Abstract:
Smallholder rural farm households face an increasing need of looking for alternative
income sources to secure their livelihoods and supplement their agricultural activities.
But Agriculture in study area is at subsistence stage, complex, diverse and risk prone. In
Haramaya district income diversification is influenced by various factors. Thus, the aim of
the study was to identify level and status of income diversification and factors responsible
for participation of income diversification strategies among rural farming households in
the district. The study drew a sample of 246 rural farm households through multi stage
sampling technique from four Kebeles of the district. In this study both descriptive
statistics and econometric model were applied. The estimated values of Simpson Index of
Diversification (SID) showed that majority of the rural households had “low” and
“medium” level diversified income activities. The multinomial regression analysis was
applied to identify factors which influence rural household's decision participation in
income diversification strategies. The result indicated that participation in income
diversification strategies was influenced by the years of education of the household head,
number of economically active family member, membership of farmers’ cooperative,
access to credit and remittance. A Tobit regression model indicated that extent of income
diversification strategies was affected by sex of household, economically active family
member,livestock holding, farm size, education, distance to market, and membership of
farmers’ cooperative. This study concludes that agricultural sector alone cannot be relied
upon as the core activity for rural households as a means of improving livelihood,
achieving food security and reducing poverty in the study area. therefore rural
development strategy should emphasis on promoting income diversification strategies in
rural areas to improve overall wellbeing of the rural societies
