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 nonfarm 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.