Determinants of Participation in Off-farm Employment among Small Holder Farmers of Jimma Arjo District, East Wollega Zone, Oromia

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.