Determinants of Income Diversification among Rural Farm Households: The Case of Leemo District, Hadiya Zone, South Nation Nationalities People Region, Ethiopia

DETERMINANTS OF INCOME DIVERSIFICATION AMONG RURAL FARM HOUSEHOLDS THE CASE OF LEEMO DISTRICT, HADIYA ZONE, SOUTH NATION NATIONALITIES PEOPLE REGION, ETHIOPIA. DEPARTMENT OF ECONOMICS, FACULTY OF BUSINESS AND ECONOMICS, UNIVERSITY OF WACHEMO (WCU) HOSSANA, ETHIOPIA Yisihake Ergicho Ababbo, Lecturer in Wachemo University, College of Business and Economics, Department of Economics Address - Mobile +2519-10-10-49-57 0r +919876086745, Emailyise_2004@yahoo. com Supervisor Nigusse Sime (PhD) This study was attempted on identifying and analyzing the determinants of income diversification and main income diversification sources among rural households in Leemo District, Hadiya Zone of South Nation Nationality Regional State using primary data. Structured questionnaires administered through personal interviews. Both descriptive statistics and econometric methods were used to analyses the data. Out of the total sampled households income, 57.84 % of their income obtained from farming activities, while 42.16 % of their income earned from off-farm activities. In this study we identified that rural farm households income was basically categorized into two, viz. farm and non-farm income. Farm income sources constitutes crop, livestock, other farm income source while nonfarm income constitutes agricultural wage, off-farm employment, nonfarm wage, self employed income sources and remittance (transfer payment). The simplest measure of income diversity was the average number of income sources (of the eight listed here) that households had. It was observed that rural households in the study area had an average of two sources of income. In Multiple regression model out of eleven explanatory variables included in the model, sex of household head, education level of household head, farm size, farm income and distance to market center were found significant in number of income diversification sources. While analysis of determinants of income diversification was done by logit regression model, in which probability of households participation in off-farm activities were used as dependent variable. In this case years of schooling of household head, farm income, landholding size/farm size, member ship in farmers cooperative and distance to the market center were found significant. Overall the result of this study suggests those stakeholders and concerned bodies who focus on promotion, encouragement and expansion of income diversification is expected to enhance educational level of household, to provide aids and subsidized inputs to improve agriculture which in turn increases farm income, to develop rural infrastructure, to create off-farm job opportunity and to take into consideration dwindling landholding size of households.