RJOAS, 2(50), February 2016

DOI http://dx.doi.org/10.18551/rjoas.2016-02.07

DETERMINANTS OF INCOME DIVERSIFICATION AMONG FARM HOUSEHOLDS

IN NIGER STATE, NIGERIA

Sallawu H., Tanko L., Nmadu J.N., Ndanitsa A.M.

Department of Agricultural Economics and Extension Technology,
Federal University of Technology, Minna, Nigeria
E-mail: [email protected]

ABSTRACT
Poverty incidence in Nigeria is higher among the rural-folks, that is, households that rely
mainly on agricultural income. Income diversification is therefore seen as a way to secure
income and to increase welfare of the farm households. This study investigated determinants
of income diversification among farm households in Niger State, Nigeria. The study utilized
data obtained from administering questionnaire to 287 farming households. Data were
analyzed using descriptive statistics, and Tobit regression model. The study revealed that
mean age, household size, and farm size of the respondents were 42, 7, and 2.82
respectively. A total of 46.4% of the respondents had no formal education and only 12.9%
had attained formal education up to the tertiary level. Majority that is 94.8% had no access to
credit. Results of the Tobit regression revealed that farm size, age, level of education, farm
income, non-farm income, credit use, livestock ownership, household size, poverty status,
and occupation were the significant determinants of income diversification in the study area.
The study recommends increase in the level of literacy among rural farm households. The
impact of institutional credit on employments has been shown which ought to require taking
comprehension of this basic by the approach system of the State as a vital advancement
issue at the grass root. And in addition, government should re-energize and re-invigorate the
extension service division of the State Ministry of Agriculture through capacity building,
training and provision of necessary equipment to carry out its functions since they are the
only group that understands the farmers’ needs and idiosyncrasies.

KEY WORDS
Farm households, income diversification, livelihood strategies, non-farm income, Tobit
regression.

Diversification as a rustic work system is utilized as a part of modifying possibilities with

a specific end goal to boost return, spread dangers, or accomplish other family objectives. By
keeping the capability to operate a heterogeneous set of activities, diversifying households
are likely to enjoy higher flexibility and enhanced income resilience capacity than agricultural
dependent rural households (Warren, 2002). Diversification and strong linkages among
different components of the farming system have a synergistic effect on the functioning of the
entire farming system and result in higher income (Kumar and Upadhyay, 2009). According
to the DFID (2001), the term livelihood strategies denote; the range and combination of
activities, and choices that people make in order to achieve their livelihood goals.
Diversification is a norm, especially among agricultural households, whose livelihoods are
vulnerable to climatic uncertainties (Barrett, Reardon, and Webb, 2001). Mishra, El-osta,
Morehart, Johnson, and Hopkins (2002) observed that off-farm work is normally considered
less risky than farming. They also argued that a risk-averse farm household would be more
likely to engage in non-farm work than a less risk-averse farm household. Idowu, Aihonsu,
Olubanjo, and Shittu (2011) reveals that age, gender, education, experience in the particular
non-farm activity, household size, per capital landholding, distance to urban centre and
investment asset base of the households were the major determinants of income shares
from different sources of non-farm activities. And also increase in the size of household, per
capital landholding and per capital animal wealth significantly increased the income
diversification of the rural farm households, while reduction in household dependency ratio

55
 RJOAS, 2(50), February 2016

and distance to urban centres significantly decreased income diversification. Few attempts
have been made to link the tendency for farm households to engage in multiple occupations
to poverty reduction in the study area.
There are a number of factors which affect the household income such as the age of
the household head, availability of labour in the household for work, household size, and
educational level of the household, possession of land and also having accessibility to other
natural resources and having the income from remittances. At the community and regional
level, the household income is also affected by a wide range of factors such as access to
markets and the infrastructure of the region. Among the institutional factors public policy,
regarding access to credits, extension and research facilities are important. Similarly, bio-
physical factors also affect the household income. The regular occurrence of diseases,
presence of disable member of household and the presence of such climatic factors or
conditions which are not supportive to the household for increasing the income. The
economic factors also affect the household income (Gordon and Craig, 2001).
Diversification is expansion in the importance of non-crop or non-farm income and
increase in the number of sources of income (Minot, et. al., 2006). Livelihood literature
(Hussein and Nelson 1999; Ellis 2000) suggests that though exogenous trends and shocks
play an important role in pushing rural people towards a diversified livelihood strategy,
diversification choices are also firmly rooted in the micro-economic logic of farming
households. Availability of key-assets (such as savings, land, labor, education and/or access
to market or employment opportunities, access to common property natural resources and
other public goods) is a an evident requisite in making rural households and individuals more
or less capable to diversify (Dercon and Krishan 1996; Abdulai and Crole Rees 2001).
Investment of a proper mix of the above endowments is the starting move of any
independent activity. Moreover, labor capability and education determine the capability of
finding a job and savings are often needed to migrate. Yet, diversification may also develop
as a coping response to the loss of capital assets needed for undertaking conventional on-
farm production. Decreased availability of arable land, increased producer/consumer ratio,
credit delinquency, and environmental deterioration can be indeed important drives towards
diversification. Economic and political shocks are often a major reason for migrate.
Maximization of return per unit of labour (Ellis, 2000) is another important element in
livelihood diversification choices. This principle foresees that, in any given point in time, a
rural household will choose the most cost-effective opportunity to ensure maintenance of its
consumption level. This formulation can be elaborated in different ways. For instance,
availability of a surplus of household labour (or a high producer/consumer ratio) may
influence the household decision to engage in wage labour. Similarly, food availability and
food cost volatility on the local market can affect the relative importance attributed to self-
consumption production, and promote or prevent the undertaking of wage labor or
engagement in income generating enterprises. Seasonality may also lead to a cyclical shift in
time allocation from on farm to off-farm sources of revenue. Strengthening the household
asset basis can be an additional important factor in diversification choices. In particular,
members of better-off household can undertake innovative activities or engage in highly
remunerative wage labour (migrate abroad) with the specific aim of accumulating savings
needed to expand the land holding, offer education opportunities to the young generation, or
insure themselves against illness and aging. In addition to that, diversification may also occur
as a means to consolidate household natural capital (to enhance the environmental
sustainability of a particular livelihood strategy). Gender relationships are also important in
shaping diversification process. Social organization and culture can significantly influence the
relative access of diverse gender (and age groups) to household’s capital assets (Ellis, 2000)
or constraint/promote their mobility. This might result in a different degree of involvement in
diversification activities and/or in an unequal distribution of their benefits between genders
(Warren, 2001). Chaplin, Davidova, and Gorton (2002) observed that size of household
farms, level of farmer’s education are the determinants of income diversification, and that
diversification might be a feasible way out of vicious circle of fragmented farms, low
productivity and poor profitability by improving the asset based and education of poorest

56
 RJOAS, 2(50), February 2016

farmers. Lending credence to this, Adebayo, Akogwu and Yisa (2012) pointed out that
educational level, membership of cooperatives and non-farm income are variables that
significantly increase income diversification of farm households while farm size decreases
the income diversification of households. Bekelu and Abdi-khalil (2013) revealed that age,
land size, and average distance from market have negative significant influence on the
household’s decision towards diversification, while family size, number of extension visit per
year and education boost income diversification among small scale farmers.
The poor in Nigeria live in abject condition due to their low level of income with children
under 5 years mortality rate of 124 in 2012 while life expectancy at birth in the country (52
years in 2012) is the 17th lowest globally (UNDP, 2012). Apart from death due to starvation
and other health hazards that the poor people are daily faced with, poverty induced hunger
and malnutrition are known to impair Intelligence Quotient (IQ) development in children,
leading to large loss in quality of life, and contributes to the declining productivity and poor
economic growth in developing countries (United Nations System Standing Committee on
Nutrition, 2004; Von Braun, 2005). This situation however, presents a paradox considering
the vast human and physical resources that the country is endowed with. Farming deals with
uncertain factors such as weather and market conditions. These uncertainties can result in
variable returns (farm income) to the decisions farmers make in a particular year. Acute land
constraint and absence of well operating land market may prevent households who possess
particular skills or abundant labour from exploiting their comparative advantageous position,
and seasonality of farming activity results in unemployment and underemployment for a
significant proportion of the labour force during most periods of the year. Evidences abound
that among the rural poor, the farming households are poorer. But the non-farm sector offers
potential to absorb a growing rural labour force, slow rural-urban migration, contributes to
national income growth, and promotes a more equitable distribution of income (Lanjouw,
1997; Fikru, 2008).
Considering the growing importance of non-farm activities, it is worthy of note, that the
rural non-farm sector in Niger State, as it is in other parts of the country, is complex and
characterized by diverse activities, whose labour and other resource requirements and
returns are in no way homogenous. The findings of the study are also expected to indicate
the policy interventions that might improve rural livelihoods to raise incomes and curb
widespread poverty. Researchers will also find the body of literature useful in their quest to
extend frontiers of knowledge. The objectives of this study were to describe the socio-
economic characteristics of the farm households, and analyse the determinants of income
diversification among the farm households in the study area. The hypothesis was formulated
for further empirical validation: Ho: The following explanatory variables do not significantly
explain income diversification by farm households in the study area: farm size; age;
occupation; household size.

METHODOLOGY OF RESEARCH

The study was conducted in selected Local Government Areas in Niger State of
Nigeria. It is one of the 36 States of Nigeria, created out of the defunct North Western State
on 3rd February, 1976. Situated in the North central geo-political Zone, the State shares its
borders with Zamfara State (North), Kebbi State (North West), Kogi State (South), Kwara
(South West), Kaduna (North East) and the FCT (South East). The location of the State is
between Latitudes 8o 201 and 11o 301 North of the Equator and also between Longitudes 3o
301 and 7o 201 East of the Greenwich Meridian. The provisional result of the 2006 National
Population Census shows that the State has a population of 3,950,249 (NPC, 2006). Going
by the population growth rate in Nigeria of 2.5% (World Bank, 2013), the population of the
State was projected to 4,695,604 as at 2013. The State comprises 25 Local Government
Areas grouped into three agricultural Zones: I, II, III, with each zone having 8, 9 and 8 Local
Government Areas (LGAs) respectively. There are three major ethnic groups in the State,
Nupes, Gbagyi, and Hausa. Other tribes are Kadara, Koro, Dibo, Kambari, Kakanda,
Dukkawa, Dakarkari, Gana-Gana, Kamuku, etc. Niger State covers a total land area of

57
 RJOAS, 2(50), February 2016

83,266,779 kilometres or about 8.3 million hectares which represent 8% of the total land area
of Nigeria. About 85% of the land is arable; the vegetation consists mainly of short and
scattered trees. Soils are predominately light and well drained. The State experiences
distinct dry and wet seasons with annual rainfall varying from 1,100 mm in the Northern part
to 1,600 mm in the southern parts. The temperature ranges from 23oC to 37oC and daylight
duration is averagely 8.5 hours and it has a relative humidity of 40%. The major economic
activity is agriculture (farming, fishing and livestock rearing).
Multi-stage sampling technique was employed in the collection of primary data for this
study. In the first stage, one Local Government Area was randomly selected from each of the
three agricultural zones namely, Zones I, II and III respectively. In the second stage, one
community each was randomly selected from the selected LGAs, giving a total of 3
communities. In the third stage, sampling of farm households in each community was
determined proportionately using Yamane’s (1967) formula and adopted by Agu and Udoh
(2012).

n= (1),

where: n = sample size; N = finite population; e = limit of tolerable error (level of

significance = 0.05) and 1 = constant.
Data were collected using structured questionnaire. Data for this study was analyzed
using descriptive statistics such as means, frequency, standard deviation, and Tobit
regression analysis. To analyze the determinants of income diversification, Tobit model was
used. This model is also referred to as a censored regression model. Owing to the
restrictions imposed on the values taken by the dependent variable, the Tobit model is often
referred to as limited dependent variable regression model.
Let Y be a variable that is essentially continuous over strictly positive values but takes
on zero with positive probability.
The Tobit model is defined as a latent variable model:

Yi* = Xi* β + εi (2)

Yi = max (0, Y* ) (3)

Then, Yi = 0 if Y*≤ 0 and Yi = Yi* if Yi* > 0

The latent variable Y* satisfies the classical linear assumptions of normality and
homoskedastic distribution with a linear condition mean. It also implies that the observed
variable Yi equals Y* when Y* > 0, but Y = 0 when Y* ≤ 0.
The estimated coefficients in a Tobit model cannot be interpreted the same way as in a
Linear Regression Model. For discrete categorical variables, the marginal effects are used to
calculate percentage changes in dependent variables when the variable shifts from zero to 1,
while for continuous variables, the marginal effects are used to calculate elasticity at
complete means.

= βk (4)

The implicit model was specified as:

Y = f(farm size, age, education, gender, distance from market, number of extension visits, farm
income, off-farm income, credit obtained, livestock holding, household size, occupation, poverty
status).

The empirical Tobit model is explicitly specified as:

58
 RJOAS, 2(50), February 2016

*
Y = β0 + β1FSZ + β2AGE + β3EHH + β4GEN + β5DFM + β6EXT + β7FIC + β8NFI + β9CRE + β10LSH +
β11HHS + β12OCC + β13PVS + e (5),

where:
Y* = 0 if the share of income from diversifying to off-farm is 5% and less than 5%, and Y* = 1
for which income share from off-farm is greater than 5% where Y* is the share of income from
off-farm activities;
FSZ = Farm size of household (hectares);
AGE = Age of household head (years);
EHH = Level of education (No. Of years spent in school);
GEN = Gender of household head (binary variable: male =1, female = 2);
DFM = Distance of farm from main market (km);
EXT = Number of extension contacts with extension agents during the last cropping season
(Numbers);
FIC = Farm income realized (N);
NFI = Non-farm income (from off-farm employment) (N);
CRE = Credit use by farm household (N);
LSH = Livestock ownership by household (N);
HHS = Household size (Numbers);
OCC = Occupation (Number of occupations);
PVS = Poverty status of the household head (poor = 1, non- poor = 0);
e = error term;
β0 = Intercept to be estimated;
β1 - β13 = coefficients to be estimated.

Tobit regression model was used to test the hypothesis formulated for this study. In
testing the hypothesis, the estimated regression coefficients in the Tobit model were used.
The statistical significance of the estimated coefficients aided the confirmatory tests.

RESULTS AND DISCUSSION

Table 1 presents the socio-economic characteristics of the respondents which revealed

that the average age of the respondents was 42 years, and just a couple of those studied are
either excessively youthful or excessively old, making it impossible to participate in one
activity or the other in the study area.
This infers pay that income diversification is common among the farm households
headed by the youthful who are more fiery and could stand to bring the dangers connected
with income diversification. This agrees with the findings of Awoniyi and Salman (2012), and
Awotide, Kehinde and Agboola (2010) which pointed out that majority of the households that
are engaged in non-farm income are still in their productive years. They are able to engage
themselves in multiple income generating activities that can enhance the households’
purchasing power and consequently their welfare status. From the analysis, household size
in the study area is genuinely substantial with an average of 7 members. This is in line with
the finding of Okere and Shittu (2012) who affirmed that larger households may have to
depend on more income generating activities for sustainable livelihood than smaller sized
households. Farming experience as depicted in Table 1 shows that an average of 26 years
of experience. The implication of this is that the farm household heads would probably
participate less in non-farm activities due to their high level of farming experience. The
results further revealed that a typical respondent had 2.82 hectares. This implies that most of
the respondents are subsistence-oriented farmers and income diversification will likely help
raise their standard of living above the poverty level. Results in Table 1 further revealed that
majority of the respondents accounting for 85% acquired their land through inheritance which
encouraged farmland fragmentation. In terms of gender, Table 1 revealed that an
overwhelming majority of the household heads were male representing 95.50%. This is an
indication that the males dominated agricultural activities. This agrees with the findings of

59
 RJOAS, 2(50), February 2016

Okere and Shittu (2012) who revealed that the males dominated the work force in Nigeria’s
agricultural communities.

Table 1 - Distribution of respondents according to socio-economic characteristics, N=287

Variables Frequency Percentage Mean (Standard Dev.)
Age
<30 20 7.00
30-39 88 30.70
40-49 110 38.30
50-59 44 15.30
> 59 25 8.70 42(10.5)
Household Size
1-5 134 46.70
6-10 94 32.80
11-15 40 13.90
>15 19 6.50 7(4.8)
Years of Experience
<11 16 5.60
11-20 85 29.60
21-30 116 40.40
31-40 49 17.10
> 40 21 7.30 26(10.7)
Farm Size
0.5-2.0 96 33.50
2.5-4.0 64 22.30
4.5-6.0 78 27.20
>6.0 49 17.00 2.8(2.4)
Gender
Male 274 95.50
Female 13 4.50
Mode of Acquiring Land
Owned 26 9.10
Rented 12 4.20
Inherited 244 85.00
Leasehold 5 1.70
Educational Level
None 47 16.40
Quranic 86 30.00
Primary 70 24.40
Secondary 47 16.40
College of Education 20 7.00
College of Health Technology 3 1.00
Polytechnic 6 2.10
University 8 2.80
Credit accessibility
No 272 94.80
Yes 15 5.20
Extension Contact
No 177 61.70
Yes 110 38.30
Total 287 100.00
Source: Field Survey, 2014.

In terms of level of education, only 12.9% had tertiary education in the study area. It
can be seen that the literacy level of farm households in the study area was relatively low.
This is in line with the findings of Awoniyi and Salma (2012) who pointed out that low
educational level among farming households undoubtedly affect their income diversification
patterns and that generally, there is a low level of education among the rural farming
households and this has implications for their income-earning capacity as the respondents
may lack the required skill to secure well paid jobs. Also, farmers may find it difficult to adopt
modern improved techniques of production or operations because of their lack of education.
Education enhances the technical competence and entrepreneurial spirit. Result in Table 1

60
 RJOAS, 2(50), February 2016

further indicated that most respondents in the target population (94.80%) had no access to
agricultural loan. Acquisition of additional capital enables farm households procures
production inputs such as fertilizers, agrochemicals and to hire additional labour. Agricultural
credit also has the propensity to break the vicious cycle of poverty and raise the purchasing
power of farm households who over rely on meagre household resources. The results also
revealed that 61.7% had no access to extension services. This implies that majority of the
farm households in the study area had no access to innovations that probably would have
increased their agricultural output so as to increase their total income.
Tobit regression model was used to identify factors that influenced income
diversification among farm households in the study area. The results in Table 2 reveal that
ten out of thirteen variables were statistically significant at explaining income diversification of
farm households.

Table 2 - Estimates obtained from the Tobit regression model on the determinants of income
diversification
Explanatory variables Coefficient t-ratio Marginal Effects
Constant 0.872 5.730***
Farm size -0.017 -3.890*** -0.017
Age of household head -0.003 -2.800*** -0.003
Level of education 0.003 2.420** 0.003
Gender of household head 0.005 0.180 0.005
Distance to main market -0.002 1.960 -0.002
Number of extension contact -0.003 -1.900 -0.003
Farm income 0.051 3.250*** 0.051
Non-farm income 0.071 5.100*** 0.071
Credit use 0.003 2.510** 0.003
Livestock ownership 0.009 4.830*** 0.009
Household size 0.005 2.360** 0.005
Occupation -0.071 -3.300*** 0.071
Poverty status 0.008 2.020** 0.007
2 2
Log likelihood= -176.37729; LR chi (13) = 97.74*** (prob.> chi = 0.0000);
2
Pseudo R = 0.3833, number of observations = 262.
*** p< 0.01, ** p< 0.05 and * p< 0.10 significant level.

Source: Field Survey, 2014

The likelihood ratio statistic as indicated by 2 statistics (97.74) was significant at the
0.01 probability level, (prob. > chi = 0.0000) suggesting that the model had a strong
explanatory power. The results of the marginal effects are also presented in Table 2. Farm
size was found to be negatively signed and significant at the 0.01 probability level. This is in
agreement with a priori expectation of a negative relationship with income diversification.
Various studies on the relationship between farm size and off-farm income have also
reported an inverse relationship (Fikru, 2008; Awoniyi and Salman, 2012; Adebayo et al.,
2012). The possible reason for this is that, as farmers’ farm size increases, they will require
more time and labour to cultivate the land. This is also consistent with the finding of Bekelu
and Abdil-Khalil (2013) who revealed that farmers with relatively larger area of farm land
tended to involve more in farming activities than those farmers who have smaller areas of
farm land to cultivate. The coefficient of age of the household head was negatively signed
and significant at the 0.01 probability level. This was in agreement with a priori expectation of
a negative relationship with income diversification. This finding was in consonance with
Awoniyi and Salman (2012) who found out that age of household head and farm size
reduces the likelihood that farming households would engage in non-farm income. Strength
of the household head as they become older or their working potential at old age could be a
probable reason for decrease in participation in non-farm activities. This also agrees with the
findings of Fikru (2008) who affirmed that as the household head gets older, he/she is
expected to be less active and hence would rely more on farm than non-farm income. This
agrees with the ideology that farming in subsistent agriculture is considered a way of life and

61
 RJOAS, 2(50), February 2016

not organized as a business enterprise. The coefficient of educational level was positive and
statistically significant at the 0.05 probability level as expected. It was hypothesized that the
educational attainment of the household head tends to increase the likelihood of income
diversification, because education tends to open more employment opportunities for income
generation i.e it is vital for boosting the productivity of human factor, making people to be
aware of more opportunities for generating income from different sources. Various studies on
the relationship between education and non-farm income have also reported a direct
relationship (Ibekwe et al., 2010; Bekelu and Abdil-Khalil, 2013; Adebayo et al., 2012). This
is also consistent with the findings of Minot et al. (2006) who found out that education
facilitates access to a number of different economic activities, either as a formal requirement
for wage earning jobs or because it helps setting up and managing own small businesses.
Results in Table 2 further revealed that, the coefficient of farm income was positively
signed and statistically significant at the 0.01 probability level. This result conforms to the a
priori expectation of a positive relationship with income diversification. This is because, farm
income can be a source of investment for non-farm activities, especially in situations where
lack of liquidity and access to credit are critical barriers to entry, income derived from crop
and livestock can hence support diversification strategies of farm households. The purpose
of income diversification is to increase the non-farm income so as to raise the standard of
living of the farm household. This was suggested by the coefficient of non-farm income which
was positive and statistically significant at the 0.01 probability level, indicating that an
increase in non-farm income will lead to increase in diversification. This is in agreement with
the a priori expectation and finding by Adebayo et al. (2012) who ascertained that non-farm
income increases income diversification by farm households. Credit use by the respondents
had a positive coefficient and statistically significant at the 0.05 probability level in
determining income diversification which conforms to the a priori expectation. This implies
that access and utilization of household’s credit facility could probably lead to engagement in
other businesses to improve their standard of living. This is in line with the findings of
Demissie (2003) who pointed out that credit was found to be a significant determinant of the
level of income diversity for more lucrative strategy, implying that credit enabled households
to widen their income earning options.
The observed positive regression coefficient of livestock ownership which was
statistically significant at the 0.01 probability level suggested that the variable was a
determinant of household participation in non-farm activities. This is consistent with studies
done by Demissie (2003), and Fikru (2008) whose findings revealed that apart from serving
as accumulation of wealth and social prestige, livestock holdings generate income through
sale of animals and animal products (milk, butter, and cheese), and provide transport
services. Livestock endowment seems, therefore to be an important asset for enhancing
diversification and it had a positive effect on livelihood diversification through different
channels; namely, reducing risk aversion attitude of households, relieving liquidity constraints
and, generating income through sale of its products and services. The coefficient of
household size was positive and statistically significant at the 0.05 probability level which is
in agreement with the a priori expectation. It was hypothesized to have a positive influence
on diversification because, households with large sizes, coupled with the prevailing economic
hardship in the country, may resort to search for alternative sources of income to supplement
those from their main occupation. This is in line with the findings of Ibrahim and Onuk (2009)
who found out that household with a very high ratio of dependants had a higher tendency to
diversify into non-agricultural activities in order to feed the gaping mouths and to cope with
the needs of the household. The coefficient of occupation was negative and statistically
significant at the 0.01 probability level which is in agreement with the a priori expectation. It
was hypothesized to have a negative influence on diversification, the possible reason for this,
is that as the number of occupation of the farm household head increase they will tends to
diversify less due to the time available to take care of many different income generating
activities. This is in line with the findings of Ibekwe et al. (2010) who found out that
occupation and age of household head are important factors for non-farm income at the
household level. The coefficient of poverty status of the respondents was also positive and

62
 RJOAS, 2(50), February 2016

statistically significant at the 0.05 probability level which is in agreement with the a priori
expectation. This implies that poor farming households will probably need to engage
themselves in multiple income generating activities so as to increase their purchasing power.
This is in consistent with the findings of Awoniyi and Salman (2012) and Oluwatayo (2009)
who identified poverty status of households as one of the factors that determines the
likelihood that rural households would diversify their income.
The null hypothesis stated that farm size, age, occupation and household size do not
significantly explain income diversification by households in the study area. The result of the
Tobit model in Table 2 indicated that the farm size, age, occupation, and household size with
coefficients of -0.017, -0.003, -0.071, and 0.005 respectively were statistically significant at
explaining the income diversification. The null hypothesis (Ho) is here by upheld in respect to
farm size, age, occupation, and household size. The implication of this finding is that income
diversification is influenced by farm size, age, household size, and occupation of the farm
household.

CONCLUSION

The study concluded that farm size, age, and occupation were the negative
determinants of income diversification. While level of education, farm income, non-farm
income, credit use, livestock ownership, household size, and poverty status were the positive
determinants of income diversification in the study area. The study therefore, recommends
that the level of literacy among rural farm households, and financial markets should be
looked into when formulating policy and developmental issues as they influenced livelihood
diversification, government should re-energize and re-invigorate the extension service
division of the State Ministry of Agriculture through capacity building, training and provision of
necessary equipment to carry out its functions since they are the only group that understands
the farmers’ needs and idiosyncrasies.

REFERENCES

1. Abdulai, A. & Crole R. A. (2001). Determinants of Income Diversification amongst Rural

Households in Southern Mali. Food Policy, 26(1), 437-452.
2. Adebayo, C. O., Akogwu, O. G., & Yisa, E. S. (2012). Determinants of Income
Diversification Among Farm Households in Kaduna State: Application of Tobit
Regression Model. Production Agriculture and Technology Journal, 8(2), 1-10. Retrieved
from www.patnsukjournal.net/currentissue. Accessed on 16 February, 2014.
3. Agu, A. O., & Udoh, B. E. (2012). Impact of Job Satisfaction on Organisational
commitments among Secondary School Teachers in Enugu State. African Journal of
Education and Technology, 2(1), 119-136. Retrieved from www.sachajournal.com.
Accessed on 2nd December, 2014.
4. Awoniyi, O. A. & Salman, K. K. (2012). Non-Farm Income Diversification and Welfare
Status of Rural Households in South West Zone of Nigeria. International Food Policy
Research Institute (IFPRI) Paper. Pp. 1-14.
5. Awotide, O. D., Kehinde, A. L., & Agbola, P. O. (2010). Poverty and Rural Livelihood
Diversification Among Farming Household in South- West Nigeria. Journal of Food,
Agriculture & Environment, 8(1), 367-371. Retrieved on 16 January, 2013 from
www.world.food.net.
6. Barrett, C. B., Reardon, T., & Webb, P. (2001). ‘Non-farm Income Diversification and
Household Livelihood Strategies in Rural Africa: Concepts, Dynamics and, Policy
Implications’, Food Policy, 26(2), 315-331.
7. Bekelu, T. & Abdi-khalil, E. (2013). Determinants and Patterns of Income Diversification
among Smallholder Farmers in Akaki District, Ethiopia. Journal of Research in
Economics and International Finance, 2(4), 68-78.
8. Chaplin, H., Davidova, S., & Gorton, M. (2002). Non Agricultural Diversification of Farm
Households and Corporate Farms in Central Europe. Paper presented at the

63
 RJOAS, 2(50), February 2016

International Agricultural Policy Reform and Adjustment Project (IAPRAP) in it series

workshop on the Farm Household-Firm unit: Its importance in Agriculture and
implications for statistics, April 12-13, 2002, Wye Campus, Imperial College, Durban
South Africa.
9. Demissie, D. (2003). The Determinants and Impacts of Income Diversification in Rural
Ethiopia: The Case of Communities in Southern Nations, Nationalities, and Peoples
Regional State. M. Sc submitted to the School of Graduate Studies of Addis Ababa
University.
10. Department for International Development (DFID) (2001). Sustainable Livelihoods
Guidance Sheets. London.
11. Dercon. S., & Krishnan, P. (1996). Income portfolios in rural Ethiopia and Tanzania:
choices and constraints. Journal of Development Studies, 32(6), 850-875.
12. Ellis, F. (2000). Rural livelihoods and Diversity in Developing Countries. London: Oxford
University Press. Pp. 1-10.
13. Fikru, T. (2008). A Case Study of Non-farm Rural Livelihood Diversification in Lume
Woreda, Oromiya Regional State, M.Sc. Thesis, School of Graduate Studies Lume
Woreda.
14. Gordon, A., & Craig, C. (2001). Rural Non-farm Activities and Poverty Alleviation in Sub-
Saharan Africa. Policy Series 14. Chatham, UK: Natural Resources Institute.
15. Hussein, K., & Nelson, J. (1999). Sustainable Livelihoods and Diversification. IDS
Working Paper 69. London: Institute of Development Studies.
16. Ibekwe, U. C., Eze, C. C., Ohajianya, D. O., Orebiyu, J. S., Onyemauwa, C. S., & Korie,
O. C. (2010). Determinants of Nonfarm Income among Farm Households in South East
Nigeria. Academia Arena, 2(8), 29-33.
17. Ibrahim, H. I., & Onuk, G. E. (2009). Analysis of Rural Non-farm Diversification among
Farming Households in Doma area of Nasarawa State, Nigeria. Production Agriculture
and Technology Nasarawa State University Keffi Journal, 5(1), 49-54. Retrieved on 13
Sept. 2014 from www.patnskjournal.net/currentissue.
18. Idowu, A. O., Aihonsu, J. O. Y., Olubanjo, O. O., & Shittu, A. M. (2011). Determinants of
Income Diversification among Farm Households in South-West Nigeria. Economics and
Finance Review. 1(5), 33-34. Retrieved from http://www.businessjournalz.org/efr.
Accessed on 15 January, 2013.
19. Kumar, S., & Upadhyay, A. D. (2009). Goat farmers’ Coping Strategies for Sustainable
Livelihood Security in Arid Rajasth: An Empirical Analysis. Journal of Agricultural
Economics Research Review, 22(12), 281-290.
20. Lanjouw, J. O., & Lanjouw, P. (1997). The Rural Non-farm Sector: An update. (Drafted
Paper) Washington D.C: World Bank.
21. Minot, M., Epprecht, M., Anh, T., & Trung, L. (2006). Income Diversification and Poverty
In the Northern Uplands of Vietnam, International Food Policy Research Institute,
Wishington, DC.
22. Mishra, A. K., El-osta, H., Morehart, M., Johnson, J., & Hopkins, J. (2002). Income,
Wealth And Economic Well-being of Farm Households. Department of Agricultural
Economics Report 812, 2002.
23. National Population Commission (NPC) (2006). Population Data in Nigeria. Retrieved on
February 20, 2013 from http://www.population.gov.ng/population-data-in-Nigeria.
24. Okere, C. P., & Shittu, A. M. (2012). Patterns and Determinants of Livelihood
Diversification among Farm Households in Odeda Local Government Area, Ogun State,
Nigeria. Paper Presented at the Nigerian Association of Agricultural Economist
Conference held at Obafemi Awolowo University, Ile-Ife between 25-27 September,
2012. Theme: Agriculture in the National Transformation Agenda: The Policy Mix.
25. Oluwatayo, I. B. (2009). Poverty and Income Diversification Among Households in Rural
Nigeria: A Gender Analysis of livelihood Patterns. A paper presented at The 2nd Instituto
de Estudos Sociais e Económicos (IESE) Conference on ‘Dynamics of Poverty and
Patterns of Economic Accumulation in Mozambique’ in Maputo, Mozambique, 22-23
April, 2009. Accessed on 2 February, 2014.

64
 RJOAS, 2(50), February 2016

26. United Nations System Standing Committee on Nutrition (UN/SCN) (2004). 5th Report on
27. the World nutrition situation. United Nations, Geneva.
28. United Nations Development Programme (2012). The Sustainable Future we Want.
Retrieved from www.undp.org/.../undp/.../annaul-report-2012-the-sustainable-future.
Accessed on 2 March, 2014
29. Von Braun, J. (2005). The World Food Situation: An overview. Paper presented at the
CGIAR Annual General Meeting, held December 6, 2005 at Marrakech, Morocco.
30. Warren, P. (2001). Distance Survey on Gender Impacts of Commercialization.
Manuscript. ROME: FAO, AGSP.
31. Warren, P. (2002). Livelihoods Diversification and Enterprise Development: An Initial
Exploration of Concepts and Issues. Livelihood Support Programme (LSP) Working
Paper 4. Food and Agricultural Organization of the United Nations.
32. World Bank, (2013). Nigeria Population Growth.
33. Yamane, T. (1967). Statistics: An Introductory Analysis, 2nd Ed., New York: Harper and
Row.

65