Determinant of Rural Household Participation in Non-Farm and Level of Generated Household Income from the Activities: The Case of Haramaya Woreda, East Hararghe Zone, Ethiopia

Fami Abdurezak ,Lemma Zemedu ,Daniel Belay

doi:10.7176/jpid/58-03

Abstract

This study analyzed the determinant of rural household participation in non-farm and level of generated household income from the activities in Haramaya district, Ethiopia using cross-section data. During this study both primary and secondary data were employed Primary data were collected from 196 sample respondents using stratified random sampling. In this study both descriptive and econometric analysis was carried out. Descriptive statistics were applied to characterize the sample households in terms of economic, demographic and institutional factors. Heckman two stages selection model was used for estimation of determinant participation of rural households in non-farm activities and determinant level of income from non-farm activities. The result of factors affecting participation of rural households in non-farm activities indicated landholding size, use of irrigation, livestock holding and distance to nearest market negatively and significantly influenced participation while education, household size and non-farm training significant and positively affects participation of rural household in non-farm activities. In the result of determinant level of non-farm income shows that landholding size, use of irrigation, livestock holding and distance to the nearest market were significant and negatively affects level of non-farm income while household size and education status were significant and positively influenced level of non-farm income. In generally the study identified the determinant of rural household participation in non-farm activities and determinant level of income from non-farm activities. Therefore, Policy makers should integrate the promotion of non-farm activities in the framework of rural development policies and strategies. Keywords: participation, non-farm activities, household income, heckman two steps selection model DOI: 10.7176/JPID/58-03 Publication date: January 31 st 2021

Highlights

In most developing countries, agriculture is the mainstay and the largest economic sector for both its contribution to the GDP and generation of employment
Some variations/differences were observed between those rural households who were participating in non-farm activities and non-participants in terms of demographic, economic and institutional factors
The two groups differ to some extent in sex, education, remittance, irrigation, credit, non-farm training, age, landholding size, livestock owned, household size, dependency ratio, farm experience, distance to nearest market and access to improved agricultural input

Summary

Introduction

Agriculture is the mainstay and the largest economic sector for both its contribution to the GDP and generation of employment. In sub-Saharan African countries, agriculture is the major economic activity accounting for the highest share of the GDP and creates an oversized proportion of employment opportunities (MoARD, 2010; FAO, 2016). Despite that agriculture is being major source of income and employment in most rural areas in developing countries, it has not been able to produce sufficient food to feed their population due to small ratio of farm land to population (Eshetu and Mekonnen , 2016). Haggblade et al, (2010) found that non-farm activities contributed 35-50 percent of rural household income across sub-Saharan African countries. This indicates one possible pathway to induce out of food insecurity problem in developing countries is that the promotion and establishments of nonfarm employments

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