Introduction: Many researchers and policymakers used to believe that the rural economy in developing countries was synonymous with agriculture. This perspective suggested that rural households derived most of their income from food production and the export of agricultural products. However, this view has evolved over recent years. Today, researchers are increasingly recognizing that income for the rural households comes from a variety of activities, with the non-agricultural sector playing a significant role. The non-agricultural sector has gained recognition as a crucial tool for reducing rural poverty and providing lucrative employment opportunities for rural labors. In Iran, non-agricultural activities in rural areas have expanded significantly due to recent droughts, water resources crisis, and the growing inclination of rural youth to pursue non-agricultural jobs. According to the 2017 Population and Housing Census, 49.7 percent of rural employees in Iran were engaged in the non-agricultural sector. As of the 2016 Population and Housing Census, approximately 6,434,501 people lived in urban areas, which accounted for 1.8 percent of the country's total population. Within that figure, 4,700,924 resided in urban areas across the nation, while 1,733,121 lived in the urban regions of Razavi Khorasan province. The significant difference in population is largely attributed to inadequate agricultural conditions and limited job opportunities in the province's villages. In Razavi Khorasan province, employment in the agricultural sector accounted for 22 percent of jobs in 2016, dropping to 19.3 percent by 2017. A review of existing studies indicated that no comprehensive research on the economic impacts of non-agricultural activities on the agricultural sector, particularly within Iran, was conducted. Given the importance of understanding the economic implications of non-agricultural employment for the agricultural sector— and considering the vital role of agriculture in the country's economic growth and food security— this research aimed at evaluating the economic effects of non-agricultural activities on agricultural operators in the rural areas of Sabzevar County of Iran.
Materials and Methods: The required data were collected through a questionnaire using a simple random sampling method from 208 farmers in the county during the crop year 2021-2022. For this purpose, the system of Seemingly Unrelated Regression Equations (SURE) was applied. The dependent variables included agricultural labor employment, farmers' income, and the amount of investment made in the agricultural sector by the farmers of Sabzevar. The concerned independent variables included the level of labor wages, income from non-agricultural activities, the extent of area under cultivation, the amount of facilities received (reflecting the interest rate on these facilities), and the diversity of agricultural products (including crops, horticulture as well as livestock and poultry) produced by the farmers of Sabzevar County.
Results and Discussion: An examination of the employment structure and income of farmers’ households in Sabzevar County revealed notable findings from a survey of 208 farmers. Among these, 112 farmers (53.8 percent) were engaged in the  non-agricultural activities, while 96 farmers (46.2percent) earned their income solely from agricultural sub-sectors, including livestock, agriculture, and horticulture. The study results indicated that in the wage labor employment equation, agricultural income and labor wages negatively impact the level of labor employment; conversely, the amount invested, income from the non-agricultural activities and the total area of agricultural and horticultural crops had significantly positive effects on the labor employment. In the equation concerning the agricultural income, the variables of the area under cultivation, monthly income from the non-agricultural activities, investment in agriculture, and the diversity of agricultural products showed positive effects. Additionally, an analysis of the equation with investment as the dependent variable showed a negative relationship with the interest rate of received loans; however, it maintained a significantly positive relationship with other factors such as the amount of facilities received, the agricultural income, and the income from non-agricultural activities. Overall, the results from estimating the system of Seemingly Unrelated Regression Equations (SURE) indicated that the non-agricultural income positively and significantly influenced the labor employment, the agricultural income, and the level of investment in the agricultural sector.
Conclusion and Suggestions: Raising the income levels of the rural people and farmers leads to poverty reduction, increased consumption expenditures among rural households, and enhanced investment and employment in the agricultural sector. Therefore, it is recommended that the government create and strengthen appropriate production and service infrastructure in the rural areas. This will provide the necessary conditions for the diversification and expansion of non-agricultural activities along with the agricultural ones. To enhance effectiveness, it is important to emphasize regional indigenous capacities and provide job creation and entrepreneurship consulting services. Given the positive impact of financial facilities and the negative influence of interest rates on investment in the agricultural sector, policymakers should aim to expand investment in agriculture. This can be achieved by offering financial facilities at reasonable interest rates and easing the process of obtaining these facilities.