Analysis of Smallholder Farmers’ Participation in Off-farm Activities: The Case of Tole District, South West Shoa Zone, Oromia Region, Ethiopia

Abstract

Poverty in rural areas of Ethiopia has its root, in low productivity, landlessness and erratic weather dominant areas. Small and fragmented farm size coupled with low level of technology, soil degradation and poor infrastructure, have reduced the capacity of small holder farmers to undertake long term investment on the farm. Therefore off-farm activities provide employment right in their own and also supplement agricultural incomes. This study investigated the factors that influence smallholder farmers' participation from off-farm activities among smallholder farmers in Tole District. Semi-Structured questionnaires were utilized to gather data for the study from 154 randomly selected farm households. Thus, a cross-sectional research design that utilized both descriptive and inferential statistics was used. The Heckman’s two stage models were used to identify the variables that affect smallholder farmers' participation in off-farm activities and the total level annual income they derive from those activities respectively. Results show that about 52.6% of smallholder farmers engaged in off-farm activities. The first-stage probit model result revealed that the likelihood of engagement in off-farm activities in the research area is significantly influenced by sex, age, and distance to the main market, educational attainment, and extension contact. The Heckman’s second stage model result showed that family size was found to be adversely related, but livestock ownership, experience, training, and cooperative membership were significant and favorably related to the income level of participant sample farm households. There was a significant difference in household income between those who engaged in off farm activity and those who just relied on agriculture. Concerned stakeholders and government organizations are recommended to identify the numerous off-farm activity categories and provide support with the knowledge and expertise of these categories to help smallholder farmers operate more successfully. Furthermore, they might be required to develop appropriate strategies and policies to improve, which would increase the effectiveness of smallholder farmers.