Determinants of Income Diversification and its Effect on Food Security of Small Holder Farmers in Ethiopia
Mezgebu Aynalem Mengstie
Debre Markos University, Burie Campus, Ethiopia
In Ethiopia 83 percent of small-holder farmers participated in farming activities and only 27 percent in non-farm economic enterprises. This paper examines the determinants of income diversification and its effect on food security in Ethiopia. The study used two stages sampling in combination with stratified and simple random sampling procedures to select kebeles and households. Fractional response model were employed to analyse the data collected from a sample of 450 rural households. While the Simpson index of diversity were used to measure the extent of income diversification. Income diversification level has positive and significant effect on food security status of the rural farming households in Ethiopia. The level and type of income diversification depends on the accessibility and availability of different income sources. The mean results of degree of income diversification revealed that Simpson Index of Diversity (SID = 0.24) by rural households in the study area. Based fractional response model educational status, credit utilisation, distance from market and access to electric power affect at p<0.01 percent probability level, sex of the household head affect at p<0.05 percent probability level and, annual household income, special skill and family size significantly affecting degree of income diversification at p<0.1 percent probability level. Finally, this thesis indicates the important policy implications suggesting that programs, projects and/or any interventions designed targeting to engage people in other income generating activities would augment their income sources which are made to increase the food security status at household level in Ethiopia. To reduce food insecurity, government policies should better aim at increasing access to non"=farm activities for all rural households, particularly for households with little human resources, land and monetary assets (opportunities) by decreasing the constraints that hinders these households from participating in non-farm activities.
Keywords: Food security index, fractional response regression, income diversification
Contact Address: Mezgebu Aynalem Mengstie, Debre Markos University, Burie Campus, Debre Markos, Ethiopia, e-mail: mezgebu12aynalemgmail.com