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2017-10-29 | News

Farmers don’t prosper in the transition to a new business if they are forced to make that change

Salvatore Di Falco, Professor in Environmental Economics, University of Geneva

Making a change from working as a farmer to starting a small business is sometimes a good choice, but it works best if it’s a real choice instead of a response to poor conditions on the farm.

That’s one of the findings of a study by Salvatore Di Falco of the University of Geneva, which he presented as the first keynote address of the 11th Annual Meeting of the Environment for Development Initiative in Addis Ababa, Ethiopia, 26-30 October, 2017.

“The reluctant entrepreneur” is how Professor Di Falco described farmers in rural Ethiopia who feel that they need to earn money off the farm but don’t live close to formal job opportunities. He showed that these small business owners are not necessarily successful as entrepreneurs, even if they were as good at farming as those who stayed on the farm. In other words, many would be better off farming if their yields were better.

Starting new activities, explained Di Falco, requires an investment of time and money. As a result, “they get locked in” to low-profitability activities, he said.

Professor Di Falco thinks farmers need training opportunities, as well as safety nets such as insurance in case of crop failure. That way, he concludes, those who really want to be entrepreneurs will be more likely to be suited to their new line of work.

By: Cyndi Berck