MICRO-ECONOMIC ASPECTS Models vs reality

In economic utility theory, one model suggests households face choices as to how to allocate their labour and spending in order to maximise their wel­fare or ‘utility’with given resources. It predicts family members will jointly choose how to allocate their labour to maximise income (or spending substitu­tion) over a given period. However, other factors make this analysis more complex when we con­sider that urban farmers are both suppliers of labour to UPA and consumers of food. Other factors include imperfect labour and land markets, unreli­able market information, unclear markets for some inputs, such as credit, gender factors, risk percep­tions, and social expectations. The decision to get, or stay, involved with UPA activities leads to changes in how households allocate their time and spending. From a labour supply view, households will produce food themselves if the UPA activity provides a higher return compared with other activ­ities. From a food consumers view, a household will produce its own food when it is less costly (in terms of time and money) than purchasing food (Nugent,

2000) .

Within utility theory there are a number of different models determined by the variables used in the function. These can include the income maximisa­tion model where utility is a function of income, the risk aversion model which recognises uncertainty as an important factor, the drudgery aversion model where no labour markets exist, the share – tenancy model where access to land as a produc­tive resource is through non-market mechanisms, and lastly, the farm household model where utility is determined by production and time constraints. All have some validity when considering the differ­ent aspects of UPA in reality, but as ever, the reality of UPA turns out to be far more complex than the theory. (Readers are referred to the extensive litera­ture on farm households for further examination of utility models.)

MOTIVES FOR UPA

Surveys of urban farmers’ motives for engaging in UPA in the South have been ranked according to their perceived importance (Nugent, 2000). Eco­nomic motives of production for home consumption, income enhancement (or expenditure substitution), response to economic crisis, and high prices of market produce are ranked at the top of the list. The ranking is expected to differ compared to farmers in the North, although a number of motives will be shared.

UPA can ensure food security during times of crisis and food scarcity, whether from national emergen­cies, such as war, or household crises such as sud­den unemployment. (Readers are referred to the example of Cuba.) UPA can also enhance food security due to chronic factors. Even in a relatively wealthy country such as the UK, the dramatic rise in the number of ‘out-of-town’ supermarkets in the 1980s and 1990s has hastened the decline of small, local shops. This decline has left many, par­ticularly the poor and vulnerable, without access to adequate supplies of fresh, nutritious food who instead have to rely more on overpriced, processed foods high in salt, sugar, and saturated fats (Caraher et al., 1998).

Poor families in the South can spend between 50-80 per cent of their income on food and still suffer from food insecurity. Structural adjustment policies of the 1980s and 1990s, leading to the removal of subsidies and price controls, have resulted in rapidly increasing prices of some food commodities (Nugent, 2000). Even with a return to a more stable macroeconomic environment, house­holds may continue to be engaged in UPA, perhaps reflecting an aversion to the risk of food insecurity.

UPA can be carried out by up to two-thirds of urban and peri-urban households, very often informally by women, who combine UPA activities with other activities such as childcare. Urban farmers are not always the poorest residents in the city but are sometimes among those who have lived long enough in an area to secure the means of produc­tion, especially land, and have become familiar with the markets for selling surpluses.

Studies in several African countries have found that income from UPA activities makes a significant con­tribution to the total household income. Drescher (1999) found that home gardens in Lusaka pro­duced an average of three months’ income at the average worker’s level in 1992, although this was extremely seasonal. In Russia, a survey found that urban farmers in three cities earned an average of 12 per cent of their income from food production in 1995 (Seeth etal., 1998). Nugent (2000) describes a number of factors which will determine the net flow of income of households engaged in UPA activ­ities. These are: farming effort; availability and cost of basic inputs; yields; market access; ability to store; transport; process and preserve; and prices. The fungible income of households derived from the substitution of market-bought produce with home grown is a major factor in UPA, as much activ­ity takes place informally.

Employment in UPA provides additional opportu­nities to the underemployed, temporarily unem­ployed, or long-term unemployed, where formal employment opportunities are limited. UPA is the second largest employer in Dar es Salaam (UN Centre for Human Settlements, 1992), but relatively few paid jobs exist in UPA beyond the intensive, commercial sector found mainly on the urban fringe (Nugent, 2000a).

Farmers may be engaged in UPA activities because of religious and cultural factors. For example, in Cairo, Muslims will raise small livestock for religious rituals surrounding holidays and funerals.

Even for relatively better off households in the South, the perception of the risk of food insecurity will influence their efforts because of the insurance value of activities. Residents of Hubli-Dharwad keep buffalo as a ‘nest egg’ to be sold at times of hardship or crisis. At the same time, the buffalo pro­vides the households with a fresh supply of milk, and fuel and fertilizer in the form of dung (Nugent, 2000a).

Food growing can be motivated by factors such as therapy and enjoyment. Recreational gardening and community growing activities are not finan­cially profitable in the North especially when the opportunity costs of alternative labour activities are considered. However, as noted earlier, profit is not usually a motive for the informal food grower. In the North, informal participants cite therapy, recre­ation, exercise, and a household supply of fresh produce as their primary reasons for urban food growing (Petts, 2001).