Implications of Rainfall Shocks for Household Income and Consumption in Uganda

Much of Uganda's agricultural production activities are rain-fed, meaning that changes in weather conditions have important implications for households' total agricultural production and wellbeing. This study uses a basic model of household production to assess the impact of rainfall shocks (using rainfall variability) on farm income and consumption expenditure and the response of households to such shocks. Pooled cross sectional data of farm households are derived from the Uganda National Household Surveys for 1992/93, 1999/2000 and 2002/03, which provide a rich source of information on individual and household characteristics (size, age, sex, education, employment, etc.), household income, expenditure, and exposure to risk/shocks. Rainfall statistics are obtained from various issues of the Statistical Abstracts and the Background to the Budget. We show that rainfall shocks have important implications for both income and consumption of households, with strong policy implications towards cushioning agricultural households. Higher than average rainfall in the first planting and first harvest seasons is found to result in lower incomes and consumption. Given that about 40% of Uganda's total output is obtained from rain-fed agriculture, the impact of rainfall variability on household welfare has important implications for national income. It is also noted that other factors such as ownership of land, education of the household head and household size are important in the determination of household welfare. Community characteristics such as access to electricity, markets and infrastructure in general play a very important role in the welfare of agricultural households. Programmes to protect households against rainfall shocks such as irrigation schemes, storage facilities for dry produce, staggered planting and crop diversification can provide helpful avenues to reduce income variability among agricultural households. In order to reduce welfare variability and poverty in general, it is necessary to continue the focus on education and targeting of poor and vulnerable households in terms of access to education, health care and other welfare programmes. Access to land has strong implications for both income and consumption - households with access to larger land areas are likely to have higher incomes and higher consumption expenditures - suggesting that land policies to improve access are needed so as to enhance incomes of agricultural households.