Household participation in livelihood diversification choices and its effects on household income of smallholder farmers in Boloso Sore District of Wolaita Zone, Ethiopia

Abstract

Rural households in many different contexts have been found to diversify their income sources allowing them to spread their risks and to ease consumption. Generating diversified incomes for a majority of the rural poor is an essential component of a successful rural development strategy. This study examined participation in livelihood diversification choice and its effect on household income in Boloso Sore District of Wolaita Zone, Ethiopia. Multistage sampling technique was employed and 270 households were selected for the study. Data analyses were carried out by using descriptive statistics and econometric model. Multinomial logit model was used to identify factors influencing households’ participation in livelihood diversification choices while effects on the household income were analysed by using two-limit Tobit model. The result showed that agricultural activities were the most important source of income for rural households in contributing 72% of total household income with the remaining 28% originating from nonagricultural activities. Multinomial logit model output revealed that age of household head, market distance, members in cooperatives determined participation in livelihood choices significantly and negatively while educational level, economically active members at home, sex, training, owning mobile phone had positively determined participation in livelihood choices. Besides, two-limit Tobit result revealed that age, family size and farm size determined level of income diversification significantly and negatively while educational level, economically active members at home, sex, frequency of extension visit and credit access had positively determined level of income diversification. The findings imply that these factors need to be considered by policy makers in the planning of agricultural and non-agricultural initiatives in the study area.