Rural households in developing countries have traditionally been viewed as though they were exclusively engaged in agriculture. However, in recent development, rural households in such countries driversify their incomes by participating in non-agricultural activities, such as wage and self-employment in commerce, manufacturing, and services. Such non-farm incomes can contribute significantly to total income of farm households in developing countries. In review of about 100 farm household survey studies from 1070s-1990s, Readon et.al (1998) finds an average share of 42% of non-farm income in total rural household income in Africa, followed by 40% in Latin America, and 32% in Asia (Lasjouw and Sparrow, 1999). Further, in more extreme resutls, this research in Malang District – East Java find an average share of around 80% of non-farm income in total rural small farm households income. The research is a case study that deals with different area. i.e. peri-urban and rural areas in Malang District. The unit analysis of the study is farm household.
