Analyzing The Motives Of Household Income Diversification And Its Effect On Food Security And Crop Production

The primary source of livelihood of rural societies in Ethiopia is rain-fed agriculture.As a result,rural households have been easily exposed to food insecurity problems as the agriculture system is associated with enormous environmental risks.Hence,farm households usually diversify their activities outside the farm sector to minimize the risk which born out of depending on undiversified livelihoods.However,in Ethiopia,the empirical evidence linking household income diversification to food security is limited.Additionally,no previous studies have investigated whether the rich or the poor households are more engaged in the diversification of activities in Ethiopia.Therefore,this study examined the status of household income diversification and food security,why households diversify their income(whether household income diversification is a means of survival or accumulation);the effect of household income diversification on food security;the effect of household non-farm participation on crop production and household farm income(whether participation of households in non-farm activities substitutes or complements agricultural production and farm income in rural areas)and the role of social network in determining the rural-urban migrants‘ job conditions and duration of migration(income diversification beyond the local territory).The study used a survey of rural(Abebe Doyo kebele,n = 175)and semi-urban(Gosu Kora Kebele,n = 175)households;and day laborers of Ambo town(n = 93)of Oromia Regional State,Ethiopia.Primary data were collected by using structured and administered questionnaires;which composed of a newly developed questionnaire and the adapted Household Food Insecurity Access Scale(HFIAS)from February to April 2018.The study determined the status of household income diversification and food security among rural and semi-urban households.Simpson‘s Index of Diversity(SID)and Shannon‘s Equitability Index(SEI)were employed to measure the household income diversity.Additionally,Food Security Index(FSI)was used to determine the food security status of households.The results of income diversity indices of rural(mean SID = 0.206 and SEI =0.366)and semi-urban(mean SID = 0.426 and SEI = 0.686)households showed that the rural households had a predisposition to specialization than diversification;while the semi-urban households diversified their income moderately.Moreover,the majority of households(69%of rural and 61% of semi-urban)in the study area were food insecure.This study also examined whether income diversification is a means of survival or accumulation among rural and semi-urban households in the study area.Ordinary Least Squares(OLS)estimation method was used to determine the effect of household income on the income diversity level of households.Independent samples t-test was also employed in the data analysis.Additionally,Instrumental Variable(IV)method was applied to overcome the possibility of reverse causality(an endogeneity bias).The second-stage least square(2SLS)regression results indicated that a 1000 Birr increase in household income decreased the index of diversity(both the SID and SEI)by 0.02 in the rural area(Abebe Doyo kebele).Conversely,an increase in household income by 1000 Birr increased the SID by 0.03 and SEI by 0.04 in semi-urban areas(Gosu Kora kebele).Therefore,the negative relationship between income and income diversification in the rural area indicated that income diversification was a means of survival for rural households and on the other hand,the positive relationship between income and income diversification in the semi-urban area showed that income diversification was a means of accumulation for semi-urban households of the study areas.Moreover,this study examined the effect of income diversification on food security in the study areas.Food security(access)was measured using the daily calorie consumption(nutrition-based)and the HFIAS(experience-based)methods.Consequently,the study used binary logistic regression and OLS estimation methods to determine the effect of household income diversity on food security.The IV method was also employed to overcome an endogeneity bias.The binary logistic regression result of the nutrition-based measure indicated that an increase in the value of income diversity(SID)by 1% increased the probability of households being food secure by 15.9% and 24.8% in Abebe Doyo and the Gosu Kora kebeles,respectively.Likewise,the result of the binary logistic regression of the experience-based method also indicated that an increase in income diversity(SID)enhanced the food security condition of households in both study areas.Additionally,the result of the2 SLS regression method showed that a 1% increase in the value of SID increased the FSI(nutrition-based measure)of households by 17.6%.Thus,the overall results suggested that income diversification contributes positively and significantly to food security in the study areas.The study also examined the effect of household non-farm participation on the major crop production(teff,wheat and barley)and farm income in the study areas.To address this objective,a survey of 144 non-farm participants and 160 non-farm non-participant households were conducted.For the data analysis,the OLS estimation was employed after applying the IV method.Besides,the study used an independent samples t-test to determine whether there is a statistically significant difference between non-farm participating and nonparticipating households on the yield of major crops,farm income and size of land cultivated.Thus,the 2SLS regression result indicated that the crop yield of the average major crops of households who were participating in non-farm activities was larger than that of households who were not participating in non-farm activities by 1.214 quintals.Likewise,the annual farm income of households engaged in non-farm activities was 1473 Birr larger than those who did not participate in any of the non-farm activities.Therefore,the results showed that household non-farm participation contributed positively to crop production and household farm income.The t-test result also revealed that the size of land cultivated by farm households was not reduced because of their participation in non-farm activities.Therefore,the overall results indicated that household participation in non-farm livelihood had a complementary effect on the agriculture sector in the study area.Finally,the study determined the role of social network(having family,friends or any contact)in determining the rural-urban migrants‘ job conditions(availability of job)and stay conditions(duration of migration)in Ambo town.In this situation,the day laborers who migrated to the town in the last five years(2015-2019)to diversify their income beyond their local territory were considered.The study employed Ordinal Logit model to analyze the data.The result of the model revealed that migrating day laborers who have social contact in the town have 0.11 times chances to find job and 0.086 times chances to stay longer in the town than the day laborers who have no such contact.Therefore,the study indicated that having social network in the town enables rural-urban migrants to find daily jobs and reinforces their decision to stay long time in the town.Pulling the whole result together,the study suggested the following policy interventions.(i)Facilitating the scaling up of income diversification and the movement of poor households out of low return and high-risk activities to sustainable economic activities along with easier access to credit and market to reduce food insecurity.(ii)Promoting non-farm sectors and establishing the underlying linkage between non-farm and agriculture to further maximize the synergetic effect between the two sectors.Moreover,to reduce the number of jobless day laborers in Ambo town,government may consider(a)accelerating rural industrialization to retain the excessive labor migrating to the town to find new jobs and(b)organizing the day laborers in micro and small enterprises by giving priority to those who have no family(social contact)in the town.