Abstract:
Diversifying the sources of income for subsistence farmers beyond agriculture plays a significant
role in uplifting the living standards of the poor through reducing poverty, slowing down rural urban migration, provision of income, and absorbing rural surplus labor. The objective of this
study was to analyze the determinant of smallholder farmer’s participation in Off-farm
employment and its intensification in the case of Jimma Arjo district of East Wollega Zone. The
study used data from 323 respondents, from three selected villages of Jimma Arjo district
through a structured questioner. The descriptive statistics and Heckman two-stage econometric
methods were employed to analyze data collected from a sampled household. The significance of
the coefficient of inverse Mill’s ratio () indicates the presence of selection bias and the
effectiveness of applying the Heckman two-stage model. In the 1st stage of probit regression
results of the study show that the participation in Off-farm employment was driven by factors
such as age, sex, family size, household labor, land size, fertility of the land, education, livestock,
access to finance, agricultural shocks, and distance to reach the market place. In the second
stage, the amount of earning from Off-farm activities was influenced by age of the household
head, total family size, household labor, education status, agricultural shock, training, and time
spent to reach the market. Policies for smallholder farming systems that support the
improvement of soil quality and restoration of degraded and marginal land instead of expanding
cropland through deforestation, education, and capacity-building for farmers and the
development of specific financing schemes were recommended.
