Determinants of non-farm income diversification strategies and decisions of Bangladesh farm households

Abstract

Despite being mostly dependent on agriculture, farm households in Bangladesh frequently engage in non-farm income diversification activities in order to maintain or increase their standard of living. The aim of this study is to examine the factors that influence farm households’ strategies and decisions regarding the accumulation of non-farm income.Multi-stage sampling was used to collect primary data from 139 farm households in the Rajshahi district in order to meet the study aim. Descriptive and econometric analyses were both used for data analysis.The descriptive data showed that around 80% of the respondents earned income outside of agriculture. The findings of the binary logit model demonstrate that family size, years of schooling of the household head, and lack of participation in local organizations have a substantial impact on respondents’ decisions on diversification. The multinomial logit model examined how family size, local organization membership, and farm size affected factor diversification outside of farming. Furthermore, the household head’s years of schooling, participation in local organizations, and distance to the closest product market were the main factors influencing their diversification strategy.Policy makers should provide incentives and training that further stimulates non-farm income generating activities of farm households to facilitate the continuing transition of the Bangladesh economy away from its primary reliance on agriculture to generate national income.