Contents

• Introduction 3
• Farm Diversification 3
• Diversification of farming system in case of South Africa 5
• Impact of farm diversification on sustainable household income and rural development 6
• Farm diversification as a risk management tool for farm households 9
• Risk Management through farm diversification strategy 11
• Factors affecting farm diversification decisions 11
• Adoption of on-farm diversification strategy 12
• Conclusion 15
• Reference List 16

Description

Structural transformation in agricultural sector has been studied by many literatures for past several years. Agriculture is the primary base for the South African economy because majority of the livelihood of the population depends on it and serves as the principle source of income for them. The agricultural sector of South Africa can be categorized into three segments, namely, commercial, medium and small scale. The country faces significant challenges in terms of food security due to the obstacles created by quick depletion of natural resources like soil and water, poor micro economies, unfavorable agricultural policies and poor economic condition. These factors have affected small and individual farmers and put their livelihood at risk. Evidently, this risk motivates and encourages the farmers to diversify farm activities into other nonfarm activities that are considered to supplement their income. A number of researchers have studied the viability of diversification strategy for the farm (Lanjouw & Sharrif, 2004). The present section aims to critically appraise those literatures and compare the findings of different studies to generate a deeper insight about the feasibility of diversification strategy as a part of the farm adjustment strategy by giving special reference to the South African farms.