Unpredictable farming income
Low farming income
Unexplored livestock income
Single source income
Undiversified basis of income possibilities
Underdeveloped capacity for income farming
Limited individual capital reserves
The quantity of global capital has been increased by the widespread move to a money economy after the Second World War. However, most rural communities are excluded from the mainstream of capital flow. In many villages, the economy rests on one cash crop with a secure but low market income. The people are almost totally dependent on farming and the unpredictable sufficiency or insufficiency of rain. This provides a very narrow economic base and places the community in a perpetual struggle with contingency. Although people work long hours, and although most villages have virtually no unemployment, yet in relation to the village's human potential and productive capacity there is radical underemployment, and few possibilities for improvement. Many rural communities have no industry and only a few small shops and businesses. Shopkeepers, farmers and fishermen operate on subsistence level profits, and the additional cost involved in transporting goods from urban areas to rural villages increases overheads and lowers profit margins even more. Low incomes mean there is no financial surplus, and thus no seed money is available for local expansion or investment. High construction costs further prohibit development, and it often takes several selling seasons to complete a building. The volume of production decreases where children are no longer as active in the family's work as they once were. Whatever funds are generated in a household are managed on a day by day basis and few records are kept for reference.
[Developing countries] Apart from human resources, the arable land within and adjacent to many third world villages is still their greatest resource; but although the economic development of many third world communities must primarily depend on agricultural industries, virtually no farming of cash crops may be carried out. Large and small plots of land may stand uncultivated, although local people may be aware that here is a latent potential for, for example, horticulture or stock farming. Most villagers have a background of subsistence farming and see farming as, at best, a minimal supplement to urban income; they are underexposed to intensive and diversified high-income farming. As a result, the land remains divided into tiny, cultivated plots with few animals. Each family manages its own land individually. In addition, there is little experience of essential machinery, soil improvement, marketing processes and managerial techniques.
Subsistence agriculture draws heavily on the natural resource base and thus degrades it.