WOLLEGAUNIVERSITY

SCHOOL OF GRADUATE STUDIES

FACTORS INFLUENCING FARMERS’ PARTICIPATION IN OFF-

FARM ACTIVITIES: THE CASE OF DANO WOREDA OF WEST
SHEWA ZONE, OROMIA REGION

By
GELETA ABERA

October, 2021
Nekemte, Ethiopia
 WOLLEGAUNIVERSITY
SCHOOL OF GRADUATE STUDIES

FACTORS INFLUENCING FARMERS’PARTICIPATION IN OFF-

FARM ACTIVITIES: THE CASE OF DANO WOREDA OF WEST
SHEWA ZONE, OROMIA REGION

A THESIS SUBMITTED TO THE COLLEGE OF BUSINESS AND

ECONOMICS IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF
MASTER OF SCIENCE IN DEVELOPMENT ECONOMICS

By

GeletaAbera

Major Advisor: MelkamuBelina(Assistant professor)

October, 2021
Nekemte, Ethiopia
 WOLLEGA UNIVERSITY
SCHOOL OF GRADUATE STUDIES
P.O. Box: 395, Nekemte, Ethiopia.

APPROVAL SHEET FOR SUBMITTING FINAL THESIS

As member of the Board of the Final M.A. thesis open defense, we certify that we have
read and evaluated the thesis prepared by GeletaAbera Under the title“Factors
Influencing Farmers’participation In Off-Farm Activities: The Case of
DanoWoreda Of West Shewa Zone, OromiaRegion”and recommended that the thesis
is accepted as fulfilling the thesis requirement for the Degree of Master of Art in Science
In Development Economics

_____________________________ ________________ ________________

Chairperson Signature Date
_____________________________ ________________ ________________
Internal Examiner Signature Date
____________________________ ________________ ________________
External Examiner Signature Date
Final Approval and Acceptance
Thesis Approved by
____________________________ ________________ _______________
Department PGC Signature Date
____________________________ ________________ _______________
Dean of College Signature Date
Certification of the final thesis
I hereby certify that all the correction and recommendation suggested by the board of
examiners are incorporated in to the final thesis entitled “Factors Influencing
Farmers’participation In Off-Farm Activities: The Case of DanoWoreda Of West
Shewa Zone, Oromia Region” byGeletaAbera
____________________________ ________________ _______________
Dean of SGS Signature Date

i
 STATEMENT OF THE AUTHOR

I Mr. GeletaAberahereby declare and affirm that the thesis entitled “Factors influencing
farmers’ participation in off-farm activities” is my own work conducted under the
supervision of MelkamuBelina(Ass.prof). I have followed all the ethical principles of
scholarship in the preparation, data collection, data analysis and completion of this thesis.
All scholarly matter that is included in the thesis has been given recognition through
citation. I have adequately cited and referenced all the original sources. I also declare that
I have adhered to all principles of academic honesty and integrity and I
have not misrepresented or fabricated or falsified any idea/data/ fact/source in
my submission. This thesis is submitted in partial fulfillment of the requirement for a
degree from the Post Graduate Studies at Wollega University. I further declare that this
thesis has not been submitted to any other institution anywhere for the award of any
academic degree, diploma or certificate.

I understand that any violation of the above will be cause for disciplinary action by the
University and can also evoke penal action from the sources which have thus not been
properly cited or from whom proper permission has not been taken when needed.

Name:
GeletaAbera

Signature:____________________
Date: ______________________
School/Department:

ii
 DECLARATION
This is to certify that the thesis entitled “Factors Influencing Farmers’participation In
off-Farm Activities: The Case Of DanoWoreda of West Shewa Zone, Oromia Region”
to be submitted in partial fulfillment of the requirements for the award of the Degree of
Master of Science in Development Economics by the school of Graduate Studies,
Wollega University through the college of Business and Economics, carried out by
GeletaAberawith my guidance. The matter embodied in this thesis work has not been
submitted earlier for the award of any degree or diploma.

The assistance and help received during the course of this investigation have been duly
acknowledged. Therefore, I recommend that it can be submitted as fulfilling the research
thesis requirements.

_________________________ _____________________ ______________

Major Advisor Signature Date

iii
ACKNOWLEDGEMENT

First and for most I would like to extend my heartfelt thanks to my advisor Melkamu
Belina(Assistant Professor) for his genuine and constructive professional comments
without which the quality of this paper would not have been like this. My genuine
appreciation goes to my wife Marta Abera who was my backbone for this work and her
for all her support, encouragements and enthusiasms throughout my life and my work.

Second, I would like to acknowledge to different scholars particularly (Haile,2012) and

others many who study on the area of my topic I reviewed and discussed.

I would like to express my sincere appreciation to my family, relatives and real friends
for their encouragement and inspiration, which made the study a success.
Above all, many thanks go to the Almighty God who is always behind every success in
one‘s attempt.

Finally, I would like to acknowledgement my previous director DiribaDebele(MA) who

supported me in facilitating the way I start to coninue my education.

iv
 ACRONYMS& ABRAVAITIONS

ADLI : Agricultural Development Led Industrialization

AE : Adult Equivalent
CSA : Central Statistical Agency
DWFEDO : DanoWoreda Finance and Economic Development Office
FAMSIZ : Family size
FAO : Food and Agriculture Organization of the United Nations
FGD : Focus Group Discussion
GDP : Gross Domestic Product
Ha : Hectares
HH : Household
KA : Kebele Administration
Ls : Land size
NFE : Non-Farm Enterprise
NGO : Non- Governmental Organization
PPS : Population proportional to size
UDFID : United Kingdom Department of Foreign and International Development
UNDP : United Nation Development Program
WB : World Bank
Medoc : Ministry of Economic Development and Cooperation
DWAS : DanoWereda Agricultural sector
SSA : Sub-Saharan Africa

v
 TABLE OF CONTENT
Contents Page
APPROVAL SHEET FOR SUBMITTING FINAL THESIS ........................................ i
DECLARATION .............................................................................................................. iii
ACKNOWLEDGEMENT ............................................................................................... iv
ACRONYMS& ABRAVAITIONS .................................................................................. v
TABLE OF CONTENT ................................................................................................... vi
LIST OF TABLES ............................................................................................................ix
LIST OF FIGURES ...........................................................................................................x
LIST OF TABLE APPENDIX ........................................................................................ xi
ABSTRACT .......................................................................................................................xii
CHAPTER ONE ................................................................................................................ 1
1.INTRODUCTION .......................................................................................................... 1
1.1.Background of the Study ............................................................................................1
1.2.Statement of the problem ........................................................................................... 4
1.3.Objective of the study ................................................................................................ 6
1.3.1.General Objective ................................................................................................6
1.3.2.Specific Objectives ..............................................................................................6
1.4.Research Questions .................................................................................................... 6
1.5.Significance of the Study ........................................................................................... 6
1.6.Scope of the Study ..................................................................................................... 7
1.7.Limitation of the study ...............................................................................................7
1.8.Organization of the proposal ......................................................................................7
CHAPTER TWO ............................................................................................................... 8
2.LITERATURE REVIEW .............................................................................................. 8
2.1.Definition of Terms and Concepts ............................................................................. 8
2.2.Theoretical Review ......................................................... Error! Bookmark not defined.
2.2.1.Livelihood Diversification ........................................Error! Bookmark not defined.
2.2.2.The reason Households diversify their livelihood .... Error! Bookmark not defined.
2.2.3.Farm livelihood diversification in sub-Saharan Africa Error! Bookmark not
defined.
2.3.Empirical evidences ........................................................ Error! Bookmark not defined.
2.3.1.Empirical Evidences from Developed Countries .............................................. 11
2.3.2.Empirical Evidences from Other Developing Countries ...................................13

vi
 2.3.3.Off-farm activities in Sub Saharan Africa (SSA) ..... Error! Bookmark not defined.
2.3.4.Empirical Evidences on Ethiopia ...................................................................... 17
2.4.Conceptual Frame Work .......................................................................................... 23
CHAPTER THREE .........................................................................................................25
3.METHODOLOGY ....................................................................................................... 25
3.1.Description of the Study Area ..................................................................................25
3.2.Research Designs ..................................................................................................... 28
3.3.Data sources and Data Collection Methods ............................................................ 28
3.4.Sampling design and techniques .............................................................................. 28
3.4.1Sampling design ................................................................................................. 28
3.4.2.Sampling Technique ..........................................................................................29
3.4.3.Sample Size determination ....................................... Error! Bookmark not defined.
3.5.Methods of Data Analysis ........................................................................................30
3.5.1.Descriptive Statistics ......................................................................................... 31
3.5.2.Econometric Model ........................................................................................... 31
3.5.3.General Specification of the Econometric Models Used for Analysis ..............33
3.6.Model Specification ................................................................................................. 33
3.7.Definition of Variables and Working Hypothesis ....................................................35
CHAPTER FOUR ........................................................................................................... 40
4.RESULTS AND DISCUSSION ................................................................................... 40
4.1. Results of Descriptive Statistics Analysis ...............................................................40
4.2 Results of the Econometric Mode ............................................................................46
4.2.1. Estimation Procedures ......................................................................................47
4.2.2. Diagnostic Test .................................................................................................47
4.2.2.1 Specification error test ....................................................................................47
4.2.2.2.Good Ness of Fit Test .....................................................................................48
4.2.3.Multicollinearity diagnosis ................................................................................49
4.3.Results of the Econometric Model ...........................................................................51
4.4.Factors influencing farmers’ participation in off-farm activities . Error! Bookmark not
defined.
4.5.Dominant Types of off-farm activities in the study area ......................................... 58
4.5.3.Wage labor ........................................................................................................ 59
4.5.4.Foods and Local Drinks .................................................................................... 60
4.5.5.Handicrafts ........................................................................................................ 61

vii
 4.5.6.Petty Trade ........................................................................................................ 62
4.5.7.Charcoal and wood fire selling ..........................................................................62
4.5.8.Fattening oxen ................................................................................................... 63
4.6.Constraints of off-farm activities ............................................................................. 63
CHAPTER FIVE ............................................................................................................. 63
5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............................ 63
5.1. SUMMARY ............................................................................................................ 64
5.2.Conclusions ..............................................................................................................65
5.3.Recommendation ..................................................................................................... 66
REFERENCE ...................................................................................................................69
APPENDIXES ..................................................................................................................75

viii
LIST OF TABLES

Table 1: Number of households in the selected Kebele .................................................... 30

Table 2: Independent variables ..........................................................................................39
Table 3: Rural households’ participation status in off-farm activities .............................. 41
Table 4: Summary of descriptive statistics for continuous variables by off-farm
participation ....................................................................................................................... 44
Table 5: Summary of descriptive statistics (categorical variables) ................................... 46
Table 6: Specification Test of the Model .......................................................................... 47
Table 7: Logistic result table with robust test ....................................................................51
Table 8: Determinants of off-farm participation and odd ratio using stata software 15.0 .51
Table 9: Types of off-farm activities ................................................................................. 59

ix
LIST OF FIGURES

Figure 1: Conceptual framework ....................................................................................... 24

Figure 2: Location map of the study area .......................................................................... 27
Figure 3: Graphical representation of off-farm participation sample respondents off-farm
participants and non-participants .......................................................................................41

x
LIST OF TABLE APPENDIX

Table Appendix 1: Logistic Regression Result ................................................................. 75

Table Appendix 2: Odd ratio result .................................................................................. 76
Table Appendix 3: Model specification ............................................................................ 77
Table Appendix 4: Variance inflation factor for continuous explanatory variables ......... 78
Table Appendix 5: Cotangent for dummy variables ..........................................................79
Table Appendix 6: Conversion Factor that used to estimate Tropical Livestock Unit (TLU)
Equivalents ........................................................................................................................ 80

xi
ABSTRACT

The rapidly increasing number of population causes a large number of youths in rural area
are landless and depends on their family. This creates disguised unemployment and
unemployment to the rural labor force. Therefore, strengthen the participation of farm
households in off farm activities, is paramount important not only to increase their income
but also for efficient and effective utilization of rural labor forces to ensure food security at
household and national level. Therefore, this study is conducted to analyze the socio-
economic and institutional factors which determines farmers Participation on off farm
activities in Dano wereda,West Shewa Zone; Oromia region,Ethiopia. To address the
objectives, both quantitative and qualitative data were collected from primary and secondary
sources. The primary data were collected from 352 selected sample household. Binary Logit-
model and a household level analysis were used to analyze determinants of farmer’s
participation on off farm activities. A total of 15 explanatory variables were included in the
analysis. The result of the analysis indicated that among the hypothesized explanatory
variables included in the model, eleven variables namely, age of households head (AGE),
family size (FAMS), Education level of a household head (EDUCH), distance of residence
from the marker center (DISTMAR), total size of area cultivated (AREACULT), access to
credit (ACCCRD), access to information (ACCINF),access to off-farm
train(TRAIN),extension service contact(EXTSER),marital status(MSTAT) and farm
experience(FAREXP) were found to be significantly affecting the farmers participation in off
farm activities. Therefore, The findings of this study recommends that any effort which will
be undertake to strengthening the off farm activities in rural areas should recognize the
household ,socio-economic and institutional characteristics and greater attention should be
given in creation of off-farm employment in the rural areas to reduce the increasing rural
under employment and unemployment . Besides, strategies which focus on enhancing the
knowledge and /or ability of farmers and strengthen learning opportunities should be
adopted, establishment of market centers to nearby areas and developing the infrastructures
to rural areas should also give emphasis.
Key words: West Shewa Zone (Ethiopia), logit model, participation; off farm activities.

xii
 CHAPTER ONE

1. INTRODUCTION

1.1. Background of the Study

Rural farmers in developing countries are often encouraged by policy makers to diversify
their income generation sources into different income diversification so that poor farmers
could supplement their farm income, and reduce income inequality and poverty in rural areas.
Since 2015, many countries have made great efforts to enable people to improve their lives,
which lifted more than 85 million people out of extreme poverty. It is estimated that, by 2019,
more than 651 million people still lived in extreme poverty around the world, with the
majority of them concentrated in poor, rural areas of developing countries (WB ,2020b).Farm
households in these countries diversify their income sources by allocating productive
resources among diverse income generating activities including farm and off-farm work.
Diversification may be a deliberate household strategy or a spontaneous response to
crisis(Benjamin, 2019).

OFF-farm activity is one of the income diversification sources used when farmers faced
agricultural production fluctuation during difficulty season. In the wake of the dwindling
fortunes and challenges facing agriculture in most developing countries, the rural off-farm
sector has emerged as an important source of livelihood (Benjamin, 2019). That is, when
farming becomes less profitable and more risky as a result of population growth and crop and
market failures, households are pushed into off-farm activities, leading to “distress-push”
diversification(Fentahun et al., 2018). In other cases, however, households are rather pulled
into the off-farm sector, especially when returns to off-farm employment are higher or less
risky than in agriculture, resulting in “demand-pull” diversification(E.I et al., 2018). Without
the shadow of doubt, instigating off-farm participation is the only way-out and the sole
alternative that smallholder farmers need to follow basically to accommodate their seasonal
and fluctuating agricultural production(Berihun et al., 2017).

1
Off-farm sector has great contribution in employment creation, income generation, farm
expansion, poverty reduction and other especially in developing countries. Farm households
diversify their income sources by allocating productive resources among diverse income
generating activities including farm and off-farm work. Diversification may serve as a safety
net for the poor whereas for the rich it may be a means of accumulation. Income
diversification by farm households may also be attributed to dwindling and uncertain farm
incomes, rising poverty, and emerging opportunities for off-farm work(Benjamin,2019).

Off-farm activities involve participation in remunerative work outside the participant’s own
farm and have been recognized to play an increasingly essential role in sustainable
development and poverty reduction particularly in rural areas. Income from off-farm work
supplements onfarm income and helps to expand economic activity and employment
opportunities in rural areas. For the agricultural sector, income from off-farm activities is an
alternative source of income which may be used to finance agricultural production. Income
diversification therefore has the potential to increase farm investment leading to higher
productivity.

Off-farm activities decrease income uncertainty. Employment diversification helps

households to smooth income through the spread of risks across different activities. The
reduction in income uncertainty opens up opportunities to invest in improved production
technologies to enhance agricultural production(Benjamin,2019).

Income diversification as a livelihood strategy is considered a global phenomenon. In Latin

America, rural off-farm income accounts 50% of total income(Haggblade et al., 2007). The
off-farm sector is vital to employment and income generation in rural areas through the
provision of various economic activities such as petty trading, businesses, handcrafts, pottery,
selling food and local drinks. Moreover, several studies in Africa revealed that off-farm
earnings account for a substantial share of farm households’ income(Tewele, 2012). Despite
its vitality, in Africa, off-farm activities participation is low(Berihun et al., 2017);and 37% of
the rural households’ income is really extracted from off-farm activities where surprisingly
not more than 20% of the labor force is being participated. Likewise, in Nigeria, a study by
(Rabiu et al., 2011) revealed that participation in off-farm activities more particularly wage

2
employments of skilled and unskilled had resulted in a reduction of rural poverty by 11.02
and 10.68%, respectively; participants lessen poverty better than non-participants
(Arekemase et al., 2011).

Sub-Saharan African countries get about 35 percent of their incomes from off-farm income
generating activities(Y. Desalegn, 2020). There are also similar results found in Ethiopia.
Farmers in Ethiopia also participate in off-farm activities parallel with their agricultural
activities. According to Rijkers et al. (2002) as cited in Woinshet (2010) purported that 25%
of Ethiopian rural households own more than one labor intensive off-farm activities, although
23% of these rural households did their off-farm activities parallel with their agricultural
practices. Hence, only 2% of Ethiopian rural households were those who exclusively rely on
off-farm activities.

Agriculture remains the dominant source of household consumption and income and, is
highly dependent on rainfall; hence, rainfall rules the lives of many rural families of Ethiopia.
Indeed, the dependence on rainfall and its erratic pattern has largely contributed to the food
shortages that farmers are often faced with. Even though agriculture is the main source of
livelihood, farmers are engaged in a range of off-farm activities to diversify their income and
enable them survive with the risk of crop failures(E.I et al., 2018). According to the study by
(Endiris et al., 2021),In Ethiopia, agriculture is characterized by traditional method of
farming mainly relying on animal traction and rain fed; so the country faces fluctuation in
agricultural production and productivity due to weather or manmade related shocks which
leads to that rural households’ income is not sufficient.

In Ethiopia, farm households participating in rural off-farm activities have the significant role
in employment creation, income generation and enhancing farm income activities. These off-
farm activities engaged in both self-employment and wage employment on milling, weaving,
handicraft, trade in grain and livestock, general trade, income from share cropped out land,
collecting and selling firewood, charcoal, bakery, salt trade and pottery, selling local food
and drinks (Fentie&Rao, 2016).

The rural farm households in the study area was engaged in different off-farm activities such
as, fattening oxen, labor wage, Wood work, Pottery, firewood and charcoal, selling local

3
drinks, petty trade and Food preparation. On the basis of this principle, many rural youth,
especially those who are landless, unemployed or currently not attending school, were made
to be organized. Therefore, it is important to identify the different factors that influence
farmers’ participation in off-farm activities in the study area.

1.2. Statement of the problem

In Ethiopia, agriculture is the basic economic sector in which the country relies for its social
and economic development. According to Adem et al.(2018) it contributes to the GDP,
employment, and foreign exchange earnings of the country is about 46.3%, 83% and 90%,
respectively. This implies that the economy of the country heavily depends on the
agricultural sector. Despite such an immense importance the performance of agriculture is
very low by any standard. A rapidly growing number of young and potentially productive
people in rural areas are becoming landless because of declining cultivable land. The average
cultivated holdings are usually a hectare of land, which is barely large enough to feed the
large family size. In Ethiopia, the average farm size is less than a hectare and about 74
percent of the farmers are smallholders who contribute more than 25 percent to the national
food production (Kourtidis et al., 2015). Climatic change also one of the other factor that
affects agricultural productivity since the majority of farmers depend on rain fed agriculture.

Risk-related hardships faced by rural households in Ethiopia for the last 20 years include
climatic risk affecting 78% of the households, policy shocks consisting of 42% of the
households, oxen problem (35%), others livestock and land problems accounts 17% of
households (Worku, 2016). Consequently, due to increasing agricultural difficulties of
traditional production system to support livelihood, participating in off-farm activities is very
important.

Moreover different factors influence farmers’ participation in off-farm activities in Ethiopia.

Although the government focuses on agriculture to change rural livelihoods, there is no
expected significant change on the improvement of the rural livelihoods. Many of the efforts
to support livelihood diversification so far have tended to be supply-driven and focused on
single issue solutions. Services are offered to rural communities to address perceived short-
falls without really understanding the underlying causes of the lack of off-farm activities.

4
Therefore in rural Ethiopia, where the livelihood of the population is mainly crop production
and livestock rearing, families tend to diversify occupation to buffer the risk of bad weather
and other problems that affect both crops and livestock. So there should be awareness of the
available resources that are natural, physical, financial and human capital that encourage the
involvement in off-farm activities in order to tackle land constraints, climate fluctuation,
seasonal idleness and low income. Off-farm income can also enhance agricultural production
by relaxing liquidity and credit constraints to purchase productivity enhancing agricultural
technologies such as improved seed, fertilizer, machineries, and hiring labor. This is
particularly true in developing countries where farmers are facing credit constraints(Ahmed
&Melesse, 2018).

Oromia is one of the parts of Ethiopia regional state in which agriculture is the main
economic sources of the country in general and particular for the region. Most Oromia
households rely on rain fed agriculture for their livelihood, but population growth has led to
fragmentation of available arable land, and average farm size has dropped below one hectare
(Marit, 2006).About 75 % of the population receives their livelihood from agriculture (CSA,
2015).In spite of the few studies which analyze the driving forces for off-farm activities
participation and its impact on reducing economic problems like poverty, inequality,
vulnerability etc. However, the empirical study about off-farm activities in Oromia region is
limited.

The rural livelihoods of households in DanoWereda depend on rain fed agriculture, but
population growth has led to fragmentation of available arable land, and average farm size
has dropped below a hector. The climate varies from time to time and results in inconsistent
rainfall which is unfavorable for crop production. Sometimes unexpected high rainfall occurs
and destroys the crop. In addition, crop disease and shortage of farm land are other problems
in the study area (DWAS, 2021). As a result the rural households of Dano wereda are not
satisfied with the production of agriculture. To cope up with these challenges, rural
households in the area engage in off farm activities which are undertaken to generate
additional income and improve their wellbeing. But there was no empirical research that
supports the existing off farm activities opportunities practiced by the farmers in the study
area as far as my knowledge.

5
Therefore, the purpose of this study is to identify the socio-economic and institutional factors
which determine farmers Participation in off-farm activities in the study area and to put
recommendations which help all concerned bodies to expand off farm activities performed by
farm households in the rural households.

1.3. Objective of the study

1.3.1. General Objective

The general objective of the study was to analyze the factors that determine farmers’
participation on off-farm activities in DanoWoreda, oromia region.

1.3.2. Specific Objectives

The specific objectives of the study were to:
1. Describe the demographic characteristics of the respondents in the study area.
2. Assess the factors that determine in the participation of off-farm activity in the study area.
3. Collate the off-farm activities of rural farm households in the study area.

1.4. Research Questions

(i) What were the demographic characteristics of respondents in the study area
looked like?
(ii) Which variables did determine participation in off-farm activity of the rural
farm households according to the data collected in the study area?
(iii) How was the off-farm activities in the study area collated?

1.5. Significance of the Study

The study is significant for it increases individuals’ understanding regarding the factors that
influence farmers’ participation in off-farm activities and corresponding benefits obtained
from the activities and the importance of off-farm activities incomes across the different
income groups. The outcome of this study can also be use full for local administrators and for
all institutions established for development of a country in and all the concerned body in
order to devise interventions that can improve the livelihoods of the rural poor. Particularly
this paper can serve as a source of reliable information for farmers and policy makers
regarding the actions that should be undertaken so as to improve farmers’ participation in

6
different off-farm employment activities and incomes earned from them. The findings can
also use as reference for researchers who are interested to conduct further study on the field.

1.6. Scope of the Study

The study would focus on the factors influencing farmers’ participation on off-farm activities.
The aim of this study is to identify important variables that determine farmers ‘participation
on off-farm activities. How these variables determines farmers’ participation on off-farm
activities. This study is limited to specific area of DanoWoreda of West Shewa Zone of
Oromia Region due no research has been done yet on the title selected at the study area. So, I
am initiated to fill the gap that is not raised in the study at other study area related to the title.

1.7. Limitation of the study

The study would try to analyze factors that influence farmers’ participation on off-farm
activities, however, it would not likely to say the paper would be free of limitation, that the
researchers were faced many problems which hinder the successful completion of the study.
The limitations were, shortage of available organized secondary data at study area because
of , lack of awareness the respondents might refuse to reply the question during interview,
the sample selected respondent farmers might need benefit from the researcher and lack of
peace and instability might be obstacle to the researcher while data collection was going on.

1.8. Organization of the Study

The paper is organized into five chapters. Chapter one have described the back ground of the
study, statement of the problem, objective of the study, research question, significance of the
study and scope &limitation of the study. After introducing in chapter one; chapter two
reviews literature review with regard to the case study. The third chapter presents the
methodology used. Furthermore, chapter four discusses data presentation and analysis.
Finally, the last chapter of the paper concludes the study and incorporates recommendations.

7
 CHAPTER TWO

2. LITERATURE REVIEW

2.1. Definition of Terms and Concepts

Off-farm: Off-farm activities-are those agricultural activities takes place outside households
own farm area (daily wage laborer, charcoal selling, livestock trading etc). Whereas On-farm
refers to are those agricultural activities mainly of crop production, cattle rising and poultry
production. According to (WB, 2018) Off-farm employment comprises both being wage
employed outside the farm-household (i.e. off-farm wage employment) and running a non-
farm enterprise (NFE) (i.e. off-farm self-employment).

Non-farm: Non-farm activities are non-agricultural activities takes place outside the
agricultural sector. Generally, participation in off-farm activities plays crucial role to increase
income of the households in the study area (AntenehAstatike&GanamoGazuma, 2019).

Household: - It consists of a person or group of persons irrespective of whether related or

not who normally live together in the same housing unit or group of housing units and who
have common cooking arrangements (CSA, 2005 as Cited in Bahabelom, 2010).

Head of household: - It refers to a person who economically supports or manages the

household or for reasons of age or respect is considered as “head of household” by members
of the household or declares himself as head of a household. Here, head of a household can
be male or female.

Member of a household:- It refers to persons who live and eat with the household for at
least six months including those who are not within the household at the time of the survey
and who are expected to be absent from the household for less than six months. It also
includes:

Rural household: is a household that lives in the countryside and that may involve in both
farm and off-farm activities and Household that lives in the kebele of countryside that can be
involved in the two activities.

8
 2.2. Theoretical literature review

This section reviews theoretical literature on farm household participation in off-farm

activities.
The basis for the household’s participation decision is the theory of agricultural household
model, where the household has a dual role of producer and consumer. If markets are perfect,
the household first maximizes profit by choosing different sets of income generating
activities based on its resources and prices, and then maximizes utility by choosing between
different levels of consumption and leisure given profits. However, in case the markets are
imperfect production and consumption decisions become non-separable(Tewele, 2012).

It is often stated that “distress-pushed” diversification factors that push farmers into a variety
of low-return activities, leading to more stable but lower household income generating
activities. In this light, diversification is seen as an involuntary reversion of the process of
specialization, brought on by crises such that the multiplication of activities is an adaptation
necessary to ensure survival (Wamukota, 2010). On the other hand, progressive success and
wealth, which in turn lead to increased access to resources, may lead to increased livelihood
diversification as although they may have lower risk incentives than the poor, the non-poor
may be more capable of financing this diversification if it is costly, have high entry barriers,
and is initially risky. From this point of view, diversification can be seen as a deliberate
strategy adopted by proactive households with greater opportunities (Martin &Lorenz, 2016).

Earlier studies approach to labour allocation between farm and non-farm activities were
mostly captured in terms of the relative returns to labour accruing from diverse income
earning activities. The optimizing rule propounded by the marginal revolution found that any
activity should be increased until its marginal return and competing alternatives were equal.
In connection to the marginal revolution ideology found that a farm household will allocate
his time between farm and off-farm activity so that the value of the marginal product of farm
work and the off-farm wage rate, net of the costs incurred in the off-farm work, are equal.
Due to technology improvement, marginal productivity of labour has increased in agriculture
and also advances in transportation have reduced the cost and time for travel. Further has

9
increased the opportunities for farmers to be no longer tied to their farm lands alone but that
they can divide their time between farm and off-farm economic activities (Joshua, 2011).

Rural non-farm activity in Africa is fairly evenly divided across commerce, manufacturing
and services, linked directly or indirectly to local agriculture or small towns, and is largely
informal rather than formal ( Haggblade et al., 2007). Also, while households earn much
more from rural nonfarm activity than farm wage labour, non-farm wage labour is still more
important than self-employment in the non-farm sector. On sustainable livelihood and
livelihood diversification concluded that while livelihood diversification is normal for most
people in rural areas of developing countries in Africa, non-agricultural activities are critical
components of the diversification process (Adepoju, 2013).

Further, livelihood diversification is pursued for a mixture of motivations and these vary
according to context: from a desire to accumulate, invest and the need to spread risk or
maintain incomes, to a requirement to adapt to survive in eroding circumstances or some
combination of these. In addition, the character of livelihood diversification is dependent
primarily upon the context within which it is occurring (the differential access to
diversification activities and the distribution of the benefits of diversification). However, the
poorest rural groups probably have the fewest opportunities to diversify in a way that will
lead to accumulation for investment purposes.

Households try to attempt different activities in diversified way by what strategy is designed
to overcome the poverty and other problem come following the crisis with difficulty
conditions.
This is enabled by diversification an attempt by individuals to find new ways to raise
incomes and to reduce risk, by involving into activities in addition to main agricultural
activity. . Households engage in off-farm activities to generate more income to cushion the
effects of poverty (Bila et al., 2015).

Woldenhanna and Oskam (2001) analyzed households’ off-farm labor supply and choice
between offfarm activities in Ethiopia. The authors found that higher farm output discourages

10
farmers from working in off-farm wage employment while it encourages farmers to
participate in off-farm self-employment activities. They argue that there are entry barriers to
certain off-farm employment opportunities, noting that wealthier farm households dominate
the most lucrative nonfarm activities such as trading and masonry.

In regard specifically to rural Ethiopia, households have been found to diversify their income
sources due to both push and pull factors. Push factors such as rural population growth, farm
fragmentation and declining agricultural productivity are commonly-cited causes for
diversifying. Moreover, studies show that pull factors, such as urban or local demand, can
lead to non-farm activities that enhance the household’s economic standing Prowse, M.
(2015).Thus, rural households tend to engage in a variety of off-farm activities including
firewood and charcoal, daily labor wage, fattening oxen, and different handcrafts.

2.3. REVIEW OF EMPIRICAL EVIDENCES

The literature dealing with off-farm activities has focused on factors affecting participation in
off-farm activities. Much has not been done in developing countries in general and Ethiopia
in particular. Very few studies have considered empirically the factors that determine
participation of rural farm households in Sub-Saharan Africa to participate in off-farm
activities. Studies that concentrate on the factors that determine participation of rural
households in off-farm activities of developed countries, other developing countries and
Ethiopian farm households were reviewed.

2.3.1. EMPIRICAL EVIDENCES FROM DEVELOPED COUNTRIES

Hwang & Lee(2015) studied the determinants of households’ participation in off-farm

activities in South Korea. Their work used the binary logit model. The result from the model
revealed that age, farm experience, family size and educational level are significant in the
participation of households in off-farm activities. According to the study, as age and farm
experience increases the involvement of farmers in off-farm activities decreases. On the other
hand, when year of schooling increases the engagement of households in off-farm activities
increases. And also as land size decreases the rate of farmers to be participated in off-farm
activities increases.

11
Empirical literature available on off-farm work tries to identify the factors that determine
farm households’ participation in off-farm activities(Alasia et al,2009).Panel data was used
to evaluate factors that determine farm operators’ in off-farm employment in Canada. He
found age, sex, educational attainment; family size and farm size were identified as the most
significant determinants of off-farm activities participation in the country. According to the
result revealed as age increases the rate of households to be involved in off-farm activities
decreases due to energy decline. Similarly, as level of educational attainment increases
households’ engagement in off-farm activities increase. Again those farmers with large
family size more participated in off-farm activities than their counterparts due to more
working power present in the family as well as due to burden of caring the family. Lastly,
farm size negatively affected off-farm participation in the country since decline of cultivated
land enforced the farmers to be involved in off-farm activities.

A study by Wang (2016) also tried to analyze off-farm activities in rural China by using
binary logit model. The result shows that Off-farm employment causes the outflow of the
rural population and reduces regional population and environmental pressures, which is
beneficial for maintaining rural development achievements. This is consistent with the results
of the study on ecological restoration in the Wuyi Mountain Area of Fujian, China, as well as
the studies on combating desertification in Asia. The reduction in households’ engagement to
the environment is mainly caused by less dependence on environmental resources after the
improvement of livelihood diversity. As an external “pull” factor, the rapid development of
China’s overall economy effectively promotes the non-agricultural transfer of the rural
labour force and improvement of household livelihoods, so as to indirectly facilitate the
restoration of the ecological environment.

De Janvry et al. (2005), study in China, involving 7041 households with agricultural and
non- agricultural income showed 72% of rural households have non-farm income. Non-farm
income is not only able to absorb surplus labour in rural areas, but more importantly what it
can improve is the quality of life in rural areas. It can be concluded that non-farm income can
be considered as a potential successor to the agricultural income. His study also found that
the factors of education, close to town, the influence of neighbours and the influence of

12
residential area, is crucial in helping particular households gain the opportunity to diversify
its economic activities.

Huang, Wu, Zhi and Rozelle (2008) examined linkages between labour supply to off-farm
markets and the labour allocated to on-farm work by fruit crop farm households in Shandong,
China. The study used a stratified random sampling in Shandong Province capturing
information of apple and grape farm households. Probit, ordinary least squares, and tobit
estimations were used for the study. The results of the study showed that young members as
well as the educated members of the farm households tend to work more in off-farm
economic activities and that off-farm employment reduced the probability and intensity of
production of fruit crop. Though the study did different regression analysis comparing one
with another, it also did not look at the joint participation decision of farm couples.

A study in China by Glauben, Herzfeld and Wang (2007) analyzed the participation of farm
household labour in rural labour market by Chinese farm households. The data used for the
analysis was drawn from a rural survey data collected by the Chinese Research Center of
Rural Economy across 10 regions in the Zhejiang province and covered the period 1986–
2002 so as to cover the various regimes of China. The study used a multinomial logit model
for the empirical estimation. It considered variables like education, family composition, farm
size, and agricultural income. The findings from the study showed that members of the farm
households with higher level of education had significant probability of participating in off-
farm labour work. But in contrast, a farm household with a higher number of male members
and unearned income increased the participation in on-farm work.

2.3.2. Empirical Evidences from Developing Countries

Anang&Yeboah (2020) have used the Heckman selection model to estimate the factors
influencing participation in off-farm work and the determinants of farm income in Ghana.
The results indicate that participation in off-farm work is influenced by sex, age, and years of
formal education of the respondent, farm size, and number of dependents. In addition, the
result of the propensity score matching revealed that participants in off-farm work increased
their farm income by at least GH¢ 1702 as a result of income diversification. The rural
economy therefore provides off-farm and on-farm linkages that enhance farmers’ income

13
from agriculture. Result shows women more engaged in off-farm activities. Women play
several roles in the household apart from farming. They are involved in petty trading, arts,
and craft and are more disposed to take up extra income earning activity to support the
household’s income. The marginal effect of sex indicates that the probability of women
engaging in off-farm work is 0.214 higher than men. Ahmed and Melesse, 2018) as well as
(Man and Sadiya,2009) obtained similar results in their studies in eastern Ethiopia and
Malaysia, respectively. As observed by Ahmed and Melesse,2018), female-headed
households were more likely to engage in off-farm work compared with male-headed
households because female-headed families take part in off-farm work to offset their relative
lower farm income compared with maleheaded families. The result however disagrees with
the findings of (Pramanik et al. 2014&(Mccarthy, 2009) in Zimbabwe.

(Bila et al., 2015) used binary logit model to analyze off-farm activities and its contribution
to household income in Borno state, Nigeria. The results of the findings revealed that female
gender participate more in off-farm activities, most of whom are married with 21-40 years of
farming experience, with monthly off-farm income between N11, 000 – N20, 000 with less
than one hectare of farm size. It is paper recommended that household members should be
encouraged to take up off-farm employment so as to argument their income and raise their
standard of living. The result also revealed that some of the problems militating against farm
and off-farm activities include: inadequate credit facilities, poor knowledge on improved
technology, lack of access to market, high cost of raw materials, discrimination and low
social status in the society among others. The result of the study also revealed that
households that participate in off farm activities do better and their living standard is better
due to the extra income generated from off farm activities.

Benjamin(2019) has used adouble-hurdle model to determine the factors influencing

participation in off-farm work as well as the predictors of actual amounts earned from
working outside the farm in Ghana. The results revealed that gender, farming experience,
years of education, and access to credit are the factors determining participation in off-farm
work while farming experience, years of education, and geographical location are the
determinants of income from off-farm work. In his study most Ghanaian societies, women
play several economic roles and are noted for their entrepreneurial abilities. Women in many

14
rural communities engage in petty trading and other income earning activities to supplement
household income. Thus, women tend to be engaged in multiple off-farm activities to
supplement household income compared to men and play multiple roles in the household.

Iqbal et al.( 2015) used binary logit model to evaluate the determinants motivating the
farmers to participate in different off-farm activities in Pakistan. The data was documented
from a total of 180 cotton farmers using multistage cluster sampling technique. The result
reveals that various socio-economic factors were found significantly associated with
probability of immersion in non-farm activities. The results of the model reveal different
factors like total farming area and farmers having access to road were significant for several
business activities through odds ratio 1.051 and 0.088 respectively. Though more
experienced farmers with odds ratio (1.063) had more likelihood for labour activities. Lastly
more educated farmers and large family size have higher probability to go for services type
of off-farm activities and their odds ratio estimated is 1.297, 2.069.

Anang&Yeboah (2020) used Heckman selection model to evaluate factors influencing

farmers’ participation in off-farm activities in the Northern Ghana. Their study revealed that
younger farmers are more likely to engage in off-farm work as shown by the coefficient of
the age variable. As farmers become older, they become less disposed to engage in off-farm
work. Younger people are more likely to find jobs because they are more energetic. Due to
the low poverty level in most rural communities, off-farm employment for rural people
involves labour-intensive activities which are better suited to younger people. The quadratic
term for respondent’s age shows that participation in work off-farm increases at a decreasing
rate with age of the farmer. The results also indicate that educated farmers are more likely to
work off-farm. Education enhances the human capital and opens up opportunities for
employment off the farm. An additional year of education increases the likelihood of
participation in off-farm work by 0.023.The result also revealed that Participation in off-farm
work was found to be positively related to farm size and significant at 1% level. This
indicates that farmers with larger agricultural lands are more likely to take up employment
off the farm. The result is contrary to a priori expectation and hard to explain. A unit increase
in total agricultural land increases the likelihood of working off the farm by 0.041.

15
Adeoye et al.(2019) used tobit Regression Model to identify the determinants of such off-
farm activities in the Nigeria. The result shows that having higher landholdings, post‑primary
education, access to electricity and location is major factors. Post‑primary education is
significant (P < 0.05) and positively related. This reveals that having extra educational
qualification beyond primary school is likely to increase income concentration and decrease
the extent to which farmers diversify their income sources. This could indicate that the more
educated specialize in some activities and are less likely to involve in other off‑farm
activities such as low remuneration jobs. The other result shows that females are less
participator than the males probably because females are care givers at home and could be
more engrossed with household chores than males. Age is also the other factors that
influence farmers to participate in off-farm activities according to this study. Farm size is
significant (P < 0.1) and negatively correlates Index. This implies that as farm size increases,
concentration level reduces and the extent of diversification increases. The implication of this
is that farmers with larger farm sizes are more likely to diversify income sources.

Findings on factors which explain households’ participation in off-farm activities are

presented by different scholars. Tanzania, male headed households are pro-off-farm activities,
while in Uganda, we observe a negative sign which show that majority of male-headed
households prefer on-farm employment. The coefficients of age and age squared for
Tanzania show that as people get older, they tend to shift away from on-farm to off-farm
employment. In Uganda, age was not a significant factor. While formal education was
positively related to off-farm employment in Tanzania, it was negative for Ugandan case.
Access to credit positively influence participation in off-farm activities in Tanzania, while for
Uganda, farm ownership, household size, cost of inputs, farm assets, and remittances, have
positive influence on off-farm employment. In summary, we find that age, gender,
agricultural produce, formal education of the household head, family labour, cost of inputs,
farm size, and access to credit, are key determinants of labour re-allocation from on-farm to
off-farm in Tanzania. For Uganda, key determinants include: gender, formal education,
family labour, farm assets, household size, and cost of inputs, land ownership, and
remittances(Kinuthia et al., 2018).

16
Dabalen et al. (2004)’s study of the returns to participation in the off-farm sector in rural
Rwanda finds that education is a significant determinant of participation into the off-farm
activities, in particular, in off-farm wage employment. They also find that for both men and
women, higher levels of education are positively associated with higher probability of
participating in the off-farm activities. They further find that having some form of education
is associated with a greater chance of participating in self-employment for men, while only
post-primary education matters for women’s participation. Education is even more strongly
correlated with wage employment for both men and women. This correlation increases with
education level with the strongest effect coming from having secondary education or further
education. Similarly, studies by De Janvry and Sadoulet (2001) in Mexico and by Ruben and
Van den Berg (2001) in Honduras observed that education plays a major role in accessing
better remunerated non-farm employment activities. Household assets are also important for
off-farm income diversification.

2.3.3. Empirical Evidences on Ethiopia

The available empirical literatures on the off farm activities of farmers in Ethiopia and
related studies are reviewed below.

Ayana &Ermias( 2019) used the probit model result revealed that age of the household head,
sex of the household head, marital status, distance to the nearest market, agro-ecological zone,
credit access, livestock ownership, the amount of farm income, and having mobile phone
were key factors that influence participation of households in off-farm activities. With regard
to results of Heckman’s two-step model, the participation in off-farm activities, education
level of the household head, and agro-ecological zone were found to be the main factors that
affect households’ total income level. The result revealed in their study, when off-farm
income increases farmers tend to decide participating in off-farm activities in Ethiopia.
Specifically, the mean farm income of off-farm participant households was 21,535 birr while
the mean income of non-participants was 11,573 birr which is nearly half of the average
income of the participants. This implies that the higher farm income of the households will
increase their decision to participate in off-farm activities since more household farm income
would have a positive influence to start non-farm businesses not only this access of

17
information and credit access has also positive influence to be involved in off-farm activities.
Households who owned mobile phone as well as access to credit has higher participation rate
in off-farm activities than their counterparts. This might be due to the fact that access to
finance and information through mobile phone is the important factor to engage in off-farm
activities. Having access to credit, farm income, sex of the household head, age of the
household head, possessing mobile phone and agro-ecological zone are all found to be
statistically significant at 1 and/or 5 percent level. The effect of these variables on
household’s participation decision on off-farm activities is positive. The marginal effect for
probit model shows that, citrus paribus, households who have access to credit would be about
49.5 percent more likely to participate in off-farm activities than those who haven’t. This
may indicate that reducing financial problem of the household through credit access will
encourage them to participate in off-farm activities.

The result also revealed that the marginal effect of the variable “possessing mobile phone”
shows that, other things being equal, households who have mobile phone would be about 22
percent more likely to participate in non-farm activities than those who haven’t. That is,
increased access to information through mobile phones can potentially increase rural off-
farm activities. The rationale behind this result is that access to mobile phone leads to
updated market information which increases the chance of participating in profitable off-farm
activities. On the other hand, the variables marital status, tropical livestock unit and market
distance were found to be significant at 1 and or 5 percent and negatively affects households’
decision to engage in off-farm activities. The marginal effect value for marital status show
that married individuals would be about 35 percent less likely to participate in off-farm
activities than their counterparts, other things being equal Ayana &Ermias( 2019).

Yadeta( 2017) studied determinants of off-farm work participation of farm households in

Ethiopia. In his study the results of the study show that human capital variables such as
health and training on non-farm activities have positive relationships with off-farm
participation decisions of farm households. The education status of the farmers has also
significant relationship with the off-farm participation decisions of the members of the family.
The availability of credit and transfer income is the other factors that have a positive relation
with the decisions of farmers to participate in off-farm activities. According to this study

18
family size is found to be a significant and positively influenced household off-farm
participating of the farm households implying that, households with large family size, having
children of productive age, could be participate in the off-farm activities. Cultivated land size
is also positively determined the rural household off-farm participation. This implies that
households who had larger farm size had better chance to participate on off-farm activities.
Since households who had larger farm size had better chance to assess other additional
income activities. Total livestock owned is another factor that is related to the probability of
participating on off-farm in the country. The positive relationship is explained by the fact that
total livestock owned being a proxy for farmer’s resource endowment, those farmers with
large herd size have better chance to earn more income from livestock production.

A study carried out by Fentie & Rao(2016) in East Gojjam Zone determines the factors that
influence farmers’ participation in off-farm activities. The tried to see the influence of
variables like age, sex, responsibility, and distance from market, education, and family size,
access to credit, extension contact, area cultivated, irrigation use, food shortage, total
livestock and number of economically active family labor by using logit model. They stated
that farmers not participating in the off-farm activity are older than those participating. Age
of the household head was significant at 5% probability level and related negatively with the
farmer’s participation on off farm activities. This is because; younger farm households
cannot get enough land to support their livelihood as compared to the older farm households.
Therefore the younger households have to engage more on off-farm employment than the
older ones to support their livelihood. The result of the study showed that sex of a household
head is significant at 1% probability level and negatively influence participation of farmers
on off farm activities. It means that female household heads are engaged in off farm activities
than male house hold heads. This is due to the fact that in the study area as women often do
not take part in ploughing activities, so that female headed households are engaged in off
farm activities and earn off farm income than men headed households.

Education is found to be a significant factor that affects farmers’ participation in off-farm

activities positively. It had a significant influence at 5% probability. Off-farm activities
require some skill and training hence households with some skills and education tend to
engage in off-farm activities. Distance of market from residence variable was significant at

19
1% probability level and related negatively with the farmer’s participation on off farm
activities. Households far away from market places have no easy and quick physical access
to the market place, to transport output and inputs from and to their residence. Total size of
area cultivated (AREACULT) was significant at 10% probability level and negatively
influences the farmer’s participation on off farm activities. It showed that household heads
that had relatively more cultivated land needs more labor for farming activities and gives
more focus on farm activities than off farm activities. The presence of food shortage in the
household affects positively and significantly households’ participation on off farm activities.
It implies that in the presence of food shortage the family members engaged more in off farm
activities to earn additional income to mitigate the problem the faced rather than in the
absence of food shortage. The number of economically active family was significant at 10%
probability level and related positively with the farmer’s participation on off farm activities.
It means that a household that has relatively large number of economically active family
labor can supply labor to off farm activities. This supports the reason given by non-
participants respondents that busy in agricultural works is the cause for their non-
participation of off farm activities(Fentie & Rao(2016).

A study carried out by Yonatan (2020) studied off-farm activities, Income and household
welfare in Rural Ethiopia. His result revealed that households operate at low levels of off-
farm diversification and those in the lower consumption quintile experience lower returns to
off-farm participation relative to those in the higher quintiles. The econometric results show
that being in a rural town has the largest increase on the probability of off-farm participation.
Credit access affects participation in but not incomes from off-farm activities.

Household head’s gender found to be a statistically significant effect on a household’s

probability to participate in off-farm activities. Female headed households were 7.9 percent,
8.8 percent, and 4.9 percent more likely to participate in off-farm activities relative male
headed households. One explanation is that female headed households have lesser
entitlements to agricultural inputs such as land and credit relative male headed households.
Hence, they engage in off-farm activities that require lesser land and credit. The maximum
years of schooling attained by the household head was found to be statistically significant in
determining off-farm participation with positive coefficients (Yonatan. D, 2020).

20
Zewdie, E., &Sivakumar, S. (2017) used logit model to analyse determinants of off-farm
participation of rural farm households in shebedino district of sidama zone, southern Ethiopia.
The finding of the study shows that among the sample of factors, off farm training, credit
service, household saving, education status, presence of draft animals, size of farm land were
most important determinants to influence off farm participation of the households. The result
also shows that the role of off farm activities to fulfill the livelihood needs of the farm
households; food security, better health, educating children, better housing and relaxation of
financial constraint are main benefits households have got from off farm income. Distance of
market, shortage or lack of input and low price of the products are among main challenges
that farm households face while practicing off farm activities. Overall results of this study
shows that insuring the quality and distribution of off farm training to all farm households,
providing credit service through easily accessible way, creating awareness and mobilizing
saving, ensuring the sustainability of adult education, exhausting the benefit of draft animals
and enhancing the productivity of farm land are most important tools to attract more farm
households to off farm participation.

Beyene(2008) used binary probit model to estimate determinants of off-farm participation

decision of farm households of Ethiopia. The results of the analysis show that human capital
variables such as health and training on non-farm activities have a positive effect on the off-
farm participation decisions of male members of farm households. The education status of
the head has no significant impact on the participation decisions of the members of the
family as most of the off-farm activities do not require formal education. The availability of
credit and transfer income is the other factors that have a positive impact on the decisions of
male members to participate in off-farm activities. The effects of family and farm
characteristics are also analysed.

(Haile,2012 ) used both bivariate probit and univariate probit to estimate determinants of
participation in off-farm wage employment and off-farm self-employment activities in Tigrai
region,Ethiopia. His findings shows Age and formal education of the household head,
number of children with 10 years old or under and district where the households live
significantly affects participation in off-farm wage work. On the contrary, participation in
off-farm self-employment is strongly determined by sex of the household head, number of

21
adult male in the household, per capita non labor income, credit use, per capita livestock
holding, district and distance to the nearest all weather road and distance to the nearest major
market. The result shows that female headed households less earns from off-farm activities
than male headed households. The result also revealed that Even though female have more
probability to participate in off-farm self-employment activities, female headed households
earn lower than their counterparts from these activities. This is because most of them are
involved in low return small scale traditional non-farm activities like: weaving, spinning,
pottery and preparing local drinks like ‘Tella’ and ‘Tegi’, selling tea or coffee and shop
keeping, Thus, they should be provide with skill enhancing training in order to improve the
quality of commodities they provide and get attractive return from these activities.

Both Berg and Kumbi (2006) jointly have used multivariate probit model to estimate the
relation between poverty and participation in non-farm sector in Oromia region, Ethiopia.
They classify off-farm activities in to three: hand crafts, food and drink and trade. Their
result indicates, own cultivated land, which represents for rural households productive asset
has a negative and significant effect on participation across the three off-farm activities. This
implies the relatively poor households are more likely to be engaged in off-farm sector.
Households owning more pack animals are likely to participate in off-farm activities.
Positive and significant effect of family size and negative effect of dependency ratio on the
likelihood of taking part in food/drink activities shows that off-farm activities are used
surplus labor from agriculture. Age, experience and primary education positively affects
participation in hand craft. While informal education affects positively participation in
food/drink and trade. The effect of distance to all weather roads is positive for handcrafts and
negative for food/drink. The justification is strong competent from urban areas may reach it
easily if roads are accessible for handcrafts, but for local drinks/food may not be interested to
supply their commodity to the rural centers using the opportunity of all-weather roads. The
positive and significant effect of female adult ratio in food/drink implies the traditional
female domination of the activities in Oromia region or largely in Ethiopia.

In general, the empirical results from previous studies in Ethiopia suggest that farm size,
livestock holding, composition and size of household demographic characteristics are the
main factors that determine the decision to participate in off-farm activities in rural areas

22
(Lemi, 2006). Households with small land size and large family size participate more in off-
farm activities. On the other hand, education level of household members has little
significant effect on the probability of participation in off-farm activities. The significance of
household demographics could suggest that family labour is the only available disposable
resource for farm households in rural Ethiopia.

2.4. Summary and conclusion of Empirical Review

The above review of empirical literature on the determinants of off farm activities of farm
households in different countries in the world show that there are many factors that affect the
participation of farm households in off-farm activities. So many researches have been done
on developed countries. In developing countries much has not been done in this area except
in India and other Latin America countries. One can find very few researches in Africa.
Those few studies undertaken in developing countries try to investigate the effect of the
different variables like human capital variables such as age, sex,education, experience on
farm, training, information, and other variables like shortage of food, credit, farm size, family
size, agricultural production, marital status, livestock unit, extension service contact. But the
sign and magnitude of these variables are not the same in those research outcomes. In Africa
the literature on this area are dealt with the rural off-farm.

In Ethiopia few empirical evidences reviewed are concentrated on the determinants of off-
farm activities on some districts of the country.

Therefore this study tries to address all the gaps indicated before. Since the impact of the
different factors affecting off farm participation are not the same, this study helps to
determine or examine the effect of these variables on the off farm activities in Dano wereda,
Oromia, Ethiopia case.

2.5. Conceptual Frame Work

Farmer households living in the rural area participation on off-farm activities is affected by
different number of variables that are caused by different consequences. Some farm
households participate on off-farm activities because of large family they have, other farm
households participate because of the pressure they faced because of bad weather conditions,

23
 some are involved because of lack of farm land and others are because of individual
motivation to get additional income. The literatures provide us the explanation as well as the
enumeration of what motivates farm households to diversify their incomes. Simply, we can
obtain important information that is necessary for researcher in the coming activities of study
from literature reviews. Based on these empirical review we present the conceptual frame
work that tries to link the major factors that are expected to determine household’s decision
to participate in off-farm activities and level of off-farm employment income below.
Therefore, the variables involved in the study will be categorized as dependent and
independent variables.

The independent variable of this study is Age, Family size, educational level, marital Status,
household farm size, Income from non-farm activities work, Access to owner property,
utilization of credit ,Access to information and Distance from market. The dependent
variable is the farmers’ participation on off-farm activities Infrastructure factors
Economic factors  Distance from
 TLU market center
Demographic factor
 Agricultural  inadequate
 Age production extension services
 Sex  access of
Dejjk.ks’’pkcspacp
 Family size information
Farmers’
 Marital status  off-farm training
participation in
 Educational off-farm activities
level
Social factors
 Farm size
 Farm

Livelihood factors Institutional factors

 Sources:
Farm Researcher own construction, 2021
experience  Credit access
 Shortage of food

Figure 1: Conceptual framework

24
 CHAPTER THREE

3. METHODOLOGY

3.1.Description of the Study Area

The study is conducted in Oromia region, Ethiopia. Its climate is characterized by long rainy
season mostly from late April to November. Oromia region has twenty one administrative
zones, each of which is further divided into a number of Woredas and kebeles. The survey
has been conducted in Dano wereda,West Shewa Zone,Oromia region.

DanoWoreda is one of the 22Woredasof West Shewa Zone with an estimated area of 659.19
square kilometers. The Woreda capital city seyo is located off the main road Addis-
Nekemte.The distance from capital city of the country to Dano wereda capital Seyo is 250
km. A dministratively, the woreda is divided in to 27 kebeles administrations, 22 rural and 5
urban kebeles administrations.

Census data of 2007 (1999 E.C) indicated that the total population of the wereda was
114,629 of which female accounts to 50 percent with an estimated density of 160 people per
square kilometers. But the recent population data of the wereda organized by the wereda
administration in 2020 (2012 E.C.) showed that the total population is 135,949 out of 68,790
female and 67,159 male. The recent data revealed that an estimated density of 2.0623%
people per square kilometer, which is highly, populated relatively other wereda as in the zone.
The average family size is estimated to be 5 persons per household. There are around
75,530members of households that make their livings mostly from agriculture. The land
holding size is estimated at 2.5 hectares per household.

The climate condition of the area is classified as follows: Baddaa(dega) 5%, baddadaree
(woinanadega) %80 and Gammoojjii(kola) 15% and is highly suitable for crop production,
irrigation production and animal husbandry most of the peasant in the study area are
dependent on seasonal rain fall for crop cultivation and also irrigation schemes are rarely
practiced on the rivers and other small stream.

The rural people in Dano wereda are mainly dependent on rain fed subsistence agriculture.
Crops like maize, beans, nug, Teff, lentil and sorghum are mainly cultivated in the area. The

25
main livestock types are cattle, sheep and goats. Livestock provides drought and draft power,
food and income.

Off-farm activities for e.g; petty trade and sale of labor are also important livelihood
strategies in the study area. Wage labor employment opportunities are available locally on
the farms of the better-off households, and in the nearby towns.

Women participate in hand craft; milking cows move from market to market trading, petty
trading and sell their products. They also sell traditional and; “Tella”,”Areke”,(Tej” and
different types of forest products such as wood and charcoal and so on. Men also participate
in making and selling charcoal. They also participate in different off-farm activities
(DanoWoreda Monetary & development office, 2020).

26
The map of Oromia, WestShewa zone and DanoWoreda respectively looks like as
follows.

Figure 2: Location map of the study area

Source: Google map of 2020 and DanoWereda land use and administration office, 2020

27
 3.2. Research Designs
The study used both qualitative and quantitative research method. Quantitative research is
based on measurement of quantity or amount it is applicable to that can be expressed in terms
or quantity, whereas qualitative method produces narrative or textual descriptions of the
phenomena under study (Scott et al, 2009). Therefore throughout this study the researcher
used quantitative method to compute and interpret numerical information and qualitative
method to narrate and explain the information obtained from qualitative data.

3.3. Data sources and Data Collection Methods

Answering the basic question stated on the study and to attain the desired objectives, the
study was depended on the data obtained from various sources. Therefore, throughout the
study, information obtained from both primary and secondary sources was employed.
Primary data were collected from distributed questionnaires. Secondary data were gathered
from documents, journals, Internet, various books and other relevant materials.

3.4.Sampling size determination

3.4.1 Sample and sampling technique

According to the DanoWoreda Finance and economic development offices DWFEDO,2020),

there are 800,700,480,600 and 347 households in Seyo Gudetu,Dano Shenen,Ajila Dale,Beke
Sirba and Dire Hereyu Kebeles respectively, making the population of 2927. Since it delivers
the desired number of sample size for the study, the sample size was determined by using
Yemane (1967) scientific formula, as cited by Taye (2014), by considering 5% level of error
and determined sample size as follows:The formula was given as:

�
n= �+�(∝)�
…………………………………………………………….1

Where;
n = Sample Size
N = Total number of targeted populations
α = level of precision (sampling error) at 0.05 significance level, margin of error

28
Level of confidence is 95 percent; this is chosen because the convenient method reduces the
possibility of no response drastically.

�
n=1+�(�)2

2927
n=1+2927(0.05)2

n=352

3.4.2. Sampling Technique

The sampling frame for this particular study was rural households that are found in three agro
ecological zone of Dano woreda. The study area, was selected purposefully and carefully so
as to represent the woreda in terms of economic, socio-cultural, and physical factors like agro
ecology, accessibility to infrastructural facilities, natural resource endowment, and the like.
For some of these factors, the study area was selected. Mainly, the familiarity of the
researcher with the study area causes to select purposively. Moreover, multi- stage sampling
technique was used to select the representative samples. At the first stage, rural kebeles were
systematic sampled by agro-ecology (dega, woinadega, and kolla) and then one
Municipalities and four rural kebele (SeyoGudetu,Dano-Shenen, Ajila Dale Dire-Hereyu and
Bake-sirba respectively) were selected systematically, i.e. one and more kebele from each
agro-ecological zone.

Besides, representativeness and accessibility of getting data from respondents were the major
factors to select the study site purposively. Hence, it is appropriate techniques to have a deep
understanding of the household economic activity situation of the study area.

The purpose of this sampled was to explore household farmers’ participation in off-farm
activity situation of different groups and to understand the most affected factor in the study
area. Since kebeles differ in terms of the total number of households they encompass,
proportionate systematically sampling technique was employed to identify number of
households from eachagro-ecology, kebeles.For household survey, 352 sample households
(271male-headed and 81 female headed) were selected from sampled kebeles.

29
 To determine sample size from each Kebeles, the sample size determination formula of
(Israel, 1992) was used. That is nh= (Nh/Ns)*n, Where: nh = sample size from each stratum,
Nh = total population in each stratum, Ns =Total population of the sum of strata for study
and n = Total sample size population from the study.

To determine sample size from each Kebeles, the sample size determination formula of
(Israel, 1992) is used. That is nh= (Nh/Ns)*n, Where: nh = sample size from each stratum,
Nh = total population in each stratum, Ns =Total population of the sum of strata for study
and n = Total sample size population from the study.

Table 1: Determination of sample size from each stratum by applying formula

Sample Number of Households Formula of Sampling site each Calculated sample
Kebeles head in each Kebele Sampling site of Kebeles procedure households in each
each Kebeles Kebele
SeyoGudetu 800 nh= (Nh/Ns)*n 800
( 2927)*352 96

DanoShenen 700 nh= (Nh/Ns)*n 700

( 2927)*352 84

Ajila Dale 480 nh= (Nh/Ns)*n 480

( 2927)*352 58
Bake Sirba 600 nh= (Nh/Ns)*n 600
( 2927)*352 72
Dire Harayyu 347 nh= (Nh/Ns)*n 347
( 2927)*352 42
Total 2927 nh= (Nh/Ns)*n 2927
( 2927)*352 352
Source: Danowereda Finances and Economic Development office data, 2020

3.5. Methods of Data Analysis

Depending on the natures of the data and specific objective of the study, both descriptive and
inferential statistics along with binarylogit model were employed to analyse the data.
Specifically, binarylogit model were employed to analyse the factors influencing farmers’
participation in off-farm activities.In descriptive statistics; cross tabulation, averages,
percentages and standard deviation were used. Initially, the questionnaire is developed in
English and then it is translated into Afan Oromo. Questionnaire is designed by the
researcher with the support of advisor. The data analysis was conducted using STATA
15.The data were collected systematically by organizing code, edit and enter in spread sheets

30
of STATA 15for analysis. Along with these descriptive statistics, data was displayed in
graphic presentation. In inferential statistics; t-tests (one sample t-test and paired t-test) and
χ2 tests were used. Lastly, the data that collected was analyzed in descriptive and inferential
statistics would be used in application of binary logit model.

3.5.1. Descriptive Statistics

Descriptive statistics is one of the techniques used to summarize information (data) collected
from a sample. It was employed to explain the demographic and socioeconomic behavior of
household characteristics. By applying descriptive statistics such as mean, standard deviation,
frequency of appearance, figure table etc. one can compare and contrast different categories
of sample units (in this case women’s households) with respect to the desired characters so as
to draw some important conclusions.

3.5.2. Econometric Model

Regression models in which the regressed evokes a yes or no or participate or non-

participate, use or not use response are known as dichotomous or dummy dependent variable
regression models. They are applicable in a wide variety of fields and are used extensively in
survey or census-type data (Gujarati, 2004; Verbeek, 2004; Green, 2003; Woodridge, 2002).
One of the dependent variables in this study is also a dummy variable, which takes a value of
zero or one depending on whether or not the households participate in off-farm activity.
However, the independent variables are of both types that are continuous or categorical.

When one or more of the explanatory variables in a regression model are binary, we can
represent them as dummy variables and proceed to analysis. However, the application of the
linear regression model when the dependent variable is binary is more complex and/or even
not efficient (Pindyck and Rubinfeld, 1981). Binary choice models assume that individuals
are faced with a choice between two alternatives and their choice depends on their behavior.
Thus, one purpose of a qualitative choice model is to determine the probability that an
individual with a given set of attributes will make one choice.

Farmers participation in off-farm activity is a dependent variable, which is dichotomous

taking on two values, one if the farmer participates in off-farm activity and zero (non

31
participant) or otherwise. Estimation of this type of relationship requires the use of
qualitative response models.

In this regard, the non-linear probability models, logit and probit models are the possible
alternatives. However, several estimation problems arise particularly when Ordinary Least
Squares (OLS) regression and linear probability models are employed (Aldrich and Nelson,
1984). The OLS regression technique, when the dependent variable is binary, produces
parameter estimates that are inefficient and a heteroscedastic error results in the structure.
Consequently, hypothesis testing and construction of confidence interval become inaccurate
and misleading. Likewise, linear probability model assumes that the probability of an
individual making a given choice is a linear function of the individual attributes. But this
model has some econometric problems associated with it such as non-normality of the
disturbance term, hetroscedastic variance of the disturbance, lower value of R2 and
nonsensical predictions that may generate predicted values outside the 0-1interval, which
violates one of the basic tenets of probability (Non fulfillment of 0,< E (Yi/Xi) <1). To
alleviate these problems and produce relevant empirical outcomes, the most widely used
qualitative response models are the logit and probit models (Amemiya, 1981).

The logit and probit models guarantee that the estimated probabilities will lie between the
logical limit of 0 and 1.These two binary outcome models have an S- shaped relationship
between the independent variables and the probability of an event which addresses the
problem with functional form in the linear probability model (Long, 1997).

Because the probit probability model is associated with the cumulative normal probability
function, whereas, the logit model assumes cumulative logistic probability distribution are
very close to each other, except at the tails, we are not likely to get very different results
using the logit or the probit model. Therefore choice between the logit and probit models
revolves around practical concerns such as the availability and flexibility of computer
programs, personal preference, experience and other facilities because the substantive results
are generally indistinguishable (Maddala, 1983). Therefore, given the similarity between the
two models, it is possible to use logit model for the analysis of the determinants of farmers’
participation in off-farm activities.

32
3.5.3. General Specification of the Econometric Models Used for Analysis

To analyze farmers’ participation in off-farm activities the descriptive statistics such as

percentiles, mean, standard deviation, minimum, maximum and figure and binary logit
regression model analysis would be employed to deal with the research questions and to
achieve the objectives.

Descriptive statistics was one of the techniques used to summarize the data collected from
the sample respondents. Descriptive measures employed to evaluate, analysis, and determine
the influence of farmers’ participation in off-farm activities.

Discussion based on descriptive statistics will be employed by using the measures like,
percentages, tables, figure, chi-square test were used for comparing participant farmers and
non-participants in various explanatory variables. As well as the researcher use the software
chose for our analysis Stata software 15.0.

3.6. Model Specification

This study was intended to analyze determinants of farmers’ participation in off-farm

activities. As already noted, the dependent variable is a dummy variable, which will take a
value zero or one depending on whether or not participants defaulted. However, the
independent variables were of both types, that is, continuous or categorical.

Probit and logit models are similar and yield essentially identical results. Aldrich and Nelson
(1984) indicated that in practice these models yield estimated choice probabilities that differ
by less than 0.02 and which can be distinguished, in the sense of statistical significance, only
with very large samples. The choice between them therefore, revolves around practical
concerns such as the availability and flexibility of computer programs, personal preference,
experience and other facilities.

The logit models is commonly used in studies involving qualitative choices. The probit
probability model is associated with the cumulative normal probability function, whereas, the
logit model assumes cumulative logistic probability distribution. The advantage of these
models over the Linear Probability Model is that the probabilities are bound between 0 and 1.

33
Moreover, they fit best the non-linear relationship between the probabilities of the dependent
variable and the explanatory variables, that is one which approaches zero at slower and
slower rates as an explanatory variable (Xi) gets smaller and smaller and approaches one at
slower and slower rates as Xi gets larger and larger. Gujarati (1988), Feder et al., (1985),
Aldrich and Nelson (1984) and Maddala (1981) have recommended probit model for
functional forms with limited dependent variables that are continuous between 0 and 1, and
logit models for discrete dependent variables. Hence, the logistic model is selected for this
study. To identify factors affecting farmers’ participation in off-farm activities at the
individual household level, binary logit model was used. This method was chosen because it
was a standard method of analysis when the outcome variable was dichotomous (Hosmer and
Lemeshow, 2000), measured as had a value of 1 or 0, where 1 = participant in off-farm
activities and 0 = non participant in off-farm activities. Generally, the Binary logit model
written as: Therefore, the cumulative logistic probability model is econometrically specified
as follows:

Probit model is used for functional forms with limited dependent variable that are continuous
between 0 and 1 whereas binary logit model is used for discrete dependent variables.

Therefore, the cumulative logistic probability model is econometrically specified as follows:

�
Pi=E(Y=1/X)=�−(β�+β���)------------------------(1) expressed also as follows

� ��
Pi=�+�−�= � -------------- (2) cumulative logistic distribution function
�+�
Where Z= β� + β���+el=Pi the probability that farmers would decide to participant in off-
farm activities, Xi represent the explanatory variable. The decision not to participant can be
�� �
expressed as 1-Pi=1- � = �+�� the ratio of the probability to participant and not to
�−�
�
�� ��/�+�
participant is given by odd ratio. = � = �� = � ��+����+�� , taking the natural
�−�� �/�+�

logarithm
��
Ln(1−��)= βo + β1Xi + el, Li which the log of odds is the logit model.

Li= βo + β1Xi + ei, letting pi as a decision to participant, this model is specified

34
Pi= βo + β1age + β2gender + β3educh + β4fams + β5dmf + β6farmsi + β7accrd +

β8pagri + β9train + β10accinf + β11extes + β12Dfshr + β13mars + β14tlu +

β15exper + e

Where�� is the constant term ��, ��, ……. . ���are slope coefficients of variable.

Where β0 is the intercept and β 1,2 are also parameter in the model and ei is the error in the

observed value for the ith. Note that β0is the intercept, the model predicted value of the
dependent variable when the value of every predictors is equal to zero.

Based on the above state model the researcher is specify the logit model that is apply in
Analysis farmers’ participation in off-farm activities. Since the participation indicator, i.e ,the
dependent variable (farmers’ participation in off-farm activities) is dichotomous. The
observable variable, Analysis of farmers’ participation in off-farm activities is measure
by(FPO).

3.7. Definition of Variables and Working Hypothesis

A. Dependent variable

The aim of our study is to determine the factors which are likely to influence the participation
of farmers in off-farm activity; our dependent variable is the exercise of off-farm activity
during the primary data analysis the survey.

It is a dichotomist variable whose values are:

1, �� ������� ��� ������������

Y= 0, ��ℎ������

Analysis of farmers’ participation in off-farm activity is a dummy dependent variable taking

the value 1 if the farmer is participant in off-farm activity and 0 non -participant or otherwise.

35
B. Independent Variables

Review of literatures on factors influencing farmers’ participation in off-farm activities, past

research findings and the author's knowledge of the credit schemes of the study area were
used to establish working hypotheses of this study. In other words, among a number of
factors, which have been related to farmers’ participation in off-farm activities, in this study,
the following demographic, socio-economic, communication and institutional factors were
hypothesized to explain the dependent variable.

Age of the farm household head (AGE): It is a continuous variable, defined as the farm
household heads age at the time of interview measured in years. Older farmers have enough
farm land so they don’t more participate in off-farm activities, and it was hypothesized that
farmers with higher age may not participate more in off-farm activities. Younger farm
households cannot get enough land to support their livelihood as compared to the older farm
households(Fentie&Rao, 2016).

Sex of respondent (SEX): this is a dummy variable that assumes a value of “1” if the head
of the household is male and “0” otherwise. These are related to women’s lack of control
over economic resources and the nature of their economic activity”. Mostly females spend
their time at home engaged in preparing food, looking after children and fetching water etc.
Hence they may not participate in off-farm activities outside their village like long distance
trade and wage employment (Haile, 2012).

With this background including the existing gender differences; male headed households
have mobility participate in off-farm activities and have more exposure to information;
therefore it was hypothesized that male headed households participate in off-farm activities
than female.

Family size- it is a continuous variable that represent the number of family member in the
household. It is expected to influence off-farm participation positively. Households with
younger members tend to participate more in off-farm activities(Y. Desalegn, 2020).With
this background it was hypothesized that household with younger member has more
opportunity to participate in off-farm activities.

36
.Educational (educ)-It is categorized in to illiterate and able to read and write or literate, it is
a dummy variable. Farmers who can read and write are expected to have more exposure to
the external environment and accumulate knowledge. They have the ability to analyze costs
and benefits. The more educated the household head the more he/she participates in off-farm
activities for his/herown consumption. It is expected to affect off-farm activities
positively.According to (Li et al. 2020) better education of household heads increases the
level of participation in off-farm employment in a household. Therefore, it was expected that
those farmers who can read and write have better opportunities to participate in off-farm
activities.

Off farm Training (train): This is dummy variable implying to whether households have
taken training on off farm activities or not. The presence of training expected to positively
affect the participation of farm household in off farm work (Zewdie&Sivakumar, 2017).With
this background it was hypothesized that households with access of off-farm training more
participates in off-farm activities than non-trained households.

Farm size in hectare (farms):- It is the total land size cultivated (it is the sum of owned
cultivated land, rented-in land and land secured through sharecropping arrangements) by the
household. It is a continuous variable. The larger the cultivated land sizes the less participant
in off-farm activities. It shows that household heads that had relatively more cultivated land
needs more labor for farming activities and gives more focus on farm activities than off farm
activities(Fentie&Rao, 2016). The main hypothesis was that the farmer who cultivates larger
size of land can utilize their consumption from their land so they less participates in off-farm
activities than those of insufficient farm land size.

Households’ access to information (access to information): it is a dummy variable

assigned 1 for those who have access information and otherwise, 0.Access to market
information has a positive influence on farmers’ participation in off-farm activities.

Access to information about the availability of high-earning off-farm activities would give an
opportunity to participate in those activities(Ahmed &Melesse, 2018).Therefore, it was
hypothesized that households with access of information more participates in off-farm
activities than those with no information.

37
Distance to the nearest market (DISM): Is a continuous variable andmeasured in kilometer
or hour. It is expected to influence off-farm activities negatively. The participation of farm
family members in off farm markets is affected not only by their willingness and ability to
supply labor but also by the demand for this labor. A long distance (measured in kilometers)
from the farm to the nearest market reduces the probability of working off the farm(Beyene,
2008).By this background it was hypothesized that households walk long distance to reach
market will not more participate in off-farm activities.

Households Access to Credit (credit): is a dummy variable valued 1 if HHs get credit,
otherwise 0.It is expected positively to affect off-farm activities. If members of farm households
have access to credit then the probability of working off-farm is expected to increase(Beyene,
2008).Therefore, it was hypothesized that households those have access of credit have the
probability of participating in off-farm activities.

Total livestock ownership (TLOU):- This refers to the total number of animals possessed
by the household measured in tropical livestock unit (TLU). Livestock are important sources
of income in rural Ethiopia and hence they can have a substitution or a complementary effect
on off-farm activities. As the total number of animals in the household increases, the
household would be less likely to go for off-farm activities. An addition of one TLU (which
is equivalent to one cow and three goats/sheep) to the existing stock of a typical household
would reduce the probability of participation (Kotu, 2016).

Extension contact (EXECON): This refers to the number of contacts with extension agents
that the respondent made in the month. Farmers who have a frequent contact with extension
agents are expected to have more information that will influence farm household’s demand
for off-farm activities. Therefore, it was hypothesized that this variable positively influences
farmer’s participation in off-farm activities.

Agricultural product of households (agriculture): is a dummy variable assigned 1, if

household’s agricultural product is high and 0, otherwise. Agricultural product affects off-
farm participation negatively. Households those have high agricultural product less
participate in off-farm activities than those of low agricultural products.

38
 Households’ year of farming experience (Experience): It is continuous variable measured
in years. Experienced farmers are more likely to participate inoff-farm activities compared to
less experienced farmers (Benjamin, 2019).Therefore, it was hypothesized that more years of
experienced farmers more participate in off-farm activities than less experienced one.

Marital status (Mst):this variable was a dummy variable which take value of “1”if the
respondent farmerwas married and “0”single .this independent variable hypothesized to
affect off-farm participation positively. It was assumed that married farmers can handle and
manage their overall livelihood (social duties and farm activities) better than households who
were single. Therefore, married farm households can participate in off-farm activities than
single households.

Shortage of food (fshr):is a dummy variable assigned 1,if faced food shortage and
0;otherwise.

Table 2: Independent variables

No Description of Specific level Unit of measurement Result

variable of Expected
measurement
1. Age of households Continuous Number +/_
2. Family size Continuous Number +
3. Education Dummy 0,for illiterate,1 for literate +
4. Size of Cultivable Continuous Size of cultivated land in hectare -
Land
5. Farm experience Continuous Farm experience in years +/_
6. Agricultural product Dummy 1 if agricultural product is high,0 otherwise +/_
7. Access to credit Dummy 1 if respondents have access of credit,0 otherwise +
8. Access to information Dummy 1,for access of information,0 ,otherwise +
9. Distance from market Continuous Number +/_
10. Off-farm train Dummy If the respondents get training (1= if yes, 0= if no) +
11. Gender of household Dummy 1,if male,0 if female +/_
12. Total livestock unit Continuous Measured in tropical livestock unit (TLU) -

39
13. Marital status Dummy 1,single,2,married,3,divorced,4,widow +/_
14. Shortage of food Dummy 1,if faced and 0,otherwise -
15. Extension service Dummy 1 if access and 0,otherwise +

CHAPTER FOUR

4. RESULTS AND DISCUSSION

This chapter presents the results from the descriptive and econometric analyses. The
descriptive analysis made use of tools such as mean, percentage, standard deviation and
frequency distribution. In addition, the t- and chi-square statistics were employed to compare
participants and non-participants group with respect to some explanatory variables.
Econometric analysis was carried out to identify the most important factors that affect
farmers’ participation and finally to measure the relative importance of significant
explanatory variables on participation in off-farm activities. A total number of 352
questionnaires were administered and distributed to rural farmers, of which 346 filled
completely and returned. This made the return rate around 98.3%, indicates very good
response rate. After the data were collected, checked for errors and completeness; this study
employed farmers’ participation in off-farm activities and binary logistic regression for data
analysis.

4.1. Results of Descriptive Statistics Analysis

The descriptive statistics was run to observe the distribution of the independent variables.
The socio-economic and institutional characteristics of the respondents such as availability of
farmers’ age, sex, level of education, marital status, family size, farm land size, access of
information, access to credit, food shortage, farmers experience, livestock unit, agricultural
product, extension service, off-farm training and distance from market of participants and
non-participants in off-farm activities were analyzed. In the study area, farmers participate in
different activities to achieve their livelihood outcomes. Of the total sample respondents
interviewed 124were found to be participants of off-farm activities while 228 were non-
participants. Table3 and Figure 2 below show these categories in frequency and percent form

40
respectively. The survey result indicated that 35.23, 64.77 %of respondents were off-farm
participants and off-farm non-participants respectively.

Table 3: Rural households’ participation status in off-farm activities

Household status Frequency (N) Percentage (%)

Participants 124 35.23
Non-participants 228 64.77
Total 352 100
Source: survey result, 2021

Ss acfs

participation and non-participation

35.23%

64 .77%

0 1

Figure 3: Graphical representation of off-farm participation sample respondents’ off-farm

participants and non-participants
NB: 1 = off-farm participants
0 = non-participants

41
This pie chart displayed from the total respondents 228(64.77%) were off-farm non-
participants while 124(35.23%) were participants.

4.1.1. Socioeconomic and Institutional Characteristics of Sample Households

Sample households of the study area were composed of both male and female household
heads. Gender of the household head is an important variable influencing the participation
decision in off-farm activities. It was found that among the total sample household heads
23.01% of them are female headed while 76.99% were male headed households. When we
see the comparison by off-farm participation, out of the 124 off-farm participants’
households 31.45% were headed by female and the remaining 68.55% were male headed
household. The corresponding figure for non-participants was 18.42 % and 81.58% by
female and male household heads respectively.

Age of the respondents: from table 4 below it is revealed that the maximum age of the
respondents was 70years, and the minimum was 20 years. The mean age was identified to be
38.85years with standard deviation of 9.89 years. The mean age of respondents engaged in
off-farm activities was found to be 33.95 years and where as it was 41.52 years for those who
are not engaged in off-farm activities. The result of t-test analysis shows that there was a
significant mean difference between two groups at 1% statistically significant level. This
means participants in off-farm activities are younger than the non-participants.

Cultivated land size: In the study area it was found that the mean land holding of the
respondents was 1.96 hectare with standard deviation of 1.197hectare. The minimum and
maximum land holding of the total households was 0 hectare and 5 hectares respectively. The
mean land holding of respondents engaged in off-farm activities and those who are not
engaged in off-farm activities was 1.44and 2.24 hectares respectively. As indicated in Table
4 below, T-test was found that there was significant mean difference in land holding between
two groups.

42
Family size of the respondents’ household: As shown in Table 4, the average family size of
the entire sample household was 4.83with standard deviation of 1.96 where the minimum
size was 1 and the maximum was 10 individuals. The average family size of the respondents
engaged in off-farm activities was found to be 5.94 with standard deviation of 2.11 and
4.23for those who were not engaged in off-farm activities with standard deviation of 1.57.
The analysis of t-test shows that there was statistical significant difference between two
groups in their family size at 1% significance level. This implies that households with larger
family size more involved in off-farm activities compared to households with smaller family
size especially family with smaller size of family member. Households with younger
members tend to participate more in off-farm activities (Y. Desalegn, 2020).With this
background it was hypothesized that household with younger member has more opportunity
to participate in off-farm activities.

Educational status of the respondents: The survey result presented in Table 4 below
depicts that sample household on average have attained 3.04schooling years. The maximum
schooling years observed was 12 while the minimum was 0. The mean schooling years of
participants in off-farm activities was 5.70 and that of non-participants was 1.58. This shows
that off-farm activities participants have more schooling years than non-participants. The
result of t-test found that there was significant mean difference in land holding between two
groups.

Market distance: The average market distance from residence to the respondents was 3.15
with standard deviation of 2.21 hrs. The maximum distance from the respondent’s residence
to the nearest market for participants and non-participants was 0.75 and 11 hrs respectively.
The average distance from market of households involved in off-farm activities was 2.35 hrs
with standard deviation of 1.96 hr whereas average distance of those who was not involved
was 3.59 years with standard deviation of2.23 years. The result of t-test analysis shows that
the mean difference between two groups was found to be statistically significant at 1% level
of significance.

Farm experience: Lastly farm experience is the other explanatory variable that determines
farmers’ participation in off-farm activities. The average farm experience of respondents was

43
23.95 years, where the minimum and the maximum farm experience of respondents was 2
and 25 year respectively. The mean farm experience of the participants and non-participants
was 22.63 and24.68 year respectively (Table 4). T-test shows there was significance between
the two groups at 1% of significance level.

Table 4: Summary of descriptive statistics for continuous variables by off-farm participation

Variables Participants Non- Total T-test

No participants Households
Mean St.dev Mean St.dev Mean St,dev Min Max
1 Age of 33.95 6.45 41.53 10.41 38.85 9.89 20 70 7.37***
household
2 Education 5.70 3.41 1.59 2.18 3.04 3.31 0 12 -13.77***
3 Family size 5.94 2.11 4.23 1.57 4.83 1.95 1 10 -8.5698***
4 Land size 1.44 1.25 2.24 1.07 1.95 1.19 0 5 6.28***

5 Distance 2.35 1.96 3.59 2.23 3.15 2.21 0.75 6 5.1753***

from
market
6 Farm 22.63 10.25 24.68 11.68 23.95 11.22 2 45 1.6416
experience
7 Total 2.49 2.389 2.25 2.969 2.34 2.77 0 26.75 -0.78
Livestock
Sources: own survey, 2021, *** shows statistically significant at 1% level of significance

Access to credit: The survey result presented on Table 5 depicts that in the study area about
78.41 % of farmers had received credit from formal microfinance institutions during the last
5 years while majority of them hadn’t. About 80.65 % of farmers who were engaged in off-
farm activities received credit. On contrary to this only 77.19% of the respondents from non-
participant group received credit. The result of chi square analysis shows that there was
significant association between receiving credit and participation in off-farm activities
significance level.

44
Off-farm train: The survey result revealed that 69.35% respondents engaged in off-farm
activities had off-farm training whereas 24.12% of respondents who was not engaged in off-
farm activities had no off-farm training. The result of chi square analysis shows that there
was significant association between having information about off-farm participation level of
significance.

Access to information: It is obvious access to information is very important one to obtain

awareness of different livelihood activities. In the study area it was found that majority of the
respondents had no access to information to be easily involved in off-farm activities. From
total sampled households, 64.20% of them had no access to information. With regard to the
participation status of respondents in off-farm activities by access to information, even
though majority of households had no information majority of those who engaged in off-farm
activities had information access. it was found that 65.32% of farmers participating in off-
farm activities had access to information. The Chi-square test analysis showed that, there was
statistically significant difference in the access to information between participants in off-
farm activities and non-participant households.

Extension service: The survey result presented on Table 5 depicts that in the study area
about 53.69 % of farmers had access of extension service. About 78.23% of farmers who
were engaged in off-farm activities had extension service whereas about 40.35% of
respondents who were not engaged in off-farm activities had access of extension service. The
result of chi square analysis shows that there was significant association between having
information and off-farm participation at significance level.

Marital Status: The below table 5 showed that 56.53% of the respondents were married,
11.08% of the respondents were single, 17.90% of the respondents were divorced and
14.49% of the respondents were widowed. The fact that the majority of the respondents were
married could have the implication on the increased burden on farmers in both on farm and
off-farm activities .From respondents involved in off-farm activities 37.90% were
married,11.29% were single,20.16% were widow and 30.65 were divorced. Generally, we
can conclude from the above result that majority of respondents engaged in off-farm
activities were married. Next to married divorced respondents engaged in off-farm activities

45
 more than the others due more burden carrier than the widow and single respondents. As in
similar way, respondents in a single marital status were mostly spent depend on their family,
so they were not enforced to participate in off-farm activities due to absence of burden and
also due to lack of initial capital as they told me during discussion. Finally, farmers those
married had more chance of participating in off-farm activities than those of widowed,
divorced and single. Chi-square shows the significance level among the groups.

Table 5: Summary of descriptive statistics (categorical variables)

Variables Off-farm participants Off-farm non- Total households Chi-square
participants
N % N % N %
Gender Male=85 68.55 186 81.58 271 76.99 7.69**
Female =39 31.45 42 18.42 81 23.01
Access to credit Yes=100 80.65 176 77.19 276 78.41 0.57
No =24 19.35 52 22.81 76 21.59
Agricultural High =38 30.65 148 64.91 186 52.84 37.85***
product Low=86 69.35 80 35.09 166 47.16
Food shortage Yes=79 63.71 85 37.28 164 46.59 21.20***
N0=45 36.29 143 62.72 188 53.41
Off-farm train Yes=86 69.35 55 24.12 141 40.06 68.43***
N0=38 30.65 173 75.88 211 59.94
Access to Yes=81 65.32 45 19.74 126 35.80 72.63***
information N0=43 34.68 183 80.26 226 64.20
Extension Yes=97 78.25 92 40.35 189 53.69 46.34***
service N0=27 21.77 136 59.65 163 46.31
Marital status 1=14 11.29 25 10.96 39 11.08 46.80***
2=47 37.90 152 66.67 199 56.53
3=25 30.65 38 16.67 63 17.90
4=38 20.16 13 5.70 51 14.49
Source: survey result, 2021,*, **and *** represent level of significant at10%, 5% and 1%
level of significance

4.2 Results of the Econometric Model

In this study, to identify and analyze farm level determinants of farmers’ participation in off-
farm activities, the binary logit model has been used and analyzed. In the farmers
participation in off-farm activities, the model was used with fifteen demographic and socio

46
economic variables such as age of the household head in years, distance from the nearest
market center in hour, amount of land holding in hectare, availability of family labor force in
number, farm experience in years, education level of the household head ,total livestock
owned in TLU, access to credit, gender of the household head, access to information, access
to extension service, food shortage, agricultural product and marital status were entered and
analyzed with the help of Stata 15.0.

4.2.1. Estimation Procedures

4.2.2. Diagnostic Test

4.2.2.1 Specification error test

Model specification: Assumptions of logistic regression realize that the model is correctly
specified. When the assumptions of logistic regression analysis are not met, we may have
problems, such as biased coefficient estimates or very large standard errors for the logistic
regression coefficients, and these problems may lead to invalid statistical inferences.
Therefore, before using our model to make any statistical inference, check that our model fits
sufficiently well and check for influential observations that The Stata command linktest can
be used to detect a specification error. After the regression command (in our case, logit or
logistic), linktest uses the linear predicted value (_hat) and linear predicted value squared
(_hatsq) as the predictors to rebuild the model. The variable _hat should be a statistically
significant predictor, since it is the predicted value from the model. This will be the case
unless the model is completely misspecified. On the other hand, if our model is properly
specified, variable (_hatsq) shouldn't have much predictive power except by chance.
Therefore, if _hatsq is significant, then the link test is significant. This usually means that
either we have omitted relevant variable(s) or our link function is not correctly specified. In
this study linktest report that the model is correctly specified. Because (_hat) is significant
and _hatsq is not significant have impact on the estimates of the coefficients.

Table 6: Specification Test of the Model

47
4.2.2.2. Good Ness of Fit Test

The p-value associated the chi-square with “n” degrees of freedom and Hosmer and
Lemeshow’s are used to test goodness-of-fit test. In this study p-value associated the chi-
square with 14 degrees of freedom. The p- value of .0000 indicates that the model as a whole
is statistically significant i.e. the model fit the data well. (Regression output result below )
Another commonly used test of model fit is the Hosmer and Lemeshow's goodness-of-fit test.
The HosmerLemeshow goodness-of-fit statistic is computed as the Pearson chi-square from
the contingency table of observed frequencies and expected frequencies. Similar to a test of
association of a two-way table, a goodness of fit as measured by Hosmer and Lemeshow's
test will yield a large p-value. Therefore in this study the test result show that p= 0.9978 this
suggest that the model is correctly fitted with the data.

Logistic model for partpn, goodness-of-fit test

number of observations = 352

number of covariate patterns = 352
Pearson chi2(336) = 266.75
Prob > chi2 = 0.9978

48
4.2.3. Multicollinearity diagnosis

To study factors affecting farmers’ participation in off-farm activities, data gathered from
352 farmers were subjected to logistic regression analysis. The statistical software used for
analyzing the data was STATA15.0 for windows. Prior to running the logistic regression
model, both the continuous and discrete explanatory variables were checked for the existence
of multi-collinearity problem. The problem arises when at least one of the independent
variables is a linear combination of the others. The existence of multi-collinearity might
cause the estimated regression coefficients to have the wrong signs and smaller t-ratios that
might lead to wrong conclusions.

There are two measures that are often suggested to test the presence of multi-collinearity.
These are: Variance Inflation Factor (VIF) for association among the continuous explanatory
variables and contingency coefficients for dummy variables Gujarati (2003).

The technique of variance inflation factor (VIF) was employed to detect the problem of
multicollinearity among the continuous variables. According to Gujarati (2003), VIF can be

1
Defined as:VIF(Xi)=1−��2

Where, Ri2 is the square of multiple correlation coefficients that results when one explanatory

Variable (Xi) is regressed against all other explanatory variables. The larger the value of VIF
(Xi) the more “troublesome” or collinear the variable Xi is. As a rule of thumb, if the VIF of
a variable exceeds 10, there is a multi-collinearity problem. The VIF values displayed below
(Table 10) have shown that all the continuous explanatory variables have no serious.

The values of VIF for continuous variables were found to be small (i.e. VIF values less than
10). To avoid serious problem of multicollinearity, it is quite essential to omit the variable
with value 10 and more from the logit analysis. Based on the VIF result, the data have no
serious problem of multicollinearity. As a result, all the 15 explanatory variables were
retained and entered in to logistic analysis.

Similarly, the contingency coefficients, which measure the association between various
discrete variables based on the chi-square, were computed in order to check the degree of

49
association among the discrete variables. The value of contingency coefficient ranges
between 0 and 1, with zero indicating no association between the variables; and values close
to 1 indicate a high degree of association. Accordingly, the results of the computation reveal
that there was no serious problem of association among discrete explanatory variables. Hence,
all the 2 discrete variables were entered into logistic analysis. (See table 7) from appendix.

The contingency coefficient is computed as:

�2
C= �+�

Where, C= Coefficient of contingency,X2= Chi-square random variable and N= total sample

size.

The decision rule for contingency coefficients is that when its value approaches 1, there is a
problem of association between the discrete variables.

For the continuous variables the VIF greater than ten reveals strong correlation and measures
inflation in variance in due to multicollinearity and the value of contingency coefficient is a
chi-square based measure of association where a value of 0.75 and above shows the existence
of strong multicollinearity problem. Based on the results of VIF, the data had no serious
problem of multicollinearity. This is because, for all continuous explanatory variables, the
values of VIF are by far less than 10. Therefore, these continuous explanatory variables were
included in the model. Similarly, the contingency coefficient (CC) results showed absence of
strong association between different hypothesized discrete explanatory variables, since the
respective coefficients were very low (less than 0.75) as given on annex. Therefore, the
dummy variables were included in the model. For this reason, all of the explanatory variables
were included in the final analysis. In Heckman’s selection model normality and
homoskedasticity of the error term should hold (Green, 2003). Hence, these assumptions
required to be tested.

We tested hetroskedasticity for outcome equation and normality of the error terms for the
different regression outcomes. We used Breusch-Pagan hetroskedasticity test to check
existence of hetroskedasticity problem for errors. To check for normality of data, in Stata, we

50
 can test normality by either graphical or numerical methods. Through graphical method we
have checked the data by drawing histogram and through numerical methods we have used
skewness and kurtosis as well as the Shapiro-Wilk and Shapiro-Francia tests are used (Park,
2008). Be aware that in all these numerical tests, the null hypothesis states that the variable is
normally distributed. The homoskedasticity for the outcome equation and normality
assumption for both the participation and outcome equation of the models are not rejected.
For probit it is difficult to test hetroskedasticity problem. Thus, we assumed the presence of
hetroskedasticity and apply robust during analysis to correct the problem for the participation
equations.(See Table 8 from appendix).

Therefore, the dummy variables were included in the model. For this reason, all of the
explanatory variables were included in the final analysis. In binary logit model normality and
homoskedasticity of the error term should hold (Green, 2003). Hence, these assumptions
required to be tested. We tested hetroskedasticity for outcome equation and normality of the
error terms for the different regression outcomes. We used Breusch-Pagan hetroskedasticity
test to check existence of hetroskedasticity problem for errors. To check for normality of data,
in Stata, we can test normality by either graphical or numerical methods.

Table 7: Logistic result table with robust test

4.3. Results of the Econometric Model

Logistic regression result
Table 8: Determinants of off-farm participation and odd ratio using stata software 15.0

Variable Coef. Std. Err. Z P>|z| Marginal

effect
Age of households -.3836625 .063356 -6.06 0.000 -.0527293
Gender of households 1.075478 .6798747 1.58 0.114 .1140386
Family size .4707224 .1360814 3.46 0.001 .0635611
Education .4899697 .0892855 5.49 0.000 .0662846
Distance from market -.4493244 .1404629 -3.20 0.001 -.0640392
Land holding size -.7371399 .2375467 -3.10 0.002 -.1034547
Access to credit 1.105802 .6385676 1.73 0.083 .1254469
Agricultural product -.5352356 .5856354 -0.91 0.361 -.1056072
Off-farm training 1.143199 .5489355 2.08 0.037 .1678906

51
 Access of information 2.447588 .7062717 3.47 0.001 .4180714
Extension service 1.129584 .536903 2.10 0.035 .1534565
Food shortage -.209187 .6561346 -0.32 0.750 -.0496903
Marital status .7231808 .3284988 2.20 0.028 .1003329
Farm experience .3186429 .0540049 5.90 0.000 .0440616
Total livestock .0307188 .0793456 0.39 0.699 .0031263
_cons -.241939 1.987436 -0.12 0.903 1.560344
Log likelihood =62.219831
Number of obs = 352
LR chi2(15) = 332.35
Prob> chi2 = 0.0000
Pseudo R2 = 0.7276
Source: Own survey computation, 2021
���(��+��'�)
Fitted model in equation form can be expressed as follow:Pi (Y=1)=�+���(��+��'�)

P(y=1)=
�(.14713−.3822602age+.9847663gen+. .4607857 fams+.4805292educh−.4642517dmf−.749994 farms
+ 1.062764cred−.7520345agr+ �.125497���+. 2.481431 inf+ 1.133345ext −.3631312fshr
+..7273623 marst+ .3194242exp+ .0226641Tlu
1+�(.14713−.3822602age+.9847663gen+. .4607857 fams+.4805292educh−.4642517dmf−.749994 farms
+ 1.062764cred−.7520345agr+ 1.125497���+. 2.481431 inf+ 1.133345ext −.3631312fshr
+.7273623 marst+ .3194242exp+ .0226641Tlu

Where:P(yi=1)is the estimated probability of being participants of off-farm activities

exp = exponent and variables written in bold are independent variables.

As it can be seen from Table: 9 the likelihood ratio chi-square have value of 72.76 with its p-
value of 0.000 this implies that the fifteen independent variables i.e. (age of respondents
(age), gender the house hold head(Sex), educational status of respondents (educh),marital
status of the respondent (martastu), access to credit(accesscrd) agricultural product(agpr),
access of information(accinf),family size (Famsize), extension service(extser),distance from
the market (dfmrk),land size(ls) total, livestock unit(tlu)farmers experience(exp),
(fincperm)andfood shortage(fshr) incorporated in the model were jointly statistically
significant on off-farm activities of farmers i.e., the model as whole is statistically significant.

Pseudo R-square with value (R2=0.7276) shows that about 72.76 percent of change in off-
farm activities of farmer is explained by independent variables incorporated within the
model i.e. As indicated in the above table, the pseudo R2 value of the model used to

52
measures to what extent the independent variables explained the dependent variable is
72.76%. This implies that 72.76% of the variation in farmers participation in off-farm
activities is explained by the aforementioned explanatory variables i.e. the variables
collectively explains 72.76% of changes in off-farm activities. Thus, these variables
collectively are good explanatory power. While, the remaining less than half percentage i.e.
27.24% variation in off-farm activities of farmers in the study area could be explained by
exogenous variables which are outside the model.

The Table: 9 above shows that, the researcher tested whether the fifteen explanatory
variables incorporated in the study affect the participation farmers’ respondents in off-farm
activities. Out of which, eleven variables such as age, agricultural product, educational status,
marital status of the respondent, access to credit, land size, distance from market, family size,
access of information, off-farm training and extension service were statistically significant.

4.4. Explanation of significant explanatory variables

In light of the above summarized model results, possible explanations for each significant
explanatory variable are given successively as follows:

Age of respondents: The literature has also found effects of age of household members and
individual characteristics on off-farm activities. The result of the Binary logit regression
model has shown that, age has negative influence on dependent variable with (ᵦ= -.382) and
statistically significant at 1% level. This finding is consistent with results of studies done by(
Fentie&Rao, 2016)in Ethiopia and Kaija (2007) in Uganda in such a way that probability of
participation decreases as age increases. But the result of this finding is inconsistent with the
studies of Zahonogo (2011) in Burkina Faso and Berg and Kumbi (2006) in Ethiopia where
older farmers tend to participate better than middle or younger farmers.

The marginal effect of the model also reveals that, as the age of respondents increase by one
year on average the probability of farmers to be involved in off-farm activities decrease by
5.2% of marginal effect, citrus paribus. Therefore, the researcher can conclude that, as the
age of farmers increases, the probability of being participant in off-farm activities will also
decreases in Dano Woreda(Table9).The possible reason of this is as age of farmer increases

53
their possibilities to be actively engaged in off-farm activities decreased because with old age
energy need to carry out activities decrease. According to the study area young aged farmers
were motivated to participate in off-farm activities.

Family size: Family size has been hypothesized to have a positive relationship with farmers
participation in off-farm activities. It is obvious that the more increase in the household size
the broader opportunity to be engaged in off-farm activities of the house hold members.
Therefore, the more family size to a household means the more being participated in off-farm
activities. The regression result has shown that, family size has positive influence on
dependent variable with (ᵦ= 0.46) and statistically significant at 1%. This study is consistent
with the findings of (Yonatan. D, 2020) in Ethiopia, Households with younger members tend
to participate more in off-farm activities. The marginal effect of the model showed that, as
number of household size of farmers increases by additional one individual on average, the
probability of farmers to become off-farm participants increases by 6.4 % marginal change.

The reason for positive relationship between family size and farmers’ participation in off-
farm activities shows that as the family size increases the workforce that helps them in off-
farm activities increases. From this inference can be made that households with large active
labor force would more be probable to participate in such a way that labor division would
prevail more; and besides, enough labor force at home would let family members to
participate in off-farm activities. This is consistent with the study

Cultivated land: The result of the Binary logit regression model has shown that, cultivated
land has negative influence over the dependent variable with (ᵦ= -.749) and statistically
significant at 1%. This finding is consistent with results of studies done by (Fentie&Rao,
2016)which shows that household heads that had relatively more cultivated land needs more
labor for farming activities and gives more focus on farm activities than off farm activities.
However,(Yadeta .B,2017) disagree with this which revealed that households who had larger
farm size had better chance to participate on off-farm activities. The marginal effect of the
model result reveals that farmers who have small size of land are more likely to be
participants than farmers that have more land farm by 6.4% keeping other things constant.
The result corresponds with the prior expectation.

54
In the study area, households who owned an arable land size ranged in between 0.25 and
1hectar are young farmers while the larger land share was positioned on modal age group
interval of 40 to 70 years since they have had a great share from the last regional land
redistribution held from their old parents. It is possible, therefore, to deduce that when we
come across higher age groups, it is fortunate to find higher land holding size. This large land
holding size is found to be imperative for producing a relatively higher crop production that
would retain them to do farm activities and not to participate in off-farm activities. Hence, it
is possible to infer that, participation in off-farm activities was in response to farm land
constraints.

Educational level of respondents: It is obvious that education increases the knowledge and
skill of the peoples in a society. Therefore, the more education to a society means the more
intervention in different economic activity by that society. Consequently, Education has been
hypothesized to have a positive relationship with farmers’ participation in off-farm activities.
The Binary logit regression result has shown that, Education status has positive influence on
dependent variable with (ᵦ= .481) and statistically significant at 5% level.

The result of this study on relation between educational level and farmers participation in off-
farm activities were consistent with the findings of(Li et al. 2020) confirms that better
education of household heads increases the level of participation in off-farm employment in a
household.

The marginal effect of the model showed that, as number of years of schooling of farmers’
increases by additional one year on average, the probability of farmers to be engaged in off-
farm activities increases by 6.6 % marginal change, keeping other things constant. The model
output also reveals that education is positively and significantly related with the dependent
variable at 1% probability level.

This can be reasoned out as the schooling year of farmer increases their awareness and
acceptance of different training concerned with activities increases and they are able to think
different things in different ways of critical to change the livelihood of their household by
participating in different diversified activities.

55
Moreover, as education increases the capability to manage economic sources effectively like
the way of generating economic sources and usage of it. The study shows that education was
positive and significant related to economic activities at 1% level of probability.

Market distance: As expected, this variable was negatively associated with farmers’
participation in off-farm activities and statistically significant at 10% probability level (ᵦ= -
0.464) and statistically significant at 1%. The marginal effect of the model result reveals that
farmers having longer distance from the market center are less likely to participate in off-
farm activities than those who nearer to market Centre by 6.62%. The result of this finding is
consistent with the results of (Beyene, 2008) revealed that as farmers have a lot of
households and farm activities related to burden they are not much interested to waste their
time to go a long distance for buying and selling. The reason for negative relationship
between market distance and farmers’ participation in off-farm activities indicates, long
distance takes time for the farmers to reach the market to sell and buy commodities focused
on their off-farm activities.

Access to credit: access to credit of the respondents as one of factor that affect economic
empowerment of farmers in agricultural activities, the logit regression result depicts that the
coefficient of non-credit utilizers dummy is positive and statistically significant with (ᵦ= 1.06)
and statistically significant at 10%. The marginal effect of the model result reveals that non-
credit user of farmers are less likely to be involved in off-farm activities than users of credit
farmers by 12.54%. This indicates the probability of participating in off-farm activities for
non-credit user is less than that of credit users. The finding agrees with the findings of Wivin
et al. (2013); as if taking credit is imperative for solving financial problem and thereby
increases the probability of participation. On the other hand, the finding contradicts with the
findings of Babatunde and Qaim (2009) in Kwara State of Nigeria where liquidity problems,
while intending to participate in off-farm activities, could not be solved by accessing and
taking credit. Therefore, the hypothesis that stated as credit user farmer has more advantage
of participating in off-farm activities than that of non-credit users. Hence, access to credit
and taking credit influences participation, indicating that the more farmers have access to
source of finance, the more likely to decide and participate in off-farm activities.

56
Off-farm train: As logistic result indicated in the study access of off-farm train affects off-
farm participation positively and statistically significant at 5% level of significance. It is
believed that providing off-farm training is imperative for instigating farmers to participate
and thereby diversifying their economic and income base. As the logistic regression result is
statistically significant, off-farm training has a positive linkage with off-farm participation
decision where it gives an insight to provide and strengthen trainings pertaining to off-farm
activities. This is consistent with the study by(Zewdie &Sivakumar, 2017).

The marginal effect of the model reveals that those farmers that have access of training more
participate in off-farm activities than those who have no access of training by 16.78%This
indicates that those farmers get off-farm train like handcraft, pottery and others have more
opportunities to be involved in the activity than those who didn’t get the access in the study
area.

Extension service: access of extension service contact for farmers is an important ingredient
to enhance their participation in off-farm activities. Therefore, it was hypothesized that
farmers, who have better extension service contact, will have a better participation in off-
farm activities. The result of the Binary logit regression model confirms that there is a
significant and positive relationship between farmers participation in off-farm activities and
their access of extension service contact with (ᵦ= 1.133) and statistically significant at 5%.

The marginal effect of the model showed that, as participation of rural farmers increases by
additional one contact on average the probability of farmers to become participants increases
by 15.34% marginal change, keeping other things constant. Therefore, the researcher can
conclude that, as the access of extension service increases, the probability of being
participant will also increases in study area.

Access of information: As expected, this variable was positively associated with off-farm
activities participation of farmers and statistically significant at 1% probability level. Mass
media play an important role in transferring information in relatively shorter time and can
cover a large area at the same time. Individuals who have access to mass media are off-farm
participants as they are aware about the usage and importance of off-farm activities.

57
The marginal model result has shown that, information access has positive effect on
dependent variable i.e. off-farm participation of farmers with (ᵦ= 2.481) and statistically
significant at 1%. This finding is consistent with results of studies done by (Ahmed
&Melesse, 2018) which reveals access to information about the availability of high-earning
off-farm activities would give an opportunity to participate in those activities.

This reveals that those farmers who have access of available information concerned with off-
farm activities have more opportunity of involving in off-farm activities than those who have
no available information.

Farm Experience: The result of the Binary logit regression model has shown that, farm
experience has positive influence over the dependent variable with (ᵦ= .319) and statistically
significant at 1%.This finding is consistent with results of studies done by (Benjamin, 2019).
The marginal effect of the model result reveals that farmers who have farm experience are
more likely to be involved in off-farm activities than farmers haven’t experience by 4.4%
keeping other things constant. Hence farm experience influences participation, indicating that
as farming experience increases the possibility to diversify livelihood increases since
knowledge gained through experience teaches them.

Marital status: As expected, this variable was positively associated with off-farm
participation of farmers with with (ᵦ= .727) and statistically significant at 5%. The marginal
effect of the model result reveals that married farmers are more likely to be engaged in off-
farm activities than those who are unmarried by 10.033%. This implies that married ones
carry burden to live their families, so their opportunity to be engaged in the activity is high
than their counterparts.

4.5. Dominant Types of off-farm activities in the study area

58
 Farmers might be engaged in different off-farm activities. There are various reasons that
farmers engaged in different types of activities such as to boost their income and overcome
the natural and manmade challenges. The types of off-farm activities that farmers might be
engaged in vary from one area to another.

There are some off-farm activities which are predominantly employed by farmers in the
study areas. The following table shows types of off-farm activities that farmers engaged in
and respective number of households who employed these off-farm activities in the
respective study area.

Table 10: Types of off-farm activities

Types of off-farm activities Frequency(N) Percentage (%)

Petty trade 10 8.06
Firewood and charcoal selling 20 16.13
Wage labor/ casual work 47 37.90
Selling cows, goats and sheep 11 8.87
Fattening oxen 9 7.26
Cooked food and local drink sale 22 17.75
Handcraft 7 4.03
Total 124 100
Source: Own survey result, 2021

4.5.3. Wage labor

In this case, wage labour might be seen as some members of a given household work on
others farm land so as to generate income or moving to urban areas serve as a daily labourer
on construction sites.

59
As shown in the table above, among the surveyed respondents, 37.90% of the households in
the study area employed wage/ casual work as means of livelihood generating activity. The
survey results of this study indicated that, from respondents engaged in off-farm activity
majority of them in the study area employed this type of off-farm activity.

However, discussion results from the study participants indicated that employing of this type
of livelihood strategy varies from one household to another depending on the availability of
labour force at household level and vulnerability contexts. When a given household contains
relatively high number of labour force and their farming strategy does not requires intensive
labour force, some members of the household go to other areas and act as a daily labourer in
order to generate income. This off-farm type of livelihood activity is found common mostly
during the slack agricultural season. This was due to the availability of great demand of wage
labourers during this season.

According to the findings of this study, male members of a household are mostly engaged in
wage labour/casual work activity. However, there are also circumstances on which female
members of a household engaged in such activity. For instance, female members of a given
household go to nearby neighbors households being employed in weed activity and take
money in turn.

4.5.4. Foods and Local Drinks

This type of activities, sale of locally produced drinks such as, tela,qaribo ,local araqiand
cooked foods in small village town in the rural kebele and sell to their customers.

As indicated in table (16), among the surveyed respondents who pursue off-farm activities,
17.75% of the households in the study area employed this type of off-farm activity to make a
living .Households who are engaged in such activity prepared some locally produced drinks
such as ‘tela’,’qaribo’, ‘araqi’ and cooked foods and sell to their customers relatively on fair
and balanced price. Study participants reported that in most instances, female-headed
households are involved in this business. Widows and divorcees are usually pushed or pulled
to such activities when their livelihood situation deteriorates following the death of a spouse
or unfair property division when marriages fail. This might be due to difficulties that female

60
headed households face in keeping the farm economy as their major livelihood activity after
they lose their spouse.

The evidence from a female informant describes the following. A thirty years old woman,
who lives in a certain selected sample kebele in the study area, is engaged in sale of local
drinks like (‘tela’,’qaribo’and ‘araqi’) she started this business when she lost her husband
five years ago, shouldering all the responsibility to raise four children. The woman said,
“Some of the reasons forced/motivated me to engage in trade are; I cannot keep farming
alone after my husband has passed away. I found trade simple for me to raise my children. In
trade, no need of buying agricultural inputs, no need of having oxen and so on. Considering
the effort I exerted and the expenses that I invest to run this business, the outcomes might not
be much more satisfactory. But I found this business easier than farming especially to female
headed households.

4.5.5. Handicrafts

Handicrafts include blacksmithing, pottery and waving wood work and etc. Blacksmiths give
service to inhabitants of the kebele by making /sharpening various tools and utensils (such as
knives and ploughs).

As shown in table (16), among the surveyed respondents, 4.03 % of households in the study
area were employed crafts, wood work and pottery as means of livelihood activity to support
their major livelihood strategy. Households who employed blacksmithing, as a type of
livelihood strategy are too busy and overstretched during plough seasons due to the high
demand of farming households making /sharpening of various tools and utensils (knives,
ploughed.) and also wood worker make different home tools for farmers. Women are
predominantly engaged in pottery.

They make oven, pot, jebena and other household goods sold it in local markets. In addition
there are also individuals engaged in weavings so as to generate income to support their
household. They make traditional cloths and sold to customers.

61
4.5.6. Petty Trade

Even though trade is mostly considered as dominant livelihood strategy of urban society, it is
not solely constrained to the urban dwellers. Thus, rural households also employed trade as
their major as well as supportive livelihood strategy across the in the study sites. As indicated
in table (15), among the surveyed respondents, 8.06% of households in the study area were
engaged in trade as a means of livelihood.

There are owners of some small shops in different selected sample kebeles of the study area.
They buy various consumer items such as sugar, coffee, candy and soft-drinks from Seyo the
capital city of the wereda and sell it to the community of rural area

And also 8.87% of rural farmers of the study area bought cow, oxen and sheep from more
potential market and sell to the less potential market and butcher during holidays sell the
meat to get profit. The income earned from the sale of meat to community at holiday times is
distributed to members of the community proportionally based on the expense they
contribute during buying of the ox or cow.

4.5.7. Charcoal and wood fire selling

Although making charcoal is legally forbidden, poor rural households of the study area
involved in selling of wood fire and charcoal especially women households in large. About
16.13% of the rural households of the study area were involved in this activity. It is the
second activity that rural households were involved in for their livelihoods. Most of the
women in the rural area and men households of the rural study area sell the charcoal and
wood fire to residence of Seyo the capital town of the woreda and then they design their
livelihood strategy by the income gained from this activity.

62
4.5.8. Fattening oxen

Fattening oxen is one of the current activity that rural farm households of the study area were
adapted it as their income sources next to farm activity. According to the survey of the study
area farmers especially those who want to increase their income were actively participated in
fattening of oxen. About 7.26% of the study area of farmers engaged in this activity. They
fattening it then they sell it during holidays. This is pull factor according to the report of the
respondents.

4.6. Constraints of off-farm activities

Given the fact that rural off-farm activities are heterogeneous by their very nature, the
constraints also have varying characteristics. Therefore, this study is emphasizing on major
constraints of diversification identified by the study population. Survey respondents of this
study were asked to tell and put hierarchically constraints preventing them from participation.
According to the lack of capital, lack of infrastructure and awareness were the major one.

CHAPTER FIVE

5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

63
5.1. SUMMARY

Ethiopia is one of the countries, where agriculture dominates the overall national economy
and its population is subject to extreme poverty. Even though agriculture is the largest
economic sector of the country, many of rural farm households have not gained sufficient
agricultural outputs and achievable livelihood. Such type of population dominates the largest
part of the country. However, multidimensional income generating activities is not well
developed and supported in the country. Farmers reliant on only farm activity due various
factors avoid them not to be involved in different multidirectional activity is one of the
reasons for rural households and the whole country is forced to live in the vicious circle of
poverty for long period of time. Off-farm activity in Ethiopia is not well developed to shape
it in the mind of farmers and to fulfill important conditions for rural poor farmers in the
country.

This study was conducted in Oromia regional state particularly Dano wereda. It is one of the
areas where livelihood of its rural farm households have similar character of life style with
other rural farmers live in other parts of the country in general.

The aim of this study was to analyze the factors that determine farmers’ participation on off-
farm activities in DanoWoreda, with five sample kebeles. Multi stage sampling technique
was employed to collect data from the sampled respondents. Then, a total of 352 respondents
were selected from 5 kebeles using randomly probability distribution without any category
except sex. The research work mainly used a primary data which was collected from the
study area, Dano wereda for analysis. Secondary data was used to support primary data. The
primary data was collected using a questionnaire, group discussions, and key informants. On
the basis of the information collected from 352 households and taking into account all the
methodological pitfalls of studying factors influencing farmers’ participation in off-farm
activities, descriptive statistical analysis was carried out and compared the mean of the two
groups (participants and non-participants) with respect to important demographic,
socioeconomic and institutional variables. Chi-square and t-tests were applied to statistically
compare the two groups for discrete and continuous variables of the model respectively. To
this end the study applied the logit model to clearly identify the influence of the factors on
off-farm participation.

64
The result shows that 35.23% of the total sample respondents were found to be off-farm
participants. Off-farm activities solve the problem of farmers during difficulties as well as it
is one of income sources to generate additional income next to on farm. Off-farm participants
are profitable than non-participants. Having off-farm activities had significantly improved
the living standards of farming households when observed during survey.

5.2. Conclusions

The regression result in the binary logit model procedures for the determinants of farmers’
participation in off-farm activities, eleven variables were found to be significantly creating
variation on the probability of farmers’ participation in off-farm activities. To help different
stakeholders to enhance the current level of off-farm participation, factors affecting the level
of participation were identified. Accordingly, the logit regression model revealed family size,
educational level, access to credit, off-farm train, access to information, extension service,
marital status and farm experience positively affected off-farm participation positively and
significant while age of farm households, distance from market and size of farm land
negatively and significantly associated with farmers’ participation in off-farm activities.
Households with large number of family size that have working power have higher
probability of participation in off-farm activities. Younger households more participate in
off-farm activities than older households. The following is general conclusions of significant
variables.

Age of households: - The study has shown that as age increases the probability of
participating in off-farm activities decreases, i.e., households headed by older people are
prone to off-farm activity due to decline of energy and sufficient of farm land compared to
young farmers.

Educational level: - Educational status is positively associated with off-farm activity. That is,
the educated households significantly increase the probability of participating in off-farm
activities. Those households with higher level of education have high probability of
becoming off-farm participants as compared to households with lower level of education.

65
Family size: - Among the demographic variables, family size appeared to be significant in
determining households’ off-farm participation in the study area. This is one of the main
variables that affect off-farm activities participation positively.

Off-farm train: - The study has shown that off-far train has positively associated with off-
farm participation.

Distance from market: In the study revealed that distance from market negatively
associated with off-farm participation in the study area. As a result, households who dwelled
near to the main market centers have shown better off-farm participation status than those
households located far as they are exposed to information distortion as well as transportation
problem.

Access to credit: The survey result has shown that the accessibility of credit has positive
impact on off-farm activities according to the study area. Those who had access of credit
have more opportunity to participate in off-farm activities than their counterparts.

Cultivated land size: cultivated land affected off-farm participation negatively and
significantly.

Lastly, information access, extension service, marital status and experience affected off-farm
participation in the study area according to the study result revealed.

5.3. Recommendation

The contribution of off-farm activities is very important in the development of a country.

Thus the Woreda agricultural office,Oromia credit and saving institution which currently

66
transformed itself to Siiqqee bank,finance and economic development office and all
concerned bodies essentially promote to motivate farmers to participate in off-farm activities.
As the result based on the findings of the study, it is recommended that DanoWoreda
concerned body has to work on the following areas in order to increase their role in economic
development.

 Human capital development through education was found to be important factor for
promotion and expansion of farmers’ participation in off-farm activities. This finding
implies that education should be given for farmers in special way to promote and
expand their participation and to enhance high income earning capacity from off-farm
activities in addition to farm. Enhancing the capability of farmer through education is
expected from concerned stakeholders. Government should expand adult education in
a sustainable way to change attitude of farmers not only reliant on farm only.
 Distance from market was another factor which negatively and significantly affects
farmers’ participation in off-farm activities. Then, it needs a policy to develop market
infrastructure in rural areas to improve farmers’ participation in off-farm activities.
Provision of physical infrastructure that can reduce transportation and transaction
costs in both sectors and increases overall employment opportunities. So, the regional
and federal government should do on it. In the study in particular road is one of the
constraints to remote rural households effectively to participate in off-farm activities.
As it was discussed in the result road negatively associated with off-farm activities of
rural farmers. Poor access of road for market and infrastructure lowers off-farm
activity participation and corresponding earnings. Therefore, zonal and wereda
administration facilitate the road that connects remote rural households at least to
wereda market center.
 Training farmers on importance and ways of engaged in off-farm activities should be
promoted by agricultural sector at zonal level to federal level.In addition to this DA
should give important advice and awareness for new and old off-farm participants
and make awareness for those who are out of this activity by attracting them in order
to offer them to this activity.
 Credit is the other factor that influences off-farm participation in the study area.
Financial capacity of the farm households should be built by providing credit in

67
 affordable and easily accessed manner. Lack of the collateral or initial saving was one
of the bottle necks for farm households to borrow from various credit institutions. In
addition to offering them to initial saving, it is better if ownership of land is included
in loan process as a collateral guarantee. Creation of accessible credit schemes can
facilitate the establishment of off-farm activities and promote agricultural
development simultaneously. Government has to strength the rule and regulation of
formal credit and legalizes as well as motivates the informal credit.
 In the study area marital status and farmers’ participation in off-farm activities have
positive relationship. This reveals that married farmers more participate in off-farm
activities than unmarried farmers. This is due to more work load family care is on the
shoulder of the married farmers. Therefore the concerned body like women affairs
sector in corporation with agricultural sector, educational sector, credit sector and all
other stakeholders of Dano wereda should work in corporation to motivate those
farmers to engage them in off-farm activities.
 Age of household has a negative effect on off-farm participation. This implies in the
study area, the older a households’ head the less participant that households will be;
the younger households’ head the more participants. This was due to younger farmers
were troubled by lack of enough land and the older farmers believe as agriculture
only enough for them. Local government bodies and NGO has to facilitate the way of
old farmers enjoy into off-farm activities.
 Attention should be given by concerned body like wereda agricultural sector is given
to an attempt of increasing the productivity of small size of land. Size of farm land
was one of the determinants of off farm participation in the Dano wereda. Small size
of land was associated with low participation of the households in off farm activities.
It is better if concerned body promote off-farm sector, in order to farmers get
sufficient amount of income which in turn may be used investment on the farm
practices. Off farm activities may be used as means of income diversification which
will help to reduce poverty and boost a rural economy as whole.
 Based on the study, Information access positively associated with off-farm activities.
Those who got awareness about off-farm activities effectively participated in off-farm
activities. Therefore, local administration as well as high and medium government

68
 structure should facilitate the way of information channel is reachable to remote
farmers.

Finally, this study is limited to the factors influencing farmers’ participation in off-farm
activities. The other aspects of the farmers were not studied. Therefore, the study calls for
further research in the area of other social, economic and poverty alleviation areas in the
Woreda especially for farmers.

REFERENCE
Ahmed, M. H., & Melesse, K. A. (2018). Impact of off-farm activities on technical efficiency:
Evidence from maize producers of eastern Ethiopia. Agricultural and Food Economics,
6(1), 1–15. https://doi.org/10.1186/s40100-018-0098-0
Alasia, A., Weersink, A., Bollman, R. D., & Cranfield, J. (2009). Off-farm labour decision of
Canadian farm operators: Urbanization effects and rural labour market linkages. Journal

69
 of Rural Studies, 25(1), 12–24. https://doi.org/10.1016/j.jrurstud.2008.04.002
Anteneh Astatike, A., & Ganamo Gazuma, E. (2019). The Impact of Off-farm Activities on
Rural Household Income in Wolaita Zone, Southern Ethiopia. Journal of World
Economic Research, 8(1), 8. https://doi.org/10.11648/j.jwer.20190801.12
Arekemase, M. O., Kayode, R. M. O., & Ajiboye, A. E. (2011). Antimicrobial Activity and
Phytochemical Analysis of Jatropha Curcas Plant against Some Selected
Microorganisms. International Journal of Biology, 3(3).
https://doi.org/10.5539/ijb.v3n3p52
Benjamin. (2019). Determinants of Off-Farm Income among Smallholder Rice Farmers in
Northern Ghana: Application of a Double-Hurdle Model. Advances in Agriculture, 2019,
1–7. https://doi.org/10.1155/2019/7246176
Berihun, K., Bihon, K., & Kibrom, A. (2017). Off-farm participation decision and its impact
on crop yield in Northern Ethiopia. Journal of Development and Agricultural
Economics, 9(2), 16–25. https://doi.org/10.5897/jdae2016.0757
Beyene, A. D. (2008). Determinants of off-farm participation decision of farm households in
Ethiopia. Agrekon, 47(1), 140–161. https://doi.org/10.1080/03031853.2008.9523794
Bila, Y., Mshelia, B. S., & Landi, J. H. (2015). Off Farm Activities and Its Contribution to
Household Income in Hawul Local Government Area, Borno State, Nigeria. IOSR
Journal of Agriculture and Veterinary Science Ver. I, 8(10), 2319–2372.
https://doi.org/10.9790/2380-081010913
E.I, O., H.C, U., G.N., O., G.O, M., J.N, U., U.A., E., M.T., O., & D.O, O. (2018). Effects of
Livelihood Sustenance Activities on Off-Farm Income of Poultry Farmers in IMO State,
Nigeria. International Journal of Environment, Agriculture and Biotechnology, 3(4),
1461–1466. https://doi.org/10.22161/ijeab/3.4.43
Endiris, A., Brehanie, Z., & Ayalew, Z. (2021). The impact of off-farm activities on rural
households’ food security status in Western Ethiopia: The case of Dibatie district.
Cogent Food & Agriculture, 7(1), 1879425.
https://doi.org/10.1080/23311932.2021.1879425
Fentahun, G., Sani, S., & Kemaw, B. (2018). The Role of Income Diversification on Risk
Management and Rural Household Food Security in Ethiopia. Journal of Economics
and Sustainable Development, 9(9), ISSN 2222-2855 (Online).
https://www.researchgate.net/publication/335444046
Fentie, D., & Rao, M. S. (2016). Factors Influencing Farmers ’ Participation On Off Farm
Activities : A Case Study in East Gojjam Zone , Ethiopia . 5(2), 112–119.
Haggblade, S., Hazell, P. B. R., & Reardon, T. (2007). Transforming the rural nonfarm
economy. Opportunities and Threats in the Developing World. Baltimore, vi–ix.
http://environmentportal.in/files/ib58.pdf
Hwang, J. H., & Lee, S. W. (2015). The effect of the rural tourism policy on non-farm
income in South Korea. Tourism Management, 46, 501–513.
https://doi.org/10.1016/j.tourman.2014.07.018
Iqbal, M. A., Ping, Q., Ahmed, U. I., & Nazir, A. (2015). Determinants of Off-farm Activity
Participation among Cotton Farmers in Punjab, Pakistan. International Journal of

70
 Management, Accounting and Economics, 2(7), 707–718.
Kinuthia, B. K., Maende, S., & Baraza, L. (2018). OFF-FARM PARTICIPATION ,
AGRICULTURAL PRODUCTION AND FARMERS WELFARE IN EAST AFRICA by
Conference paper Table of Contents.
Kotu, B. H. (2016). Explaining the off-farm economy in rural Ethiopia. June.
https://doi.org/10.13140/RG.2.1.2520.5364
Kourtidis, K., Stathopoulos, S., Georgoulias, A. K., Alexandri, G., & Rapsomanikis, S.
(2015). A study of the impact of synoptic weather conditions and water vapor on
aerosol-cloud relationships over major urban clusters of China. Atmospheric Chemistry
and Physics, 15(19), 10955–10964. https://doi.org/10.5194/acp-15-10955-2015
Rabiu, K. A., Akinbami, A. A., Adewunmi, A. A., Akinola, O. I., & Wright, K. O. (2011).
The need to incorporate routine cervical cancer counselling and screening in the
management of HIV positive women in Nigeria. Asian Pacific Journal of Cancer
Prevention, 12(5), 1211–1214.
Tewele, H. (2012). Determinants of Rural Households’ Off-farm Employment Participation
and Income in Rural Tigray: Evidence from Endamokonni and Degua Tembien
Woredas of Tigray Region, Ethiopia. In International Journal of Economics, Finance
and Management Sciences (Vol. 7, Issue 4).
https://doi.org/10.11648/j.ijefm.20190704.15
Y. Desalegn. (2020). Off-farm Activities, Incomes and Household Welfare in Rural Ethiopia.
April.
Y.Bekele, G. R. & P. B. (2017). Determinants of off-farm work participation of farm
Households in Ethiopia: A review. International Journal of Research in Economics and
Social Sciences (IJRESS), 7(9), 63–79.
Zewdie, E., & Sivakumar, S. (2017). Determinants of Off Farm Participation of Rural Farm
Households in Shebedino District of Sidama. International Journal of Development
Research, 07(09), 15157–15165.
Ahmed, M. H., & Melesse, K. A. (2018). Impact of off-farm activities on technical efficiency:
Evidence from maize producers of eastern Ethiopia. Agricultural and Food Economics,
6(1), 1–15. https://doi.org/10.1186/s40100-018-0098-0
Alasia, A., Weersink, A., Bollman, R. D., & Cranfield, J. (2009). Off-farm labour decision of
Canadian farm operators: Urbanization effects and rural labour market linkages. Journal
of Rural Studies, 25(1), 12–24. https://doi.org/10.1016/j.jrurstud.2008.04.002
Anteneh Astatike, A., & Ganamo Gazuma, E. (2019). The Impact of Off-farm Activities on
Rural Household Income in Wolaita Zone, Southern Ethiopia. Journal of World
Economic Research, 8(1), 8. https://doi.org/10.11648/j.jwer.20190801.12
Arekemase, M. O., Kayode, R. M. O., & Ajiboye, A. E. (2011). Antimicrobial Activity and
Phytochemical Analysis of Jatropha Curcas Plant against Some Selected
Microorganisms. International Journal of Biology, 3(3).
https://doi.org/10.5539/ijb.v3n3p52
Benjamin. (2019). Determinants of Off-Farm Income among Smallholder Rice Farmers in
Northern Ghana: Application of a Double-Hurdle Model. Advances in Agriculture, 2019,

71
 1–7. https://doi.org/10.1155/2019/7246176
Berihun, K., Bihon, K., & Kibrom, A. (2017). Off-farm participation decision and its impact
on crop yield in Northern Ethiopia. Journal of Development and Agricultural
Economics, 9(2), 16–25. https://doi.org/10.5897/jdae2016.0757
Beyene, A. D. (2008). Determinants of off-farm participation decision of farm households in
Ethiopia. Agrekon, 47(1), 140–161. https://doi.org/10.1080/03031853.2008.9523794
Bila, Y., Mshelia, B. S., & Landi, J. H. (2015). Off Farm Activities and Its Contribution to
Household Income in Hawul Local Government Area, Borno State, Nigeria. IOSR
Journal of Agriculture and Veterinary Science Ver. I, 8(10), 2319–2372.
https://doi.org/10.9790/2380-081010913
E.I, O., H.C, U., G.N., O., G.O, M., J.N, U., U.A., E., M.T., O., & D.O, O. (2018). Effects of
Livelihood Sustenance Activities on Off-Farm Income of Poultry Farmers in IMO State,
Nigeria. International Journal of Environment, Agriculture and Biotechnology, 3(4),
1461–1466. https://doi.org/10.22161/ijeab/3.4.43
Endiris, A., Brehanie, Z., & Ayalew, Z. (2021). The impact of off-farm activities on rural
households’ food security status in Western Ethiopia: The case of Dibatie district.
Cogent Food & Agriculture, 7(1), 1879425.
https://doi.org/10.1080/23311932.2021.1879425
Fentahun, G., Sani, S., & Kemaw, B. (2018). The Role of Income Diversification on Risk
Management and Rural Household Food Security in Ethiopia. Journal of Economics
and Sustainable Development, 9(9), ISSN 2222-2855 (Online).
https://www.researchgate.net/publication/335444046
Fentie, D., & Rao, M. S. (2016). Factors Influencing Farmers ’ Participation On Off Farm
Activities : A Case Study in East Gojjam Zone , Ethiopia . 5(2), 112–119.
Haggblade, S., Hazell, P. B. R., & Reardon, T. (2007). Transforming the rural nonfarm
economy. Opportunities and Threats in the Developing World. Baltimore, vi–ix.
http://environmentportal.in/files/ib58.pdf
Hwang, J. H., & Lee, S. W. (2015). The effect of the rural tourism policy on non-farm
income in South Korea. Tourism Management, 46, 501–513.
https://doi.org/10.1016/j.tourman.2014.07.018
Iqbal, M. A., Ping, Q., Ahmed, U. I., & Nazir, A. (2015). Determinants of Off-farm Activity
Participation among Cotton Farmers in Punjab, Pakistan. International Journal of
Management, Accounting and Economics, 2(7), 707–718.
Kinuthia, B. K., Maende, S., & Baraza, L. (2018). OFF-FARM PARTICIPATION ,
AGRICULTURAL PRODUCTION AND FARMERS WELFARE IN EAST AFRICA by
Conference paper Table of Contents.
Kotu, B. H. (2016). Explaining the off-farm economy in rural Ethiopia. June.
https://doi.org/10.13140/RG.2.1.2520.5364
Kourtidis, K., Stathopoulos, S., Georgoulias, A. K., Alexandri, G., & Rapsomanikis, S.
(2015). A study of the impact of synoptic weather conditions and water vapor on
aerosol-cloud relationships over major urban clusters of China. Atmospheric Chemistry
and Physics, 15(19), 10955–10964. https://doi.org/10.5194/acp-15-10955-2015

72
Rabiu, K. A., Akinbami, A. A., Adewunmi, A. A., Akinola, O. I., & Wright, K. O. (2011).
The need to incorporate routine cervical cancer counselling and screening in the
management of HIV positive women in Nigeria. Asian Pacific Journal of Cancer
Prevention, 12(5), 1211–1214.
Tewele, H. (2012). Determinants of Rural Households’ Off-farm Employment Participation
and Income in Rural Tigray: Evidence from Endamokonni and Degua Tembien
Woredas of Tigray Region, Ethiopia. In International Journal of Economics, Finance
and Management Sciences (Vol. 7, Issue 4).
https://doi.org/10.11648/j.ijefm.20190704.15
Y. Desalegn. (2020). Off-farm Activities, Incomes and Household Welfare in Rural Ethiopia.
April.
Y.Bekele, G. R. & P. B. (2017). Determinants of off-farm work participation of farm
Households in Ethiopia: A review. International Journal of Research in Economics and
Social Sciences (IJRESS), 7(9), 63–79.
Zewdie, E., & Sivakumar, S. (2017). Determinants of Off Farm Participation of Rural Farm
Households in Shebedino District of Sidama. International Journal of Development
Research, 07(09), 15157–15165.

Ahmed, M. H., & Melesse, K. A. (2018). Impact of off-farm activities on technical efficiency: Evidence
from maize producers of eastern Ethiopia. Agricultural and Food Economics, 6(1), 1–15.
https://doi.org/10.1186/s40100-018-0098-0
Alasia, A., Weersink, A., Bollman, R. D., & Cranfield, J. (2009). Off-farm labour decision of Canadian
farm operators: Urbanization effects and rural labour market linkages. Journal of Rural Studies,
25(1), 12–24. https://doi.org/10.1016/j.jrurstud.2008.04.002
Anteneh Astatike, A., & Ganamo Gazuma, E. (2019). The Impact of Off-farm Activities on Rural
Household Income in Wolaita Zone, Southern Ethiopia. Journal of World Economic Research,
8(1), 8. https://doi.org/10.11648/j.jwer.20190801.12
Arekemase, M. O., Kayode, R. M. O., & Ajiboye, A. E. (2011). Antimicrobial Activity and
Phytochemical Analysis of Jatropha Curcas Plant against Some Selected Microorganisms.
International Journal of Biology, 3(3). https://doi.org/10.5539/ijb.v3n3p52
Benjamin. (2019). Determinants of Off-Farm Income among Smallholder Rice Farmers in Northern
Ghana: Application of a Double-Hurdle Model. Advances in Agriculture, 2019, 1–7.
https://doi.org/10.1155/2019/7246176
Berihun, K., Bihon, K., & Kibrom, A. (2017). Off-farm participation decision and its impact on crop
yield in Northern Ethiopia. Journal of Development and Agricultural Economics, 9(2), 16–25.
https://doi.org/10.5897/jdae2016.0757
Beyene, A. D. (2008). Determinants of off-farm participation decision of farm households in Ethiopia.
Agrekon, 47(1), 140–161. https://doi.org/10.1080/03031853.2008.9523794
Bila, Y., Mshelia, B. S., & Landi, J. H. (2015). Off Farm Activities and Its Contribution to Household
Income in Hawul Local Government Area, Borno State, Nigeria. IOSR Journal of Agriculture and
Veterinary Science Ver. I, 8(10), 2319–2372. https://doi.org/10.9790/2380-081010913
E.I, O., H.C, U., G.N., O., G.O, M., J.N, U., U.A., E., M.T., O., & D.O, O. (2018). Effects of Livelihood

73
 Sustenance Activities on Off-Farm Income of Poultry Farmers in IMO State, Nigeria.
International Journal of Environment, Agriculture and Biotechnology, 3(4), 1461–1466.
https://doi.org/10.22161/ijeab/3.4.43
Endiris, A., Brehanie, Z., & Ayalew, Z. (2021). The impact of off-farm activities on rural households’
food security status in Western Ethiopia: The case of Dibatie district. Cogent Food & Agriculture,
7(1), 1879425. https://doi.org/10.1080/23311932.2021.1879425
Fentahun, G., Sani, S., & Kemaw, B. (2018). The Role of Income Diversification on Risk Management
and Rural Household Food Security in Ethiopia. Journal of Economics and Sustainable
Development, 9(9), ISSN 2222-2855 (Online).
https://www.researchgate.net/publication/335444046
Fentie, D., & Rao, M. S. (2016). Factors Influencing Farmers ’ Participation On Off Farm Activities : A
Case Study in East Gojjam Zone , Ethiopia . 5(2), 112–119.
Haggblade, S., Hazell, P. B. R., & Reardon, T. (2007). Transforming the rural nonfarm economy.
Opportunities and Threats in the Developing World. Baltimore, vi–ix.
http://environmentportal.in/files/ib58.pdf
Hwang, J. H., & Lee, S. W. (2015). The effect of the rural tourism policy on non-farm income in South
Korea. Tourism Management, 46, 501–513. https://doi.org/10.1016/j.tourman.2014.07.018
Iqbal, M. A., Ping, Q., Ahmed, U. I., & Nazir, A. (2015). Determinants of Off-farm Activity
Participation among Cotton Farmers in Punjab, Pakistan. International Journal of Management,
Accounting and Economics, 2(7), 707–718.
Kinuthia, B. K., Maende, S., & Baraza, L. (2018). OFF-FARM PARTICIPATION , AGRICULTURAL
PRODUCTION AND FARMERS WELFARE IN EAST AFRICA by Conference paper Table of Contents.
Kotu, B. H. (2016). Explaining the off-farm economy in rural Ethiopia. June.
https://doi.org/10.13140/RG.2.1.2520.5364
Kourtidis, K., Stathopoulos, S., Georgoulias, A. K., Alexandri, G., & Rapsomanikis, S. (2015). A study of
the impact of synoptic weather conditions and water vapor on aerosol-cloud relationships over
major urban clusters of China. Atmospheric Chemistry and Physics, 15(19), 10955–10964.
https://doi.org/10.5194/acp-15-10955-2015
Rabiu, K. A., Akinbami, A. A., Adewunmi, A. A., Akinola, O. I., & Wright, K. O. (2011). The need to
incorporate routine cervical cancer counselling and screening in the management of HIV
positive women in Nigeria. Asian Pacific Journal of Cancer Prevention, 12(5), 1211–1214.
Tewele, H. (2012). Determinants of Rural Households’ Off-farm Employment Participation and
Income in Rural Tigray: Evidence from Endamokonni and Degua Tembien Woredas of Tigray
Region, Ethiopia. In International Journal of Economics, Finance and Management Sciences (Vol.
7, Issue 4). https://doi.org/10.11648/j.ijefm.20190704.15
Y. Desalegn. (2020). Off-farm Activities, Incomes and Household Welfare in Rural Ethiopia. April.
Y.Bekele, G. R. & P. B. (2017). Determinants of off-farm work participation of farm Households in
Ethiopia: A review. International Journal of Research in Economics and Social Sciences (IJRESS),
7(9), 63–79.
Zewdie, E., & Sivakumar, S. (2017). Determinants of Off Farm Participation of Rural Farm Households
in Shebedino District of Sidama. International Journal of Development Research, 07(09),
15157–15165.

74
 WOLLEGAUNIVERSITY
SCHOOL OF GRADUATE STUDIES

APPENDIXES
Table Appendix 1: Logistic Regression Result

Logistic regression Number of obs = 352

LR chi2(15) = 332.76
Prob > chi2 = 0.0000
Log likelihood = -62.010539 Pseudo R2 = 0.7285

partpn Coef. Std. Err. z P>|z| [95% Conf. Interval]

Age -.3822602 .063666 -6.00 0.000 -.5070432 -.2574772

gender .9847663 .6799823 1.45 0.148 -.3479746 2.317507
famsize .4607857 .1355569 3.40 0.001 .1950991 .7264722
educh .4805292 .0881346 5.45 0.000 .3077886 .6532698
dmfi -.4642517 .1426078 -3.26 0.001 -.7437578 -.1847456
farmsize -.749994 .2413176 -3.11 0.002 -1.222968 -.2770201
Accesscrd 1.062764 .6074776 1.75 0.080 -.12787 2.253399
pragricult -.7520345 .5721176 -1.31 0.189 -1.873364 .3692954
tran 1.125497 .5420903 2.08 0.038 .0630198 2.187975
Accessinf 2.481431 .70978 3.50 0.000 1.090288 3.872574
extenser 1.133345 .5422734 2.09 0.037 .0705083 2.196181
Fdshor -.3631312 .6663276 -0.54 0.586 -1.669109 .9428468
marst .7273623 .3298969 2.20 0.027 .0807762 1.373948
farmexp .3194242 .0543552 5.88 0.000 .21289 .4259583
TLU .0226641 .0807189 0.28 0.779 -.135542 .1808701
_cons .14713 1.974185 0.07 0.941 -3.722202 4.016462

75
Table Appendix 2: marginal effect

Marginal effects after logit

y = Pr(FPO) (predict)
= .16524746

variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X

Age -.0527293 .01067 -4.94 0.000 -.073645 -.031814 38.858

gender* .1140386 .06867 1.66 0.097 -.020546 .248623 .769886
famsize .0635611 .01952 3.26 0.001 .0253 .101822 4.83239
educh .0662846 .01564 4.24 0.000 .035627 .096942 3.03693
dmfi -.0640392 .0194 -3.30 0.001 -.102054 -.026024 3.15156
farmsize -.1034547 .03339 -3.10 0.002 -.168904 -.038005 1.95952
Access~d* .1254469 .06248 2.01 0.045 .002994 .247899 .727273
pragri~t* -.1056072 .08264 -1.28 0.201 -.267577 .056362 .528409
tran* .1678906 .09145 1.84 0.066 -.011355 .347136 .400568
Access~f* .4180714 .12635 3.31 0.001 .170425 .665718 .357955
extenser* .1534565 .07099 2.16 0.031 .014313 .2926 .536932
Fdshor* -.0496903 .08999 -0.55 0.581 -.226072 .126692 .463068
marst .1003329 .04764 2.11 0.035 .006961 .193705 2.35795
farmexp .0440616 .0094 4.69 0.000 .025634 .062489 23.9574
TLU .0031263 .01109 0.28 0.778 -.018606 .024859 2.33591

(*) dy/dx is for discrete change of dummy variable from 0 to 1

76
Table Appendix 3: Model specification
Model specification

a) Model specification test

Ramsey RESET test using powers of the fitted values of partpn

Ho: model has no omitted variables
F(3, 333) = 31.38
Prob > F = 0.0000
b) Test of hetroskedasticity of the error
term

Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance
Variables: fitted values of partpn

chi2(1) = 12.64
Prob > chi2 = 0.0004

c) Test for Normality

77
 Shapiro-Wilk W test for normal data

Variable Obs W V z Prob>z

e 352 0.99066 2.294 1.964 0.02477

Table Appendix 4: Variance inflation factor for continuous explanatory variables

Variable VIF 1/VIF

Age 4.06 0.246199
Farmexp 4.03 0.247959
Famsize 1.37 0.729530
Educh 1.34 0.743989
Farmsize 1.33 0.749250
Dmfi 1.18 0.847356
TLU 1.04 0.959951
Mean VIF 1.79
Source: Computed from the field survey data, 2021

78
Table Appendix 5: Cotangent for dummy variables

partpn Age gender famsize educh dmfi farmsize Access~d pragri~t tran Access~f extenser Fdshor marst

partpn 1.0000
Age -0.3664 1.0000
gender -0.1479 0.1268 1.0000
famsize 0.4165 -0.0612 -0.2577 1.0000
educh 0.5928 -0.2848 -0.1039 0.2923 1.0000
dmfi -0.2666 0.2769 -0.0624 -0.0600 -0.1609 1.0000
farmsize -0.3183 0.2345 0.3598 -0.2913 -0.1871 0.1525 1.0000
Accesscrd 0.0401 -0.0719 -0.1228 -0.0274 -0.0254 -0.1536 -0.1160 1.0000
pragricult -0.3553 0.2799 0.0797 -0.1238 -0.2779 0.1097 0.1621 -0.1097 1.0000
tran 0.4409 -0.1550 -0.1316 0.1740 0.3162 -0.0788 -0.1675 0.0062 -0.1879 1.0000
Accessinf 0.4542 -0.1993 -0.1690 0.2188 0.2151 -0.1267 -0.1123 0.0462 -0.4149 0.3934 1.0000
extenser 0.3628 -0.1599 -0.1152 0.1916 0.1994 -0.0754 -0.1697 0.0389 -0.0768 0.4336 0.3607 1.0000
Fdshor 0.2531 -0.2299 -0.0441 0.1180 0.1528 -0.0427 -0.1053 0.0749 -0.6284 0.1314 0.5143 0.0336 1.0000
marst 0.2944 -0.1280 -0.4312 0.1810 0.1666 0.0227 -0.2192 0.0337 -0.1646 0.2258 0.1301 0.1346 0.1012 1.0000
farmexp -0.0874 0.8362 0.1328 0.1101 -0.1392 0.2598 0.2267 -0.1234 0.2189 -0.0460 -0.0791 -0.0798 -0.1951 -0.0529
TLU 0.0417 -0.0511 -0.0208 0.0759 0.0820 -0.0045 0.0167 -0.0121 0.0692 -0.0238 -0.0787 -0.0069 -0.0848 0.0787

farmexp TLU

farmexp 1.0000
TLU -0.0252 1.0000

79
Table Appendix 6: Conversion Factor that used to estimate Tropical Livestock Unit (TLU)
Equivalents

Animal Category TLU

Calf 0.25
Heifer 0.75
Cow and ox 1.00
Horse 1.10
Donkey 0.35
Sheep and Goat 0.13
Chicken 0.013
Source: Storck.et al

80
 Appendix 7. Semi Structured Survey Appendix3: Questionnaire

WollegaUniversity
School Of Graduate Studies

Factors Influencing Farmers’participationOn Off-Farm Activities: The

Case of DanoWoreda of West Shewa Zone, Oromia Region

The questionnaire is prepared to undertake a study on the “Factors Influencing

Farmers’ ’participation On Off-Farm Activities: The Case of DanoWoreda of West
Shewa Zone, OromiaRegion”.The purpose of the questionnaire is to gather information
concerned with off-farm participation activities in your life. Dear respondents, the result of
this study will help different stakeholders and policy makers to make appropriate measures
on off-farm activities in the future. Your responses are confidential. Therefore, you are
kindly requested to provide genuine responses.

Thank you for your time and cooperation!

81
Part I. Household information
1 Zone: ______________ Aanaa/District:____________ Kebele Name___________
2. Name of household head: ___________________
3. Date of Interview: ________________________
4. Time of interview: Starting time: __________________, Finishing time: _________
II. Household Socio-economic characteristics
1. Sex of household head: 1= Male 0= Female
2. Age: _______
3. Did you marry? 1. Yes 2.No
4. Education level of the household head____________________
0=Illiterate 1= read and write 2= Elementary (grade 1-8) complete
3= High school and above
5. Total number of permanent household including household head at time of survey.
(Male__________ Female _______________Total _________________)
III. Access to Physical and Productive Resources
1. Do you have access to land for agricultural use? 1. Yes 2. No
2. if your response to question 1 is yes, What is the total size of your cultivated land ?
_____________hectar/sanga.
3.How was your agricultural product last year? 1. High 2.Low
4.Did you face shortage of food? 1. Yes 2.No
5 Did you get market information about prices and conditions of agricultural inputs and out
puts?
1. Yes 2. No

6. What is the distance of your residence from the market __________________ (in Km/hr)?

7. Did you receive any sort of extension services available in your locality?

1 = yes, 0 No

8. If your answer to question 17 is ‘yes ’what are the supports given?

A. Advice D.how to generate income alternatives

B. Training E. Controlling water distribution

C. Demonstration F. Specify others

82
 v. off-farm activities participation

1. Are you participating on off-farm activities? 1=yes 2=No

2. Did you get any sort of training on off-farm work? 1=yes,0=no

3. Do you or any member of your family have off-farm/non-farm job? 1= Yes 2= No

4. If your response to question 3 is yes, Can you tell me the most important activities
your family members have done in the last 12 months?
5. If your response to question 2 is no, what avoid you not to participate on it?
a. Shortage of money b. Unavailability of loan c. sufficient farm land d. other,
specify______

No Name June2020- June 2021 G.C Off-farm activities

Age Sex Education (1=literate,2=reading and writing
1=female, 2= male 3,primary school,4=secondary school)
1
2
3
4
5
6
7
8

83
1= working for wage in non-agricultural activities eg: in mine/ shop/factory/construction
work.
2= non- family agricultural activities /wage employed (agriculture)
3 = making hand crafts for sale
4= selling goods or services (trade)
5= non-agricultural family enterprise (shop, local beverages, tea, food selling etc)
6=regular salaried employment
7= collecting fire wood/charcoal for sale
8=(tailor, barber, hair dressing) for money
9= petty trade
10= wild fruit selling
11=carpentry
12= other non-agriculture activities specify_________________
13. How many years since started farming (Farming experiences)? _________years
14.Total area of land cultivated during the last one year (2012 E.C) _________________ (in
hectar/sanga

8. How many years since started farming (Farming experiences)? _________years?

Why do you participate in off-farm activities? ______________________________ For what
purpose you spend earned from off-farm
sources?_______________________________________________________
vi. Livestock holding and market participation during June2020- June2021 production
year.
1. Do you have livestock? 1. yes2..no
2. If your response to question 1 is yes, list down it with the income you got from it.

84
 Type of livestock Quantity
Oxen
Calves
Cows
Horse
Goat
Sheep
Bulls
Mule
Donkey

Iv. Access to credit Issues

1. Did you need credit for the production of your agricultural products?
1 = yes, 0 = No
2. If yes what are the sources?
A. Banks B. Traders C. Local lenders D. Friends/relatives E. Micro finance
4. What purpose you received credit?
a. Purchase of seeds b. Purchase of fertilizer
c. for trade
d. for family consumption
e. Others (specify)______________

85