12 CHAPTER 2
among others. For example, availability of off-farm employment opportuni- ties (or off-farm income) can contribute to agricultural income by providing resources to hire labor or to purchase inputs. On the other hand, off-farm employment opportunities may reduce farmers’ incentives to invest in agri- culture in general (and adoption of NAADS technologies in particular) as they become less dependent on the farmland and as the opportunity costs of their labor and capital are increased by having access to more profitable alterna- tives (Holden, Shiferaw, and Pender 2001; Nkonya et al. 2004). The extent to which such changes result in more or less agricultural productivity, for example, also depends on how well local markets, institu- tions, and policies function to relax or increase the constraints facing farm- ers and households. For example, where markets are imperfect, production decisions are not separable from consumption preferences (Singh, Squire, and Strauss 1986; de Janvry, Fafchamps, and Sadoulet 1991), so the prefer- ence of certain producer groups (G) for certain types of foods, for example, may greatly affect the production system independent of considerations of profitability and comparative advantage. The realization of impacts (e.g., greater agricultural productivity, higher incomes, reduced poverty, improved food and nutrition security) may also be conditioned by factors beyond the household’s control.
For example, agricultural production depends on agroecological and bio- physical factors. In general, livelihoods may be influenced by many village- level factors (LC), such as agricultural potential, access to markets, and population density (Pender, Place, and Ehui 1999). These factors largely deter- mine the comparative advantage of a location by determining the costs and risks of producing different commodities, the costs and constraints to market- ing, local commodity and factor prices, and the opportunities for and returns to alternative income-generating activities, both on and off the farm. These factors have generalized village-level effects and manifest themselves through, for example, their impact on village-level prices of commodities or inputs or their impact on farm-household level factors such as average farm size. Other national-level factors (P) such as programs, policies, and institutions may influence the pathways at various points. For example, macroeconomic, trade, and market liberalization policies affect the relative prices of com- modities and inputs in general throughout the nation. Although such factors may affect different people differently, they cannot be explicitly controlled for in the empirical estimation of the impacts of the NAADS program because the values of their measures do not vary across the unit of observation, in this case households. On the other hand, national agricultural research policies, for example, may affect the types of technologies that are avail- able and suitable to farmers in a particular agroecological region or profit-
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