Determinants of non-farm livelihood diversification: evidence from rainfed-dependent smallholder farmers in northcentral Ethiopia (Woleka sub-basin)

ABSTRACT Diversifying the sources of livelihood for subsistence farmers beyond agriculture plays a significant role in reducing poverty as well as withstanding the adverse impacts of climate change. A cross-sectional survey research design has been employed to examine the factors which determine the participation of rainfed-dependent smallholder farmers in non-farm activities using a mixed methods approach. Data were obtained from 384 randomly selected households in the Woleka sub-basin of Ethiopia. Data were collected using survey questionnaires and interviews were analyzed using mean, percentage, chi-square test, t-test, one-way ANOVA, binary logistic regression model and thematic analysis. Access to adequate capital, poor infrastructure and lack of training are the major constraints which hindered farmers from undertaking non-farm activities. The regression model result revealed that several factors determine the propensity of smallholder farmers’ participation to non-farm activities. Better-off households, households led by literate and younger heads, having access to microfinance, having extension services, and having social responsibilities create engagement in non-farm economic activities. We argue that strengthening agricultural extension services, providing microfinance, entrepreneurial training and skill development, and infrastructure development would enhance the participation of smallholder farmers in non-farm activities. To achieve this, policy makers and other stakeholders need to integrate non-farm livelihood strategies into rural farming economies.