Determinants oflncome Diversification into Off-farm Activities among Farm Households
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Date
2012-06
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Addis Ababa Univerisity
Abstract
This study was intended mainly in examining the determinants of income diversification
into off-farm activities among farm households and thereby to have an insight on
contributions of diversification in Misrak Badawacho Woreda. The study drew a sample
of235 households through a multi-stage stratified sampling technique from four Kebeles
in the Woreda. Data analysis was done using descriptive statistics, binary logistic
regression model and multinomial logit model. Opinions of interviewees have also
triangulated with data obtained ji-om survey in issues related to roles of diversification.
Results indicate that about 59.1percent of respondent farm households have participated
in off-farm activities. Among these about 76.9 percent of off-farm participants drive their
income ji-om at least self employing nonfarm sources while 23.1 percent of off-farm
participants are allocated their labor to wage work. The binary logit and multinomial
logit estimations show that the major significant determinants of participation into offfarm
activities as well as choice of an activity among alternatives are farm size, oxen
holding, proximity of market locations and roads, and number of adults. Other
. characteristics such as age, sex, education level of household head, dependency ratio,
and soil quality of farm land are not significantly influenced the probability of involving
decision in and choices of off-farm activities. Farm households who involved in off-farm
activities have benefited in gaining a higher average income than not involved
households thereby maintained their daily requirements including food Moreover,
poverty headcount index shows that households who participated in off-farm activities
are less incident to poverty than those did not involve. However, the implied constraints
to nonfarm diversification include high financial shortage, lack of skills and knowledge
inadequacy of institutional support. Based on the findings, the following pOints of
recommendations are stated: Promoting rural credit schemes, integrating Government
and nongovernmental organizations in providing technical support, organizing peoples
in off-farm activities, designing labor intensive employment program and constructing
rural infrastructure.
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Keywords
Farm Households