Academic journal article Asian Social Science

The Role of Assets in the Enhancement of Households' Income: A Study of Poverty Alleviation among Rural Communities of Kelantan and Terengganu

Academic journal article Asian Social Science

The Role of Assets in the Enhancement of Households' Income: A Study of Poverty Alleviation among Rural Communities of Kelantan and Terengganu

Article excerpt

Abstract

This paper aims to examine the role of assets and entitlements on the enhancement of farmers' income. Using a structured socio-economic questionnaire, 302 randomly selected farmers in both Kelantan and Terengganu states were tested. To answer the study's objectives, one way ANOVA test was carried out and tested. The results indicated that access to land, fertilizers, tractors, and health facilities, quality of housing, market, and livestock have significant positive impact on farmers' wellbeing. Access to irrigation and having savings (at banks and/or homes) were found to have significant negative impact on farmers' monthly income. Education and association memberships are not essential factors that might contribute to the enhancement of farmers' livelihood. Investing in productive assets was found to be more effective rather than safekeeping the money in a bank or at home. However, households and farmers deal with their own assets and entitlement differently. As a result, assets are found to decrease the income of farmers partially due to the farmers' decision-making strategies which seems to be poor and inadequate. Therefore, incorporating psychological perspective such as farmers' behaviours and perceptions are utmost important in order to better understand the complex mechanisms underlying the farmers who are falling in poverty trap.

Keywords: poverty eradication, assets, small holder farmers

1. Introduction

When Sen (1981) published his famous book Poverty and Famines, he altered the idea of famine is mainly occurred due to biophysical events such as flood and drought to lack of entitlements. Sen (1981) believes that famines occur without any decline of food availability. But lack of entitlement and the distribution of this entitlement among individuals and households is a significant factor that determines the vulnerability to famine. He then conceptualized his entitlement approach as a model that explains vulnerability to famine in terms of resources availability to individuals based on their own capacities and capabilities (Adger, 2006). Many scholars and researchers have criticized Sen's entitlement approach. Geest and Dietz (2004) argued that this approach neglects the historical structural processes that cause the unequal distribution of entitlements to resources, and fails to explain the recovery process after a disaster. Devereux (2001, p259) stated that Sen's approach fails in recognizing individuals as socially embedded members of households, communities and states; and fails to recognize that famines are political crises as much as they are economic shocks or natural disasters.

Even though Sen's entitlement approach generated lot of criticisms; many researchers follow his theory and investigate the impact of assets, entitlement and empowerment on households' vulnerability to poverty. Carter et al (2007) found that poor rural Ethiopian households who have few assets and experienced drought are unable to rebuild their herds. Osman-Elasha et al (2006) found that to reduce households' vulnerability to climate change in Sudan; government must invest in building poor households' capabilities to respond against climate change and natural disaster as well as other stresses. These interventions vary in nature such as access to natural, physical, financial, human and social assets. While Jehangir et al (2002) stated that credit, labour, fertilizers and reducing cost of production are positively affecting the farms' income. Babatunde (2008) pointed out that failure in many poverty reductions has been because policymakers and practitioners ignored the great diversity and heterogeneity in assets portfolios across households. All above studies assert that households use their resources rationally. But owing an assets and entitlements may not be sufficient in eradicating poverty if households behave inadequately (Scaramozzino, 2006) and if households live in prone areas and also if they live in areas where there are no well developed markets (Hanjra et al. …

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