotherapidlyindustrial -isingregions?Howhasthedeclinevar -iedbyhouseholdincomegroupandby household asset status? Have richer
households(definedintermsbothofsize ofoperatedholdingandoftotalhouse -holdincome)beenabletodiversifytheir sources of income more rapidly than poorerhouseholds?Theanswerstothese questionshaveimportantimplicationsfor understandingchangesinthedistribution ofincomeinruralareassincethe1970s. Afurthersetofquestionsrelatestohow theIndonesianexperiencecompareswith thatofotherrapidlyindustrialisingparts ofAsia.Howdothetrendsdiscernedin economies such as Taiwan’s since the 1950scomparewithIndonesia’smorere -centexperience?
The purposeof this paper isto cast somelightonthesequestions,usingdata collectedinthetwosamplesurveysof agricultural household incomes con -ductedaspartofthe1983and1993agri -culturalcensuses.3Thefocusisthuson
thesubsetofruralhouseholdsstillhav -ingatoeholdintheagricultural sector, inthesensethatatleastonefamilymem -ber isengaged inagricultural work.4 I
begin with a discussion of what these surveys show about changes in the sourcesofagriculturalhouseholdincome
TABLE2 IncomeAccruingtoAgricultural HouseholdsbyIncomeSource,1984and1993 (Rp‘000p.a.,1993pricesa)
Income 1984 1993 Increase
Source (%)
From agricultural holding 722 880 22
Foodcrops 382 399 5
Othercrops 182 264 45
Livestock 113 115 2
Fisheries 34 79 135
Forestry 12 23 94
Wagesandsalaries 328 387 18
Agricultural n.a 129
Non-agricultural n.a 258
Non-agriculturalactivities 144 189 31
Other 119 304 156
Total 1,313 1,760 34
a1984dataadjustedbythehouseholdconsumption componentoftheGDPdeflator.
Sources:BPS(1987):table9;BPS(1995a):tables1–5.
between1984and1993,bothatthena -tionallevelandbyprovince.
SOURCESOFAGRICULTURAL HOUSEHOLDINCOME
OVERTIMEANDSPACE
In1984theaverageannualagricultural household incomewasRp664,000(Rp 1,313,000in1993prices);nineyearslater ithadincreasedtoRp1,760,000(table2). Althoughthiswasasubstantialincrease inrealterms,thesenineyearsalsowit -nessedrapidgrowthinthenon-agricul -tural economy. Real growth in farm household incomes was rather slower thanrealgrowthintotalhouseholdex -pendituresas given inthenationalin -come statistics, indicating that farm incomesonaveragewerefallingbehind thoseinotherpartsoftheeconomy.This isindeedconfirmedbythedatafromthe Social Accounting Matrices (SAMs), which show thatallcategoriesof agri -culturalhouseholds(exceptthoseoper -atingverysmallholdings)experienced
somedeclineinincomesrelativetothe nationalaverage in the years 1985–93 (Booth2000:table7).Between1984and 1993,theproportionoftotalfarmhouse -holdincomethatcamefromoperatingthe farmholding(usahapertanian)fellfrom 55%to50%.Theproportionderivedfrom wagelabour(bothagriculturalandnon -agricultural) also fell, while that from othernon-agricultural activities stayed roughlyconstant.Themostrapidgrowth was in income derived from ‘other’ sources, which includedpensions and incomefromremittances(table2).
Wecanalsoexaminebyprovincethe changesintotalincomeaccruingtofarm households,andinthepercentage de -rived fromthefarm holding.By1993, when, on average, 50% of total farm household incomewas being derived fromthefarmholdingitself,sevenprov -inceswerederivingless than50% and two(WestJavaand Yogyakarta)were derivinglessthan40%(table3).Atthe otherendoftheprovincialdistribution,
TABLE3 TotalAnnualFarmHouseholdIncomeandSharefromthe FarmHolding,byProvince,1984and1993
Provincea TotalFarmHouseholdIncome Sharefrom FarmHolding %of
(Rp‘000) (%) All
Indonesia
1984 1993 1984 1993 Farm
Population
Nominal 1993 Aged
Pricesb 10+,1993
Bali 847 1,988 2,733 58.9 44.7 1.6
Riau 1,086 2,117 2,594 57.1 62.7 2.0
EKalimantan 702 1,483 2,439 61.3 54.4 1.0
Jambi 724 1,452 2,407 69.2 69.8 1.1
CKalimantan 853 1,775 2,123 60.4 58.6 1.4
SSumatra 878 1,450 2056 66.7 69.4 4.9
Aceh 791 1,412 1,987 60.3 60.0 2.9
SESulawesi 659 1,175 1,975 60.8 59.1 1.0
NSulawesi 907 1,454 1,956 56.3 46.1 1.7
WKalimantan 655 1,256 1,938 63.7 52.4 2.4
Yogyakarta 750 1,437 1,884 42.5 36.5 1.5
CSulawesi 836 1,722 1,879 57.5 52.4 1.4
NSumatra 735 1,556 1,871 55.2 55.8 4.7
SSulawesi 634 1,104 1,781 65.3 66.3 4.4
WSumatra 735 1,338 1,752 51.8 42.4 2.8
WJava 640 1,207 1,744 41.6 35.2 14.3
SKalimantan 574 1,027 1,714 50.0 45.4 2.1
Maluku 909 1,615 1,687 66.8 52.6 1.6
IrianJaya 770 958 1,653 73.8 63.0 1.7
CJava 609 1,195 1,635 50.4 40.7 14.1
Bengkulu 821 1,630 1,614 69.1 58.8 1.1
EastJava 593 1,140 1,585 58.0 51.3 18.4
NTB 523 1,041 1,578 62.7 52.0 1.8
NTT 621 1,189 1,573 72.6 61.2 3.7
ETimor 676 1,454 1,438 71.2 63.3 0.8
Lampung 590 1,149 1,418 63.1 57.8 5.7
Indonesia 664 1,313 1,760 55.0 50.0 100.0
Totalfarmhouseholdincome fromallsources
correlatedwithpercentageofincomefrom farmholding
1984 1993
r= 0.108 0.069
aProvincesarerankedbytotalfarmhouseholdincomein1993.
bThedeflatorusedisthehouseholdconsumptioncomponentoftheprovincialGDPdeflator,
asestimatedfromtheprovincialincomeaccounts.
Sources:BPS(1987,1995a,1994,1995e).
farmhouseholdsineightprovinceswere stilldependingonthefarmholdingfor over60%oftheirincome,andinthreeof these(Jambi,SouthSumatraandSouth Sulawesi)theproportionhadincreased between1984and1993.
Neitherin1984norin1993wasthere anysignificantcorrelationbetweentotal farmhouseholdincomefromallsources byprovinceandtheproportionderived fromthefarmholding.Thereweresev -eral provinces (Jambi, Riau, South Sumatra) wheretotal farm household incomefromallsourceswaswellabove thenationalaverageandwheretherewas arelativelyhighdependenceonincome fromthefarmholding(table3).Butthere were others (Yogyakarta, Bali, North Sulawesi) where total farm household incomewasabovethenationalaverage andyetrelianceonincomefromthefarm holdingwasrelativelylow.Similarly,if welookattheprovinceswheretotalfarm household income waswellbelow the nationalaverage,some,suchasCentral Java,hadahighrelianceonoff-farmin -come while others, such as EastNusa TenggaraandthethenprovinceofEast Timor,derivedover60%oftheirtotalin -comefromtheholdingitself.Itispossible thatinaprovincesuchasJambi,mostfarm householdscanmakeareasonableliving
fromagricultureandfeellittle needtoseek extraincomeelsewhere,whileinaprov -incesuch as EastNusa Tenggara, farm householdswouldliketosupplementtheir relativelymeagreincomesfromthefarm holdingbuthavelittleopportunitytodo so.Ireturnbelowtothequestionofwhat determinesthese interprovincial differ -encesinrelianceonoff-farmincome.
SOURCESOFAGRICULTURAL HOUSEHOLDINCOMEBYHOLD
-INGSIZEANDINCOMECLASS
Whileincomefromthefarmholdingac -countsfora diminishing percentageof total farm household income inmany partsofIndonesia,inthemid1990sthe majorityofhouseholdsinvolvedinag -riculturalactivitiesstillclaimedthatag -ricult ure was the ‘main’ sourc e of household income. (This does not of coursemeanthatitaccountedforalarge partoftotalhouseholdincome,butsim -plythatitwasmoreimportantthanany othersinglesource.) In1984, 82%offarm householdsclaimedthatagriculturewas themainsourceoftheirincome;by1993 thispercentagehadfallenonlyslightly (table4).Inbothyears,therewasamarked tendencyfor the percentage of house -holdsreportingagricultureastheirmain activitytoincreasebyholdingsize.In
TABLE4 Agricultural HouseholdsbySizeofHoldingandMainIncomeSource,1984and1993
Sizeof Householdsby HouseholdswithMain
CultivatedHolding Holding Size Income from Agriculture
(ha) (%) (%)
1984 1993 1984 1993
Under0.1 8.5 7.0 62.6 56.4
Indonesia 100.0 100.0 81.7 78.5
Sources:BPS(1987):tables5and7;BPS(1995a):table5.
1993, only about 56% of households cultivating less than 0.1 hectares re -ported that agriculture was the main sourceofhouseholdincome,compared withover90%ofthosecultivatingmore than2.5hectares.
Of those agricultural households whoreportedthatagriculturalactivities (including agricultural wageemploy -ment)werenotthemainsourceofhouse -holdincome,themajority(inboth1984 and1993)gavetradeandotherservices as the main source (table 5). In both years,fewerthan2%ofallagricultural householdsgaveremittances andother earnings astheirmainincomesource. Manufacturing(bothagriculturalpro -cessingandotherformsofmanufactur -ing)wasthemainsourceofincomeof only4%ofallagriculturalhouseholds in 1993. Inboth 1984 and 1993, there wasapronouncedinverserelationship betweenholdingsizeandthepercent -ageofhouseholdsreportingtradeand otherservicesectoractivityasthemain householdincomesource.In1993,this inverse relationship wasalso clear for
householdsreportingmanufacturing as themainincomesource.
Thepresenceofthisinverserelation -shipcouldbeusedtosupporttheview thatoff-farmactivitiesinmanufacturing and,especially,intheservicesectorhave hadanequalisingeffectonincomesac -cruingtoagriculturalhouseholds,inthe sensethatthosehouseholdswithfewer agriculturalassets(asproxiedbysizeof operated holding) are more reliant on theseactivities forthebulkof theirin -come.Thusitcouldbehypothesisedthat asset-pooragriculturalhouseholdscom -pensateforthelowearningpotentialin agriculture bygainingmostoftheirin -comefromotheractivities. Butthedata intables4and5 donot reallysupport such anargument.They donottell us whethertheasset-poorhouseholdsare infactearningsufficientfromtheiroff -farmactivitiestocompensateforthelow level of their farm holding incomes. Rather,theysimplyindicatethathouse -holds with smaller operated holdings tendtorelymoreonnon-farmactivities fortheir‘main’sourceofincome.
TABLE5 SourcesofNon-agriculturalIncomebyHoldingSize,1984and1993
Cultivated Householdswith HouseholdswithMainIncomefrom
Holding MainIncomefromNon
-Size agriculturalActivities Manufacturing Trade&Services Other
(ha) (%) (%) (%) (%)
1984 1993 1984 1993 1984 1993 1984 1993
Under0.1 37.4 43.6 5.7 8.3 27.7 31.3 4.1 4.0
0.1–0.249 30.3 33.5 5.9 6.9 22.3 24.4 2.1 2.2
0.25–0.49 20.3 24.5 3.5 4.5 14.9 18.6 2.0 1.4
0.50–0.99 13.0 16.9 1.9 3.0 9.9 13.0 1.3 1.0
1.00–2.49 9.5 10.5 1.5 1.8 6.8 8.1 1.2 0.7
Over2.5 7.8 7.9 1.9 1.3 5.1 6.2 0.9 0.5
Average 18.3 21.5 3.1 4.0 13.5 16.0 1.8 1.4
Sources:BPS(1987):table5:(1995a):table19.
TABLE6 Agricultural HouseholdIncomebyHoldingSize,1984
Sizeof Average Monthly On-farm Total %of
Cultivated Holding Incomeper Income per Income Total
Holding Size Household Hectare per Income
(ha) (ha) (Rp‘000) (Rp‘000) Hectare from
(Rp‘000) On-farm
Under0.1 0.04 45.9 718 1,148 63
0.1–0.24 0.17 39.6 162 233 70
0.25–0.49 0.34 43.5 102 128 80
0.50–0.74 0.58 50.9 75 88 86
0.75–0.99 0.83 54.2 59 65 90
1.00–1.49 1.14 63.3 50 56 90
1.50–1.99 1.64 71.4 40 44 92
2.00–2.49 2.11 79.9 35 38 92
2.50–2.99 2.64 87.4 31 33 94
3.00–3.49 3.10 95.4 28 31 91
3.50–4.49 3.85 111.6 27 29 92
Over4.50 6.85 171.9 23 25 91
Average 0.85 55.3 53 65 82
Source:BPS(1987).
Datafromthereportonthe1984Sur -veyofAgricultural HouseholdIncomes (BPS1987) canbeusedtoderiveabreak -downofhouseholdincomebyholding size.Thisshowsacleartendencyforto -talincometoincreasewithholdingsize. Agricultural income on a per hectare basis was much higher in thesmaller holdingsizegroups,however(table6). Thisconfirmsthewellknownpropen -sityforsmallerholdingstobemorein -tensivelycultivated withhigher value crops,whichinturnreflectsthefactthat smaller holdings often contain better quality land.5 But even when this in
-versesize–productivity effectwascom -bined with a tendency for the larger holdingstoearnmoreoftheirtotalin -comefromon-farmactivity,itwasstill thecasethatagriculturalhouseholdson largerholdingsearnedmoreonaverage fromallsources,bothonandoffthehold
-ing,thanhouseholdsoperatingsmaller holdings.
Thereportonthe1993SurveyofAgri -culturalHouseholdIncomes(BPS1995a) alsocontaineda breakdownofincome accruingtoagriculturalhouseholdsfrom differentsourcesbytotalhouseholdin -comeclass.Therewasnostrongevidence ofaninverserelationshipbetweenthein -comelevelandthepercentageofincome derivedfromnon-agriculturalsources— quitethereverseinfact.Withtheexcep -tionofthelowestandthehighestincome class,therewasasteadytendencyforthe percentageoftotalhouseholdincomede -rivedfromthefarmholding,andfromall agricultural activities including wage labour,tofallas householdincome in -creased(table7).Therewasasignificant degreeofpositivecorrelationbetweenin -comefromthefarmholding(bytotalin -comeclass)andthe proportionof total
income derived from non-agricultural sources(r=0.53).
Astotal agriculturalhousehold in -comefromallsourcesgrew,non-agri -cultural wage earnings and income fromself-employmentactivities(manu -facturing,tradeandotherservices)both accountedforagrowingpercentageof totalhouseholdincome(table8).There wassomesignofan‘invertedU’rela -tionshipfornon-agriculturalwagein -come,andofa‘U’relationship forother income(whichincludespensionsand
remittances), althoughotherincomeac -counted for more than 30% of total householdincomeonlyinthetopand bottomincome classes. Thesetwo in -come classes in turn accounted for a verysmallpercentageofallagricultural households(table7).
Thisapparentlyparadoxicalcombi -nation,ofarisingpercentageofon-farm to total income as holding size in -creasesandafallingpercentageofon -farm to total income as income size increases,hasin factbeen found ina
TABLE7 Agricultural HouseholdIncomebyAgricultural IncomeSource
andIncomeClass,1993
Income %Agricultural %ofTotalHouseholdIncome from
perMonth Householdsin
(Rp‘000) IncomeClass FarmHoldinga Agricultural Total
(%) Wages Agricultural
Incomeb
Under20 2.0 48.3 (71.2) 7.4 62.5
20–24 1.4 55.6 (73.2) 10.5 73.3
25–29 2.1 53.3 (71.2) 11.5 72.2
30–39 5.2 54.4 (68.6) 13.0 74.4
40–49 6.2 54.1 (64.5) 13.9 74.4
50–74 17.0 54.2 (60.5) 14.2 74.3
75–99 15.6 54.1 (57.3) 13.1 72.3
100–149 21.5 54.2 (52.5) 10.7 69.8
150–199 11.2 52.3 (47.7) 8.3 64.1
200–299 9.7 48.5 (43.5) 5.8 57.1
300–399 3.8 45.1 (39.7) 3.4 50.6
400–499 1.8 44.2 (38.1) 2.7 49.0
500–749 1.6 44.1 (33.7) 2.1 47.9
750–899 0.4 39.7 (23.9) 1.4 42.4
Over900 0.7 46.7 (12.4) 0.4 48.0
Indonesia 100.0 50.0 (45.4) 7.4 60.7
aFiguresinbracketsshow the percentageoffarm holding incomethatisderivedfrom
foodcropagriculture.
bTotalagricultural incomeisthesumofincomefromthefarmholding,agricultural wages
and‘othersources’,notshownhere.Typicallythiswouldincludehiringoutofagricultural
equipmentandland.
Source:BPS(1995a):tables8–12.
numberofLatinAmericancasestudies (Reardon,BerdegueandEscobar2001: 404).Ontheonehanditseemsreason -able to expect that those agricultural households operating larger than av -erageholdingshavelessneedtoseek off-farmwork.Buthowcanweexplain the fact that the richer agricultural households(rankedbyincome,rather than by operated land holding) are more dependenton off-farm income thanthepoorerones?Thedirectionof causality is seen to be more complex whenweexaminerankingsbyincome size,and itappearsthatinIndonesia, as in a number of Latin American
economies,householdsthathaveman -agedtodiversifytheireconomicactivi -tiesawayfromagriculture,andespecially thosethathavemanagedtogainaccess to non-agricultural wage employment opportunities, havebeenthemostsuc -cessfulinincreasingtheirtotalincomes. Thesearesometimes,butbynomeans always, the households that control relativelylargeamountsofagricultural land.Butcontroloverotherassets,in -cludingeducatedlabour,permitshouse -holds to diversify successfully into non-agriculturalactivities,andisthus an im por tant deter minant of total householdincome.
TABLE8 Agricultural HouseholdIncomebyNon-agriculturalIncomeSourceandIncomeClass,
1993
(%oftotalagricultural householdincome)a
Incomeper Non- Manu- Trade Other Other All
Month Agricultural facturing Services Income Non
-(Rp‘000) Wages agricultural
Income
Under20 3.2 1.3 1.1 0.3 31.7 37.5
20–24 1.7 1.1 1.4 0.4 22.1 26.7
25–29 2.4 1.6 2.1 1.1 20.7 27.8
30–39 3.4 1.6 1.8 0.7 18.2 25.8
40–49 4.1 1.7 2.4 1.0 16.5 25.6
50–74 5.8 1.8 3.1 1.2 13.7 25.7
75–99 8.3 1.9 3.9 1.6 12.0 27.7
100–149 10.7 1.9 5.2 2.0 11.0 30.7
150–199 14.3 1.9 6.9 2.2 10.6 35.9
200–299 19.5 1.8 8.1 2.4 11.0 42.9
300–399 25.3 2.0 8.1 2.4 11.5 49.4
400–499 28.3 2.1 8.2 2.4 10.0 51.0
500–749 25.3 3.4 7.4 3.3 12.6 52.1
750–899 21.0 3.6 10.1 5.5 17.4 57.6
Over900 5.7 3.1 7.0 3.4 32.9 52.0
Average 14.6 2.1 6.3 2.3 13.4 39.3
aManufacturing includesbothagro
-processingandotherformsofmanufacturing. ‘Other
income’includespensionsandremittances, andsourcesnotelsewhereincluded.
Source:BPS(1995a):tables8–11.
INTERPROVINCIALVARIATIONIN AGRICULTURALHOUSEHOLD INCOME
Iturnnowfromexaminingvariationsin income across householdsby holding sizeand incomeclassto lookat varia -tions across provinces. There is clear supportfortheargumentthatprovinces wheretheaverageincomefromthefarm holdingwaslowrelativetothenational averagederived alargerproportion of theirincomefromoff-farmactivities. In both 1984 and 1993, the coefficient of variation ofagricultural household in -comesbyprovincefromallsourceswas much lowerthan thatfrom any ofthe components,indicatingthatthevariation betweenprovincesinon-farmearnings wastosomeextentcompensated forby incomefromothersources(table9).There wasalsoasignificantdegreeofnegative correlationbetweenincomederivedfrom theagriculturalholdingbyprovinceand thepercentageoftotalincomederived fromoff-farmsources.
But inspite of the growing impor -tanceofoff-farmearningsintotalagri -cultural household income in many parts of Indonesia, the evidenceindi -catesthattheydonotfullycompensate forlowincomesfromfarmholdings,es -peciallyinthoserelativelyremoteand undevelopedprovinceswhereagricul -turalproductivityandincomeshavehis -torically been low. Itis instructive to comparethecomponentsofagricultural household incomes in four provinces whereonaveragethepercentageofto -talincomederivedfromtheholdingis muchhigherthanthenationalaverage (table3).Intwosuchprovinces,Jambi andSouthSumatra,itcouldbeargued that income from thefarm holding is quitehigh,andmanyfarmhouseholds donotfeelacutepressuretodevotemore householdlabourtoobtainingextrain -comefromoff-holdingsources,although itisalsolikelythatsuchincomeisdiffi -culttoobtain,especiallyforhouseholds livinginmoreremoteareas.InIrianJaya
TABLE9 CoefficientsofVariation:ComponentsofAgricultural HouseholdIncomebyProvince,
1984and1993a
1984 1993
Income fromfarm holding 22.82 27.16
Alloff-farm income 26.32 26.36
Income fromwages 34.38 32.71
Income fromself-employment 42.80 47.16
Income fromother sources 29.42 25.24
Income from all sources 17.82 18.13
%oftotalincomefromoff-farm
sourcesby provincecorrelated
withincome fromfarm holding –0.647* –0.766*
aEstimatedusingprovincialincomedata.
*Significant at5%
Source:BPS(1987,1995a).
andEastTimor,averagehouseholdin -comefromthefarmholdingwasmuch lower in absolute terms than in most other provinces,and althoughincome fromvariousoff-holdingsourceswason average slightly higher than in Jambi and South Sumatra, it was not high enoughtocompensatefullyforlowin -comesfromthefarmholding(table10). Table11reportsonthesocialandeco -nomiccorrelatesofthepercentageofto -tal agric ult ur al ho us eho ld inco me derivedfromthefarmholdingin1993, estimated from provincialdata. There was a positive correlation with per capita GDP and with the headcount measureofpoverty,butneitherwassig -nificantatthe5%level.Moresignificant werethecorrelationswiththepopula -tiondensityandroaddensityvariables
(population per square kilometre and kilometresofsealedandgravelroadsper hundredsquarekilometresofarea),the proportionofruralhouseholdsnotown -ingland,andarangeoflabourforceand productivityvariables.Thenegativecor -relation with population density and withroad densityindicatesthat in the moredenselysettledprovinceswithbet -ter developed road networks, agricul -turalhouseholdsfounditeasiertoaccess off-farmincome.6Thenegativecorrelation withtheproportionofruralhouseholds notowninglandcouldbeinterpreted as evidenceofa‘pushfactor’towardsnon -agriculturalemployment,inthesensethat inthoseprovinceswhereahighpropor -tion of rural households do not own land,suchhouseholdsarecompelledto seek income from non-agricultural
TABLE10 SourcesofAverageAnnualAgricultural HouseholdIncomeforFourProvinces,1993
(Rp‘000)
Jambi South Irian East Indonesia
Sumatra Jaya Timor
Total farm
household income 2,407 2,056 1,653 1,438 1,760
Farm holding 1,681 1,426 1,042 910 880
Foodcrop 337 432 442 452 399
Treecrop 1,238 667 168 187 264
Agriculturallabour 215 123 19 8 129
Otheragricultural 44 56 63 47 60
Totalagricultural 1,940 1,605 1,124 965 1,069
Manufacturing 16 13 11 8 38
Trade 69 70 27 14 111
Other self-employment 36 37 26 9 51
Non-agriculturallabour 168 158 207 232 258
Othersources 178 173 258 210 233
Totalnon-agricultural 467 451 529 473 691
% of total income
from holding 70 69 63 63 50
Source:BPS(1995a):tables1–5.
activity.Ontheotherhanditcouldalso indicatethatinsomeprovinces(suchas WestJava)ruralhouseholds havesold landinordertoinvestinnon-agricultural enterprisesfromwhichtheyearnmostof theirincome.
Therewasasignificantpositivecorre -lationbetweenthepercentageoftotalin -comeearnedfromthefarmholdingand
the rate of growth of the agricultural labourforce,andanegativecorrelation withthenumberofagriculturallabourers asaproportionofthetotalagricultural labourforce.Theformersignisexpected, inthatthoseprovinceswherethegrowth oftheagriculturallabourforcehasbeen mostrapidarethosewhereoff-farmem -ploymentopportunities arelikelytobe
TABLE11 CorrelatesofAgricultural HouseholdDependencyonIncome
fromtheFarmHoldingbyProvince,1993a
Indonesia Excluding
(exceptJakarta) Java
GDPpercapita 0.006 –0.035
%ofGDPfromagriculture 0.182 –0.013
%ofGDPfrommanufacturing –0.294 –0.105
%ofGDPfromtrade –0.398* –0.347
Ruralpoverty(1996) 0.350 0.341
Populationdensity(1995) –0.624* –0.306
Roaddensity –0.566* –0.285
%ofhouseholdmemberswho
haveneverattendedschool –0.046 0.171
PercentagegrowthofALF(1986–94)b 0.525* 0.469*
Agricultural labourersas%ofALF(1995) –0.485* –0.318
VASAperagricultural workerc
–0.487* –0.415
VAFC/VASAd
–0.437* –0.229
VASAperhectare –0.577* –0.308
Averageholdingsize 0.657* 0.387
%ofruralhouseholds –0.553* –0.511*
notowningland
aDependencyonfarmhouseholdincomeisproxiedbytheratioofon
-farmincometototal
agricultural householdincomeasgivenintable3.Allcorrelation coefficientsareestimated
inlogs.The coefficients ofvariationhavebeenestimatedusingprovincialincomedata.
bALF:agricultural labourforce.
cVASA:valueaddedinsmallholder agriculture.
dVAFC:valueaddedinfoodcropagriculture.
*Significant atthe5%level.
Sources:Householdincomedataandeducationdata:BPS(1995a);averageholdingsize:
BPS(1995b);GDPdata:BPS(1997a);VASAandVAFC:BPS(1995c);roaddensityandpopu
-lationdensity:BPS(1997b);ruralpoverty1996:BPS(2000);agricultural labourforcedata:
BPS(1988,1995d);ruralhouseholdsnotowningland:BPS(1996a).
quitelimited.Inaddition,theprovinces wheretheagriculturallabourforcegrew rapidlyincludedseveralwheretherehas beensubstantialinmigration, dueinturn tothedevelopment ofnewagricultural landfortransmigrants.Thelatter(nega -tive) signindicates thatin those prov -inceswhereagricultural labourmarkets were well developed therewas a ten -dencyforahigherproportionoftotalin -come tobeearned offthefarm, which couldsuggestthatmarketsfornon-agri -culturallabour,andindeedfornon-agri -cultural goods andservices, werealso welldeveloped.
Moresurprisingwasthenegativecor -relationbetweentheproportionofhouse -hold income derived from the farm holdingandvalueaddedinsmallholder agriculture (VASA)perhectareandper
agriculturalworker.Inotherwords,the higherthevalueaddedperhectareand peragriculturalworker,thelowerthe proportionoftotalfarmholdingincome derivedfromagriculture. Theseresults mightindicatethatinthoseprovinces where agricultural productivity per hectareandperworkerwashigh,there wasagreaterabundanceofoff-farmin -comeearningopportunities,andthusa higherproportionofhouseholdincome derivedfromthesesources.Howeverthe results of an OLS regression analysis indicatethat,onceothervariablessuch aspovertyincidence,averageholding size and growth of the agricultural labourforcearecontrolledfor,thesigns onboththevalueaddedperhectareand thevalueaddedperworkervariablesbe -comepositiveandsignificant(table12).
TABLE12 Determinants ofAgricultural HouseholdDependencyonIncomefromthe
FarmHoldingbyProvince,1993:OLSRegressionsa
Equation1 Equation2
Ruralpovertyincidence(1996) 0.152 0.131
(2.682) (2.289)
Agricultural labourersas%ofALF –0.079 –0.079
(2.363) (2.24)
VASA peragricultural worker 0.261
(2.55)
VASAperhectare 0.332
(3.011)
PercentagegrowthofALF(1986–94) 0.133 0.388
(2.649) (3.431)
Areaperfarm 0.497 0.132
(3.823) (2.324)
AdjustedR2 0.665 0.633
F 10.943 9.626
N(Residual) 25(20) 25(20)
SE 0.108 0.113
aInboth equations thedependentvariableisthe percentageoftotalhousehold income
derivedfromthefarmholdinginthatprovince;tratiosaregiveninbrackets.Allvariables
areinlogs.
Sources:Asfortable11.
EDUCATIONAND OFF-FARMEARNINGS
Thereappearstobelittlecorrelation by provincebetweenlackofaccesstoedu -cation(asproxiedbythepercentageof agriculturalhouseholdmembersover10 yearswhohaveneverattendedschool) andtheproportionoftotalhouseholdin -comeearnedonthefarm(table11).That isprobablytobeexpectedgiventhevery diversesourcesofoff-farmincomeindif -ferentpartsofthecountry,onlysomeof which demand skills such as literacy and numeracy that can be acquired throughformal education. But at the sametimethe1993surveyresultsmake itclear thatthe richer theagricultural household(intermsoftotalincomefrom allsources),thehighertheproportionof householdmembersinschool(table13).
Thismaypartlyreflectthedifferingage structure of households in different incomegroups,withthepooresthouse -holdscomprisinglargelyelderlymem -bers.Itmayalsoreflectatendencyfor moreaffluenthouseholdstotakecareof youngrelativesfromlesswell-offfami -lies,andtopayfortheireducation.There wasalsoatendencyforahigherpropor -tion ofthe less well-off householdsto report that they experienced financial difficultyinkeepinghouseholdmembers inschool,althoughevenamongthehigh -est income groupsa sizeableminority complainedaboutthefinancialburden ofeducationexpenses.
Evidencefromotherpartsoftheworld suggeststhataccesstoeducationisacru -cial determinant of an agricultural household’s ability to diversify its
TABLE13 Agricultural HouseholdswithMembersinSchoolbyIncomeClass,1993
(%)
Incomeper Agricultural Agricultural
Month Households Householdswith
(Rp‘000) with Members MembersinSchool
inSchool andExperiencing
FinancialDifficulty
Under20 35.6 48.0
20–24 38.3 49.0
25–29 38.4 47.6
30–39 41.6 40.7
40–49 45.6 40.4
50–74 50.1 37.8
75–99 54.7 35.8
100–149 59.1 34.9
150–199 62.7 35.5
200–299 66.0 34.9
300–399 70.1 34.2
400–499 73.4 33.5
500–749 74.8 31.6
750–899 70.7 34.5
Over900 72.5 28.5
Average 56.1 36.3
Source:BPS(1995a):table40.
sourcesofincomeovertime,andespe -cially of its ability tomove household membersintomorelucrativenon-agricul -tural wageemployment. Intheirsum -maryofanumberofLatinAmericancase studies,Reardon,BerdegueandEscobar (2001:405)pointoutthat
… a l l t h e s tu d i e s s h o w e d v e r y
strongly thateducation determines
parti cipation and success in RNF
[rur al nonfarm ] employme nt and
incomes.Moreeducationtendedto
mean morenonfarmwageemploy
-m en t in h igh-pr od uctiv ity , we ll
-pa yin g jobs . T he m or e e d ucate d
tend to avoid farm wage employ
-mentandgravitatetowardnonfarm
wageemploymentandonlysecond
-arily to nonfarm self-employment,
as the returns to labor in general
followthatrankingaccordingtothe
countrystudies.
Thedatareviewedabove,andes -pec ia lly the 1993 evid ence on the distribution of agricultural ho use -holdincomebyincomegroup,show that agricultural hous eholds in the higher incomegroups rely mor eon non-agriculturalwageearningsthan dothoseinthelowerincomegroups. It couldbehypothesisedthatthisre -flects the factthathouseholdsin the higher income groups have a larger numberofbettereducatedmembers. Studies in other parts of Southeast Asiahavestressedtheim portanceof secondary and tertiary education in facilitating the employment of farm household members in non-agricul -turalwork.InthecontextofthePhil -ippines, Estudillo andOtsuka (1999: 520)havearguedthat,giventhatrich households find itmucheasier than pooreronestoinvestinthehigheredu -cationoftheirchildren,thereisobvi -ous potential for inequality in farm household incomes to increase over time.Thisisalsolikelytobethecase inIndonesia.
LINKAGERATIOS
Overthelasttwodecades,muchresearch hasbeencarriedoutinmanypartsofthe worldthatexaminesthenatureoflink -agesbetweentheagricultural andnon -agriculturalsectorsofruraleconomies.7
Thereseemstobelittledoubtthatinter -actionsbetweendifferentsectorsofthe ruraleconomyhavevariedgreatlyboth betweencountriesandovertime.Some authorshavepositedan‘Asianexample’ inwhichthecombinationofa‘relatively egalitariandistribution ofincome,well -functioningfactormarkets,andastrong emphasisoneducationalexpansion’has producedrapidgrowthofnon-agricul -turalemploymentinruralareas,benefit -ing most rural households(Deininger andOlinto2001:464).Thisbenignout -comeisthencontrastedwiththemuch lessegalitarian outcomesthathaveoc -curredinmanypartsofAfricaandLatin America.However,theso-called‘Asian’ resultseemstobebasedontherecenthis -tory of just one country, Taiwan, and thereis growingevidencethattheTai -waneseexperienceisfarfromtypicalof Asiancountries,letaloneotherpartsof thedevelopingworld.8
Ranis, Stewart and Angeles-Reyes (1990)andRanisandStewart(1993)have investigated differences inurban–rural linkagesbetween the Philippines and Taiwan.Theyhavearguedthatthemore skeweddistributionoflandandincome in thePhilippines, combined with the morecapital-intensive,urban-biasedna -tureoftheindustrialisation process,has ledtoamuchslowergrowthofnon-agri -culturalemploymentandincomesinru -ral areas in the Philippines than in Taiwan. This inturn has meant that a given amount of agriculturalincome growth hascreated fewernon-agricul -turalemploymentopportunitiesinrural areasinthePhilippinesthaninTaiwan. Thustheratioofgrowthinnon-agricul -turalincomestogrowthinagricultural
incomeshas beenmuchlowerinrural areasinthePhilippines; infactoverthe twodecadesfrom1965to1985Ranisand Stewart(1993:table14)estimatethatru -ralnon-agriculturalincomesgrewmore slowlythanagriculturalincomes.
The agricultural household income surveysinIndonesiacanbeusedtoesti -matelinkageratiosovertheyearsfrom 1984to1993.ForIndonesiaasawhole, thegrowthintheoff-farmincomeofagri -culturalhouseholdswasonlyabout24% fasterthanthegrowthinincomefromthe agriculturalholdings(table14).Aswould beexpected,theaverageforthecountry asawholemaskedconsiderableinterpro -vincialvariation.9 In the fiveprovinces
wheretheproportionoftotalagricultural householdincomederivedfromthefarm holdingwaslowestin1993,thelinkage ratioswerehigherthanthenationalaver
-age.ButeveninBalithelinkageratio,al -thoughhigherthantheaverageforIndo -nesia,wasfarbelowthatfoundinTaiwan between 1962 and 1972. The evidence suggests thatIndonesia, like Thailand, wasan‘intermediatecase’betweenTai -wanontheonehandandthePhilippines ontheother. Fasteroverallratesofeco -nomicgrowthoverthe1980sandthefirst partof the 1990s in both Thailand and Indonesiathan inthe Philippinesmust haveplayedanimportantroleingenerat -ingfastergrowthinoff-farmearningop -portunities,eveniftheresultwashardly asimpressiveasthatinTaiwan.
CONCLUSIONS
Theevidencereviewedaboveshowsthat the off-farm and non-agricultural in -comesofagricultural householdsgrew rapidlyinIndonesiaovertheyearsfrom
TABLE14 LinkageRatiosandthePercentageofTotalFarmIncomeAccruingfrom
Off-farmEmployment
Country Linkage PerCapita PercentageofFarmIncome
andPeriod Ratioa GDP fromOff
-farmSources
(Initial Initial Final
Year)b Year Year
Taiwan(1962–80) 3.55 1,364 25 60
Philippines (1965–85) 0.94 1,248 45 56
Taiwan(1962–72) 2.99 1,364 40 60
Thailand(1971/72–1982/83) 1.38 1,507 46 59
Indonesia (1984–93) 1.24 1,602 45 50
Bali 1.70 41 55
WestSumatra 1.60 48 58
Central Java 1.54 50 59
Yogyakarta 1.35 58 64
WestJava 1.34 58 65
aGrowthinoff
-farmincomesovertheperiodshown,dividedbygrowthinfarmincomes.
bICP(International Comparisons Project)dollarsin1985prices,adjustedforchangesinthe
termsoftrade.DatatakenfromPennWorldTables(version5.6).
Sources:Taiwan(1962–80)andthePhilippines, RanisandStewart(1993):tables9and14;
Taiwan(1962–72),Ho(1986):table4.2;Thailand,Onchan(1990):table2.13;Indonesia,BPS
(1987,1995a).
1984to1993,andthatby1993incomes fromalloff-holdingsourcesaccounted for50%ofthetotalincomesofagricul -turalhouseholds. Thisinitselfishardly surprising: a large body of literature demonstrates that agricultural house -holdsthroughoutAsia,AfricaandLatin Americaarederivingsignificantandin -creasing shares of their total incomes from off-holding activities.10 Indeed it hasbeenarguedthatruralhouseholds ‘increasingly cometo resembleminia -turehighlydiversified conglomerates, manyofthemwithafootholdintheur -ban sector’ (Cain and McNicoll 1988: 105).Whilethisistruetoanincreasing extentofatleastsomepartsofIndone -sia,weshouldnotoverlookthefactthat thegreatmajorityofthosehouseholds classifiedasagriculturalstillclaimthat agriculture istheir‘main’sourceofin -come. Notwithstanding the extent to which income diversification is taking place,agricultureisstillthecoreactivity formanyruralhouseholds. Atthesame time,bythemid1990s,asignificantmi -norityofruralhouseholds(around27% accordingtotheSupas)hadnoinvolve -mentwithagriculture atall.
Off-farmearningsinthetwoincome surveys arebrokendownintoagricul -turalwages,otherincomefromagricul -tural activities (such as hiring out equipment),non-agriculturalwages,and varioustypesofself-employmentactivi -tiesinmanufacturingandservices.Inad -dition,manyhouseholdsreceiveincome from remittances. In 1993, wages and salary earningswerethelargest single sourceofoff-farmearnings,andnon -agriculturalwageearningsweregreater thanthosefromagriculture.Thereisevi -denceofan inverted ‘U’relationship, inthatbothagriculturalandnon-agri -cultural wages account for a higher proportionoftotalagriculturalhouse -hold incomes for the middle income groups. Butitis alsoclearthatdepen
-dence on non-agricultural wages and salariesismoreskewedtowardstheup -perincomegroups.Whenallsourcesof non-agricultural income are added to -gether,theresultisasteadyincreaseby incomegroupintheproportionoftotal income derived from non-agricultural activities, withtheexceptionofthevery lowest and the very highest income groups. In this sense Indonesiawould appeartocontradictwhatReardonetal. (2000:271) termthe‘conventionalwis -dom’thatthereisastrongnegativerela -tionship between the non-agricultural share and total household income, al -though, asthese authors demonstrate, evidencefromanumberofothercoun -triesorregionsalsotendstorefutethe conventionalwisdom.11
Overtheyears,numerousauthorshave pointedoutthatruralhouseholdstryto takealonger-termviewofincomesecurity than‘merelytakingadvantageofcurrently available incomeearning opportunities’ (Ellis2000:296).Investmentinavarietyof incomeyieldingassetsisobviouslyofcru -cialimportancetoruralhouseholdsseek -ingtosecuretheirincomeoverthelonger term. Traditionally, households with somesurpluswouldinvestinacquiring extraland,inimprovingthequalityofex -isting land, in purchasing agricultural implementsandvehiclesforownuseand forhire,and inpurchasing livestock or goldandjewellery.Overthepasttwode -cades,investmentintheeducationofchil -drenandotherfamilymembershasalso become a very importantpart of rural household asset diversification (Ellis 2000: 296–7). Increasingly many rural householdsappreciatethataccesstothe more lucrative and secure non-agricul -turaloccupationsrequireseducation,and investmentineducationoffamilymem -bersisthusviewedasanevenmoreim -portantpartofthehouseholdinvestment strategythantheacquisition oflandor equipment.
Althoughchangesinenrolmentlev -elssincethe1970sshowthatmanyrural householdsnowappreciatethevalueof educationalinvestment,therearesignifi -cantup-frontcostsassociatedwithedu -cation in Indonesia, especially at the secondary and tertiary levels (Booth 2000: 93).Thus it is the more affluent householdsthatcanaffordtokeeptheir childreninschoollongenoughtogain theentry-levelqualificationsneededfor thebetterpaidandmoresecurejobsin manufacturing andthemodernservice sector.Overtimeitislikelythattheeffect of growing access to non-agricultural wageemploymentwillaggravateincome inequalitiesinmanypartsofruralIndo -nesia,asindeedappearstobethecasein other parts of the world.12 Reardon,
BerdegueandEscobar(2001:404)report thatbothownershipoflandandaccess toeducationpositionhouseholdmem -berstoundertakewell-paidnon-agricul -turalactivityinmanypartsofCentraland SouthAmerica,andthatinsomecoun -triesthe‘educatedlandless’maybeearn -ing as much as households operating largeagricultural holdings.
Evenso,accesstooff-farmandnon -agricultural employmentpermitseven thepooresthouseholdstoincreasetheir totalincomeandalso,inmanycases,to reducetheinsecurityinherentinexclu -siverelianceonagriculture forincome. Thereislittledoubtthatincomediversi -fication is animportant reason forthe declineintheheadcountmeasureofpov -erty in many parts of rural Indonesia sincethe1970s.Tradeandotherservices have beenthe‘mainsourceofincome’ forasignificantnumberofthosehouse -holdscultivating verysmallamountsof agriculturalland.InmanypartsofIn -donesia,tradeandservicesprovideem -ploymentforlargenumbersofwomen workers.In1995,thetradesector pro -videdmoreemploymentthanmanufac -turingforbothmaleandfemaleworkers
inruralareas(BPS(1996a).IntheLatin American context, Reardon, Berdegue and Escobar(2001: 404) pointout that manynon-farmemploymentprogramsin ruralareasfocusonthemanufacturing sectorinspiteoftheevidencethattrade andotherservicesoffergreateropportu -nities.13Thispointalsoseemshighlyrel
-evantinIndonesia.Giventheimportance ofruraltradeasasourceofemployment andincomeinmanypartsofthecoun -try,especiallyforland-poorhouseholds, itissurprisingthatsolittleresearchhas beencarriedoutinthissector.14
Thereisconsiderableregionalvariation intheextenttowhichagriculturalhouse -holdshavebeenable(orbeencompelled) todiversifytheirincomesawayfromex -clusive reliance on the farm holding. Whiletheproportionofon-farmtototal incomefellinsomeofthemoreisolated andagriculturally lessproductiveparts ofthecountrybetween1984and1993,it is clear from the 1993 data thatmany householdsinEastNusaTenggara,East TimorandIrianJayawereunablefullyto compensateforlowon-farmincomeby earningmorefromoff-farmemployment. ForIndonesiaasawhole,off-farmearn -ingsgrewmorerapidlythanon-farmin -comeover the nineyearsfrom 1984 to 1993,butthedifferenceingrowthrates wascertainlymuchsmallerthaninTai -wanduringthe1960sand1970s.Indeed ahigherproportionofagriculturalhouse -holdsinIndonesiawerewhollydepen -dentonfarmingfortheirincomein1993 thanwasthecaseinTaiwanin1960,even thoughpercapitaGDPwaslowerinTai -wanin1960thaninIndonesiathreede -cades later. Even in Java and Bali the proportionwashigher.Exploringtherea -sons for thesedifferencesis beyondthe scopeofthispaper,althoughtheyareprob -ablyrelatedbothtoTaiwan’sunusually egalitariandistributionoflandafterthere -formsofthe1950s,andtogreateraccessto educationtherethaninIndonesia.
NOTES
1 The employment data from the 1990
populationcensusreported aconsider
-ablenumberof employedworkers,es
-peciallyinruralareas,whosesectorof
employment was‘not stated’.If most
were infact employedin agriculture,
then the decline in the agricultural
labour force between 1990 and1995
wouldhavebeenmuchlarger.Ifonthe
otherhand,theseworkerswereearning
mostoftheirincomefromnon-agricul
-tural jobs,then the shareofthe rural
non-agricultural sectorin overallem
-ployment growth would have been
smallerthanthatreportedhere.
2 Since1997therehasbeenarapidgrowth
in the size of the agricultural labour
force,andalmostallthe newjobscre
-atedsince1997havebeenintheagricul
-turalsector.
3 Thesurveycarriedoutaspartofthe1983
agriculturalcensusinfacttookplacedur
-ingcalendaryear1984, whilethatfor
the1993 agricultural censuswas con
-ducted overcalendar year 1993. The
mainfindingsaresummarised inBPS
(1987)andBPS(1995a)respectively.
4 Anagricultural householdasdefinedin
the1983agriculturalcensusisonewhere
atleastonehouseholdmember carries
outagricultural activities, i.e.works in
foodcrops,treecrops,fisheries,livestock
orforestry.In1993this definitionwas
amendedto‘[households]whereatleast
onememberproducesagricultural out
-putwiththeaimofsaleorprofitorex
-change,at his or her own risk’ (BPS
1995b:xxviii).Thisdefinitionwasprob
-ably rathermore restrictive than that
usedinthe1995intercensal survey,with
theresultthatthenumberofhouseholds
reportedasderivingallorpartoftheir
incomefrom agriculture in1995(24.1
million)was considerably largerthan
the numberof agricultural households
reportedinthe1993agricultural census
(20.3 million).
5 SeeAbey,BoothandSundrum(1981)for
a discussionofthis point,drawing on
datafromthe1973Agricultural Census.
Inaddition,inIndonesiaaselsewhere,
theinversesize–productivity relation
-shiprestsonlowercostlabourtransac
-tionsinsmallerholdings(Lipton1993).
6 Thereismuch evidencefromvarious
parts of Central and South America
that these factors play an important
roleindeterminingaccesstooff-farm
employment at the household level;
see for example Corral and Reardon
(2001).
7 LanjouwandLanjouw(1995:19–23)and
Ellis(1998:19–23)providea discussion
of the literature.
8 Ho(1979),inanearlyexaminationofthe
Taiwanese successwithdecentralised
industrialisation, stressedthedifference
betweenTaiwanandSouthKorea.Inthe
lattercountry,alabourforcesurveycar
-riedout in1974 showedthat lessthan
30%oftotal employmentincommerce
andserviceswaslocatedinruralareas.
9 There are also variations by holding
size,asisclearfromtheSocialAccount
-ingMatrices(BPS1996b).According to
thesedata, non-farm incomeon hold
-ingsoveronehectaregrewtwiceasfast
asfarmincomeovertheyearsfrom1975
to 1993.The differenceingrowthrates
was much lessmarked forfarmscon
-trollinglessthan0.5hectares.
10 Theliterature onoff-farmemployment
isnowsubstantial.Oshima(1984)and
thepapers inShand (1986)reviewthe
evidence upto the early 1980sin the
contextofAsia.Saith (1992)drawson
work in both Asiaand otherparts of
the developingworld, asdo Lanjouw
and Lanjouw (1995)and FAO (1998).
Ellis(1998)givesacomprehensivesur
-vey,albeitwithafocusonsub-Saharan
Africa.There isalso a body oflitera
-tureforIndonesiabasedoncolonialsta
-tistical cen s us es an d sur v ey s th a t
demonstrates the importanceof non
-a g ricultur -a l e mploym e n t in r ur a l
householdsintheearlydecadesofthe
20th century in Java, especially for
women.White (1991)provides a dis
-cussionofthesesources.
11 White(1991:table10)contrastsdatafrom
Japanwiththosefromasurveyofover
1,000 agricultural householdsin rice
-growing areas of Java in 1981. The
Javanese data showed that thelarger
landholding householdsearnedmorein
absolutetermsfromoff-farm activities,
although such incomeaccounted for a
smallershareoftotalhouseholdincome
than was thecase for the households
controlling lessland.
12 Onedetailedfieldstudy carriedout in
WestJavafound,perhapssurprisingly,
that no relationship existed between
mean earnings from non-agricultural
labourandaccesstoland.Construction
work andbecak(trishaw)drivingwere
the twomost common sourcesof non
-agricultural wageemploymentpursued
by men,and earningsfrom thesewere
spread evenly by landholding class
(Pincus1996:69–70).
13 It isindeedstrikingthatseveralstud
-ies of off-farm employment in Asia
continuethisfocusonruralindustries,
inspiteoftheevidencethattheservice
sectorgeneratesmoreemploymentand
incom e (se e , for e xa m ple , M ukh o
-padhyayandLim1985;Islam1987;and
Hayami1998).Historicalevidencefrom
Japan and even Taiwanalsosuggests
that income from self-employment in
industrial activitieswas a verysmall
part of total farm household income
until th e 1960 s. In come from w age
la bour w a s m uch m or e im por ta n t
(Oshima1984:appendixtables1and2).
14 Animportantexceptionistheworkof
JenniferAlexander(seeAlexander1998
andtheliteraturecitedthere).Women
have been heavily involved in rural
tradingactivities inJavaatleastsince
theearlydecades ofthe20th century,
as White (1991) and Alexander and
Alexander (1991) have shown. This
trendhascontinuedintothe1990s.
REFERENCES
Abey,Arun,AnneBoothandR.M.Sundrum
(1981),‘LabourAbsorptioninIndonesian
Agriculture’,BulletinofIndonesian Eco
-nomicStudies17(1):36–65.
Alexander,Jennifer(1998),‘Women Trad
-ersinthe JavaneseMarketplace:Ethni
-city,Gender and the Entrepreneurial
Spirit’,inRobertW.Hefner(ed.),Market
Cultures:Societyand MoralityintheNew AsianCapitalisms,WestviewPress,Boul
-derCO.
Alexander, Jennifer,and PaulAlexander
(1991),‘TradeandPettyCommodityPro
-duction in Early Twentieth Century
Kebumen’, in Paul Alexander, Peter
BoomgaardandBen White(eds),Inthe
ShadowofAgriculture: Non-FarmActivities
intheJavaneseEconomy,PastandPresent,
RoyalTropicalInstitute,Amsterdam.
Booth,Anne (2000),‘PovertyandInequal
-ityintheSoehartoEra:AnAssessment’,
BulletinofIndonesianEconomicStudies36
(1):73–104.
BPS(1987),Sensus Pertanian 1983:Sampel
Pendapatan Petani,Seri I [Agricultural
Census1983:FarmerIncomeSampleSur
-vey,SeriesI],Jakarta,August.
BPS(1988),KeadaanAngkatanKerjadiIndone
-sia[LabourForceSituationinIndonesia]
1986,Jakarta.
BPS (1992), PendudukIndonesia:HasilSen
-susPenduduk1990 [Resultsofthe1990
PopulationCensus],SeriesS2,Jakarta.
BPS (1994),ProdukDomestikRegionalBruto
Propinsi-Propinsidi Indonesia, Menurut
Pengunaan,1983–1991[Provincial Gross
DomesticProductinIndonesiabyExpen
-diture,1983–1991],Jakarta,January.
BPS(1995a),SensusPertanian1993,SeriD1:
Pendapatan RumahtanggaPertanian dan IndikatorSosialEkonomi [1993 Agricul
-tural Census, Series D1: Agricultural
H ous e h old In com e a n d Socio-E co
-nomicIndicators],Jakarta.
BPS(1995b),SensusPertanian1993,SeriB1:
Sensus Sampel Rumahtangga Pertanian PenggunaLahan[1993Agricultural Cen
-sus,SeriesB1:SampleCensusofAgricul
-tural Households Cultivating Land],
SeriesI],Jakarta.
BPS(1995c),ProdukDomestikRegionalBruto
Propinsi-PropinsidiIndonesia,1988–1993
[Provincial Gross Regional Domestic
ProductinIndonesia,1988–1993],Jakarta,
February.
BPS(1995d),KeadaanAngkatanKerjadiIndo
-nesia1994[LabourForceSituationinIn
-donesia1994],Jakarta.
BPS(1995e),ProdukDomestikRegionalBruto
Propinsi-Propinsidi Indonesia, Menurut
Pengunaan, 1988–1993 [GrossRegional
DomesticProductofProvincesinIndo
-nesiabyExpenditure,1988–1993],Jakarta,
March.
BPS(1996a),PendudukIndonesia:HasilSurvei
PendudukAntarSensus1995 [Resultsof
the1995Intercensal PopulationSurvey],
SeriesS2,Jakarta,September.
BPS(1996b),SistemNeracaSosialEkonomiIn
-donesia1993[1993IndonesianSocialAc
-counting Matrix],Jakarta.
BPS(1997a),ProdukDomestikRegionalBruto
Propinsi-Propinsidi Indonesia,1993–1996
[Gross Regional Domestic Product of
Province s in Ind onesia, 199 3–199 6],
Jakarta.
BPS(1997b),StatistikIndonesia1996[Statis
-tica l Y e a rbook of In d on es ia 1 9 96 ],
Jakarta.
BPS(2000),StatistikIndonesia1999[Statisti
-calYearbookofIndonesia1999],Jakarta.
Cain, Mead, and Geoff McNicoll (1988),
‘PopulationGrowthandAgrarianOut
-comes’, in Ronald D. Lee et al. (eds),
Population,FoodandRuralDevelopment,
ClarendonPress,Oxford.
Corral, Leonardo, and Thomas Reardon
(20 0 1), ‘Rur al N onfa rm In com es in
Nicaragua’, WorldDevelopment 29 (3):
427–42.
Deininger,Klaus,andPedroOlinto(2001),
‘Rural Nonfarm Employment and In
-com e D ive r sifica ti on in Co lombia’,
WorldDevelopment29(3):455–65.
Ellis,Frank(1998),‘HouseholdStrategies
a n d R ur a l L i v e l ih oo d D i v e r s ific a
-tions’,JournalofDevelopmentStudies35
(1):1–38.
Ellis,Frank (2000),‘TheDeterminants of
RuralLivelihoodDiversificationinDe
-veloping Countries’,JournalofAgricul
-turalEconomics51(2):289–302.
Estudillo, Jonna P., and Keijiro Otsuka
(1999),‘GreenRevolution, HumanCapi
-tal andOff-Farm Employment:Chang
-ing Sources of In come a mong F arm
HouseholdsinCentralLuzon,1966–1994’,
EconomicDevelopmentandCulturalChange
47(3):497–523.
FAO (1998), ‘Rural Non-Farm Incomein
DevelopingCountries’,inTheStateofFood
and Agriculture, Food and Agricultural
Organisation, Rome.
Hayami,Y. (ed.)(1998),TowardstheRural
-BasedDevelopment ofCommerceandIndus
-try:Selected Experiencesfrom EastAsia,
EconomicDevelopment Institute,World
Bank,WashingtonDC.
Ho,Samuel P.S. (1979),‘DecentralizedIn
-dustrializationandRuralDevelopment:
EvidencefromTaiwan’,EconomicDevel
-opmentandCulturalChange28(1):77–96.
Ho,SamuelP.S.(1986),‘Off-FarmEmploy
-mentandFarmHouseholdsinTaiwan’,
inR.T.Shand(ed.)(1986),Off-farmEm
-ploymentintheDevelopmentofRuralAsia,
NationalCentreforDevelopmentStud
-ies, Australian National U niversity,
Canberra.
Islam,Rizwanul(ed.)(1987),RuralIndus
-trialisation andEmploymentinAsia,ILO
-ARTEP,NewDelhi.
Lanjouw,JeanO.,andPeterLanjouw(1995),
‘RuralNonfarmEmployment:ASurvey’,
Policy Research Working Paper 1463,
WorldBank,WashingtonDC,May.
Lipton,Michael (1993), ‘Land Reform as
Comm enced Business: The Evidence
AgainstStopping’,WorldDevelopment 21
(4):641–57.
Mukhopadhyay,Swapna,and CheePeng
Lim(eds)(1985),Development andDiversi
-fication ofRuralIndustriesinAsia,Asian
andPacificDevelopment Centre,Kuala
Lumpur.
Onchan,Tongroj(1990),ALandPolicyStudy,
ResearchMonographNo.3,TheThailand
DevelopmentResearchInstituteFounda
-tion,Bangkok.
Oshima,HarryT.(1984),‘TheSignificance
ofOff-Farm Employmentand Incomes
inPost-WarEastAsian Growth’,Asian
Development BankEconomicStaffPaper
No21,AsianDevelopmentBank,Manila.
Pincus,Jonathan(1996),Class,PowerandAgrar
-ianChange,MacmillanPress,London.
Ranis,Gustav,andFrancesStewart(1993),
‘Rural Non-agricultural Activities in
De ve lop men t: The or y an d A ppl ica
-tion’, JournalofDevelopmentEconomics
40:75–101.
Ranis,Gustav,FrancesStewartandEdna
Angeles-Reyes (1990), Linkages in De
-velopingEconomies: A PhilippineStudy,
In te r n a ti on a l Ce n te r for E con om ic
Growth,San FranciscoCA.
R e a r d on , T h om a s , J. E d w a r d T a y lor ,
Kostas Stamoulis, Peter Lanjouw and
Arsenio Balisacan (2000), ‘Effects of
Non-Farm Employment on Rural In
-come Inequalityin DevelopingCoun
-tries:AnInvestmentPerspective’,Journal
ofAgriculturalEconomics51(2):266–88.
Reardon,Thomas,JulioBerdegueandGer
-manEscobar(2001),‘RuralNonfarmEm
-ploymentandIncomesinLatinAmerica:
OverviewandPolicyImplications’,World
Development 29(3):395–409.
Saith,Ashwani(1992),TheRuralNon-Farm
Economy:Processes andPolicies,Interna
-tionalLabourOffice,Geneva.
Shand,RichardT.(ed.)(1986),Off-farmEm
-ploymentintheDevelopment ofRuralAsia,
National CentreforDevelopment Stud
-ies, Australian National U niversity,
Canberra.
White,Benjamin(1991),‘EconomicDiver
-sification andAgrarianChange inRu
-ralJava,1900–1990’,inPaulAlexander,
PeterBoomgaardandBenWhite(eds),
In the Shadow ofAgriculture: Non-Farm
Activities in the Javanese Economy, Past and Present, Royal Tropical Institute, Amsterdam.
