Seasonality and its influence on rural BoP household financial management

By | July 26, 2009
Fallow field, Sawai Madhopur, Rajasthan India  January 2009

I first noticed the influence of seasonality on income halfway during the Indian fieldwork. On one hand, its but natural that the seasons are linked to a farmer's cash flow, dependent as it is on the harvest. But it was when I met the silversmith that I realized that even his income was influenced by the harvest season simply because so many of his customers were farmers. This led me to start asking everyone else that I met whether they noticed any pattern of change in their income over the course of the natural year. Just about everyone could identify the high points and the lows, regardless of whether they themselves owned land or were farmers themselves. We could stop at this point with the assumption that rural economies are linked to the seasons and impact the majority of the closely knit community.

However, I found that in The Philippines, Jesse the furniture maker, could also identify seasonal ups and downs in his income over the year, but his pattern of months was very different from the rest of the community. Instead of being linked to the "dry" and "wet" seasons (this was a rice farming region) his peak times were dependent on the holiday seasons of the balik bayan or migrant workers. They would use their home leaves to improve their houses, tending to order new furniture in conjunction with the renovation or building work done during this time.

This leads me to say that while one could define seasonality as solely the influence of nature on the land, in the context of learning about irregular incomes, I'd prefer to expand the definition to include any reasonably predictable patterns in cash flow based on the earner's prior experience. This would then differentiate known changes in cash flow from the truly unpredictable – natural disaster say or the random – how many bottles of wine might be sold today.

Thus, in rural communities, such as those studied, one might hazard a guess that the various mitigating behaviours, such as maintaining multiple streams of income or managing a portfolio of "deposits" that could be converted into cash at different durations of time, emerged from the experience and knowledge of the known, natural rhythm of the larger cycle of seasons but is also used to smoothen the volatility of the random and unpredictable in the shorter time spans. Nature would teach that there are things beyond the control of the human being, but experience would permit the control of that which could be managed.

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