"elderly rustic," apparently (based on continental analogies) a contraction of godfather… See origin and meaning of gaffer.
'Gaffer' has another meaning, too, which is no doubt also relevant. In British slang, a 'gaffer' is a foreman, a person who supervises a job. At the time of Bilbo's Birthday Party, we're told that Hamfast, who was then seventy-five, oversaw the gardening at Bag End, but was ...