Determinants of livelihood diversification decision of small holder rural farmers: Case of Sadi Chanka district, in Oromia, Ethiopia

Abstract

Livelihood diversification is the no more a choice but a must in developing countries. Diversification of farmers towards non- farm and off-farm activities as a source of income and employment is a way out of poverty in these countries. Farm households should engage in diverse livelihood strategies away from purely crop and livestock production towards other non-farm and off-farm activities in order to broaden and generate additional income for their households. This study attempts to analyses the determinants of livelihood diversification decision of small holder rural farmer households. Two stage sampling procedure was employed and 351 respondents were selected from four kebeles of Sadi chanka District. Multinomial logistic regression model was used to examine the determinants of livelihood diversification decision of the smallholder farmers. The regression result showed that out of the 16 hypothesized variables, ten were found to be significantly influencing the livelihood diversification of the smallholder farmers. Accordingly, age of household head, sex of household head, education level of household head, access to credit, irrigation facilities, urban linkage and crop production risk influenced the livelihood diversification decision positively and significantly, while farm-land size, market distance and dependency ratio affected the decision to diversify negatively and significantly. Thus, the findings from this study can be used by policy makers to design policies that will reduce poverty by way of making the smallholder farmers diversify their income generating activities.