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Special project: Agriculture

Response of rural households to agricultural income shocks

Schmidt, Erich, Dr. rer.pol. (Prof., Leibniz Universität Hannover)

Waibel, Hermann, Dr. sc. agr. (Prof., Leibniz Universität Hannover)

Summary

The Asian financial crisis of 1997 has raised new questions about the role of agriculture in emerging market economies. While in these countries subsistence farmers have been moving gradually towards commercialization rural farm households may still play an important safeguard role. The role of agriculture largely depends on the structure and organization of the agricultural systems. It needs to be recognized that in addition to economy-wide macro shocks, various idiosyncratic shocks can affect agriculture especially in peripheral areas, which are also often less favored in natural resource endowments and in addition suffer from poorly developed infrastructure. The general objective of the sector project agriculture is to advance the theory of agricultural development by merging the well-established concept of risk with the emerging concepts of dynamic poverty and vulnerability. The expected contribution of this project is to generate a better understanding of the potential and actual contributions of the agricultural sector in emerging market economies that are faced with an increasingly uncertain environment. Thus, a basis will be provided for designing more effective strategies of social protection and the establishment of better safety nets.