In rural development, the conventional wisdom has for decades been simple: households are better off when they have more than one way of making a living. Diversify, spread your risk, and you’ll be more resilient.
Our research in north-eastern Zimbabwe suggests this is only half true, and that beyond a certain point, adding more income-generating activities can actually make households poorer. The goal for policymakers should therefore be to support and enable households to diversify up to the point where it pays off, by investing in the right assets that make each new activity worth the effort.
The idea for this study came out of a broader concern. Across sub-Saharan Africa, rural households are increasingly abandoning rain-fed farming as their primary livelihood, driven by climate change, declining yields, rising production costs and stagnant producer prices. Governments have responded with programmes that subsidise inputs such as fertiliser and hybrid seeds to stabilise rural incomes. But most evaluations of these programmes look only at whether they raise crop yields. They don’t ask what happens to the household’s wider livelihood strategy.
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We wanted to understand whether input subsidies were genuinely helping rural households build better lives, or simply helping them cope.
This study was part of my doctoral research in Agricultural Economics at the University of Fort Hare under the supervision of Professor Abbyssinia Mushunje. The broader study sought to explore the wider impacts of input subsidies and to propose an evidence-based framework for livelihood support in Zimbabwe.
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We studied 408 households in Mashonaland East province, between May and July 2024. Half the households were beneficiaries of Zimbabwe’s Pfumvudza input subsidy programme and half were not. The programme, launched in the 2020/21 season, gives farmers free maize seed, fertiliser and lime, provided they establish climate-smart conservation plots. These plots must follow the three principles of conservation agriculture: minimum soil disturbance, mulching with crop residues, and crop rotation with legumes. Pfumvudza is one of the government’s flagship efforts to stabilise rural incomes in a country where formal employment opportunities are limited.
We wanted to know two things. Does receiving subsidised inputs encourage households to diversify their livelihoods? And does that diversification actually raise their incomes?
How we did the study
Mashonaland East includes areas suited to intensive maize production, and drier districts where rain-fed farming is becoming difficult. The province contains a mix of land tenure systems and plot sizes. Households were randomly selected from government extension lists, and we also held 12 focus group discussions with farmers.
To measure diversification, we used a statistical approach that captures not just how many activities a household pursues (like growing crops, hiring out labour, or running a small business), but how evenly income is spread across them.
Two findings stood out.
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First, input subsidies do encourage diversification: beneficiaries had more varied livelihood portfolios than non-beneficiaries.
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Second, and more surprisingly, extra diversification didn’t translate into higher incomes. If anything, subsidy beneficiaries were worse off than the households that hadn’t received them.
When we dug into why, we found an inverted U-shaped relationship between diversification and household income. Income rises as households add income-earning activities, but only up to a point. Beyond that point, adding more activities was associated with lower rather than higher income.
Over that threshold, households run out of the assets, labour, capital and management attention needed to run each activity well. Resources get spread too thin. Rather than a portfolio of complementary enterprises, you get a scattering of fragile ones.
The majority of households in our sample were operating beyond that optimum. Over half were classified as “medium” diversifiers, and a further 14.5% as “highly” diversified. Only about 27% were “low” diversifiers, and 2% specialised in a single activity.
In other words, most households in this part of Zimbabwe are diversifying past the point where it pays.
The activities they’re adding are mostly low-return ones: petty trading, casual farm labour, small informal businesses. These aren’t opportunities seized. They’re survival strategies in the face of distress and necessity. Households aren’t following a profitable opening; they’re diversifying because rain-fed farming alone no longer feeds them.
We also found that subsidy beneficiaries were less likely than non-beneficiaries to grow cash crops such as tobacco or cotton. These crops demand a great deal of labour, and the Pfumvudza programme is itself labour-intensive. The more commercially oriented farmers seem to be opting out of the subsidy programme altogether. By absorbing labour, the programme may be crowding out the cash crops that offer the clearest route to higher returns.
What makes diversification pay
The crucial finding is that it isn’t the number of activities that determines whether diversification pays; it’s the assets behind them.
We identified a specific set of assets that predicted higher incomes: tertiary education, livestock ownership, access to irrigation, formal credit, contract farming, and regular contact with agricultural extension services.
Households with these assets tend to diversify into high-value activities such as tobacco, horticulture and stable non-farm enterprises. Households without them diversify into whatever is at hand, which is usually low-margin and fragile.
And these assets were concentrated among households that were already better off. The very households that the subsidy programme is meant to help are the least able to convert subsidised inputs into a higher-return livelihood.
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This is the paradox we describe in the paper as “more becomes less”. Input subsidies broaden livelihood portfolios, but they push households further past the income-optimising threshold, fragmenting scarce resources into activities that suppress incomes rather than raising them. Subsidies, in this context, function as a coping mechanism rather than a pathway out of poverty.
What would need to change
Our findings point to several priorities.
First, expand irrigation infrastructure. In our data, this is the single most consistent enabler of high-return diversification. Rehabilitating existing schemes through public-private partnerships, with training in water management and crop selection, would help.
Second, strengthen contract farming in tobacco and horticulture. Pricing must be transparent and smallholders must have legal protection against exploitative terms.
Third, invest in livestock support, particularly community-based veterinary services and dipping facilities. These protect a key household asset.
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None of this is a reason to abandon input subsidies. It is a reason to stop treating subsidies as a livelihood strategy in isolation. Without complementary investment in the assets that enable high-return activities, subsidies risk creating a pattern where households work harder, spread wider, and earn less.
Diversification is not a virtue in itself. Whether it lifts a household or traps it depends on what a household has to work with, and on whether policy helps build those assets, or merely helps people cope without them.
