3.1. Socio-demographic characteristics of respondents
Table 2 presents households’ socio-economic characteristics. The sample respondents have an average age of 46.49 years and the majority about 91.7% of the household heads were male-headed. About 85.9% were married, and 71.6% of the respondents had access to formal education having 5.54 years of schooling.
Access to quality education and productive assets like land and livestock are major potential determinant factors affecting household livelihood diversification. Accordingly, the sample households have highly fragmented or minimal average landing holding size of 1.11 hectares and average livestock holding of 2.95 in TLU. Due to the small per capita landholding size and resulting very low agricultural production, the households in Chencha district practice off-farm and non-farm livelihood diversification. As a result, 47.9% of the respondent households reported out-of-farm livelihood activities as their main livelihood income sources. However, only 52.1% of the households responded that they used subsistence farming as the main source of their living. The households in the area faced the problem of food shortage for 3-6 months. As a result, about 13.5% of randomly selected respondents were beneficiaries of Productive Safety Net (PSNP) support in the form of members on food for work and free access to aid.
About 82.5% of the respondents were within the productive age category (15-64 years) with maximum age ranges of 17 and 107 years which is a similar result to Dersseh et al. (2016) [47]. The majority of weaving-based households about 90.75% have participated in more than one economic activity as their household income source and the remaining 8.25% have specialized only in one livelihood income source. The study result indicated that the respondent households have adopted an average of 4.53 number of income sources. Regarding the dependency ratio, the study revealed a 0.223 or 22.3 percent dependency ratio in the family.
3.2. Characteristics of Livelihood Diversification and Annual Income Shares
This part provides evidence of the diversity of income sources used in the area with the respective total participation, mean income, total income, and their share of the overall income of the whole household. In this case, mean income has been computed as the total income gained by several households participating in the corresponding income activity.
Due to challenges of declining landholding size, diminishing farm productivity, and decreasing capacity of agriculture; rural households diversify their productive labour both into non-farm and off-farm sectors to get their livelihood needs [48,49]. More particularly, the average per capita landholding size of the study area was one of the lowest; 1.11 hectares as per the current survey, which is slightly greater than the national and regional (SNNPR) averages of 0.84 and 0.52 hectares per household [50]. According to the CSA report, about 84% of the households in the area have 0.5 hectares and below landholding size [51]. As a result, people in the district are forced and opt to derive their household income from diverse sources.
As shown in the Table 4, the study result indicated that about 93.39%, 81.85 %, and 21.13% of respondents have participated in non-farm, on-farm, and off-farm activities, respectively. Like other rural areas, the economy of Chencha district is dominantly characterized by subsistence farming. However, the non-farm income accounts for 72.96% of the total overall income of households which is 47.67% by far advance than the on-farm income share. The income shares of on-farm income sources accounts for only 25.29% of the overall income of the respondents. This result is in line with the study conducted in the Himalayas [52].
Specifically, vegetable production (mainly Potato) was 61.72%, cereal production was 52.14%, cattle sales was 27.72%, sheep and goat production and sale were 26.73%, and fruit production 21.12% activities had relatively higher household participation recorded among on-farm activities. But, cattle sales (6,950 ETB), Cereal production (5,738.18 ETB), and vegetable production (4512 ETB) have relatively higher average annual income. While; cereal production, vegetable production (Potato and Cabbage), and cattle sales have 6.73%, 6.26%, and 4.33% shares on the overall income of the respondents, respectively.
However, off-farm income source has relatively lower levels of household participation and lower income contribution to the total household income. This could be due to high population density, very minimal landholding size, and the subsistence nature of agriculture in the area. This may limit off-farm livelihood options as an alternative employment sector for needy groups of society. Among off-farm income sources, annual income from grain trade (5650 ETB), Wage labor (4690.9 ETB), and petty trade (3706.6 ETB) has higher mean income. However, off-farm activity has an overall income share of only 1.74% of the annual income of the whole respondents. This result indicates the shortage of off-farm livelihood alternatives and low repaying capacity in the area.
Non-farm activity plays a significant role in the livelihood system of the rural households in the area. Based on non-farm income activity participation, weaving, and spinning activity account for 81.18%, remittance 17.49%, and formal employment (governmental or non-governmental) accounts for 10.89%. However, based on the average annual income return for the corresponding participants; formal employment, weaving, and Barber or hairdresser service have higher repayment capacities of (75,025.66 ETB), (38,162 ETB) and (24,500 ETB), respectively. This result is similar to the study by Israr et al. (2014) and Gautam and Andersen (2016) which reported a larger income contribution of non-farm activity and formal employment to total household income and general well-being than on-farm activities. Also, the findings of Yizengaw et al. (2015) [53] revealed similar results in which non-farm income contributed 60 percent to household income in Debre Elias woreda East Gojjam zone, Ethiopia. The study by IFAD also supports that households in developing countries drive more than 50 percent of their household income from non-farm livelihood activities [54]. Hence, giving due attention to education and strengthening non-farm livelihood diversification is inevitable in the area.
3.3. Livelihood Diversification Strategies
As shown in Table 3 above, the respondent households have adopted an average of 4.53 diverse livelihood options. Based on the survey result, 90.76% of the households got their income from more than one livelihood source. Similarly, people in highly populated and fragmented landholding conditions, diversify their sources of household income (Gebru et al., 2018) [55].
Despite the most frequent adoption of on-farm, off-farm, and non-farm concepts in the livelihood classification, many argue for inextricability and difficulty in putting clear demarcation among this classification. However, this study has adopted the conceptualization provided by [56]. Accordingly, on-farm activities consist of farming and agricultural production-related activities that include; all activities of farming (crop production and livestock rearing) carried out on the farm of the household or occur at the beginning of the value chain. On the other hand, off-farm income encompasses all agriculture-related activities that occur beyond the farm or in the “middle” and “end” of the process which include; processing, packaging, storage, transporting, and retail sale. So, off-farm activities include all processes carried outside own farm up to final consumption. Whereas; non-farm activity refers to sectors that exist outside of agricultural market systems like; construction, healthcare, hospitality, formal employment, education, mining, tourism, and artisans.
Based on the livelihood activity participation of the households, livelihood activities identified in the area were categorized into seven livelihood strategies;
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Group 1: Only on-farm livelihood activities
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Group 2: Only off-farm livelihood activities
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Group 3: Only non-farm livelihood activities
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Group 4: On-farm and off-farm combination of livelihood activities
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Group 5: On-farm and non-farm livelihood activities
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Group 6: Off-farm and non-farm livelihood activities
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Group 7: On-farm and off-farm and non-farm livelihood activities
Different authors; [31, 43] (Admasu et al., 2022) [40] classify households based on the use of on-farm, off-farm, non-farm, and a combination of one or more of them as their livelihood income source. Based on these experiences, the respondent households were categorized into seven (7) livelihood groups (Table 5). Accordingly, the majority of the respondents 179(59.08%) and 52(17.16%) were getting their livelihood means from ‘on-farm and non-farm’, and ‘on-farm, off-farm, and non-farm’ economic activities, respectively. Following the two, ‘non-farm only’ employed 45(14.85%) of the households.
Based on average annual income per participant; households who combined the three livelihood sources ‘on-farm, off-farm, and non-farm activities’ have the highest average annual income of 55,366 ETB, followed by ‘on-farm and non-farm’, ‘on-farm and off-farm’, and ‘non-farm only’ income sources. The least remunerative livelihood group is the ‘only off-farm’ activity. This implies that households who combine different income sources will get higher annual income and thereby minimize risk and enhance their capacity to withstand natural and economic uncertainties.
3.4. Extent of Livelihood Diversification in the Area
People diversify their livelihood income sources to increase their household income and thereby improve the well-being and food security status of their household members. Accordingly, this study attempted to determine the status of livelihood diversification and its association with the food security status of households. Following the experiences precedents [42, 43] (Admasu et al., 2022) [40] the status of livelihood diversification is identified by using the Herfindahl-Hirschman Index (HHI).
Table 6 presents the extent of household livelihood diversification using (HHI) techniques. Based on the thorough analysis of income distribution of households using HHI results, 14.52% of the respondents specialized only on one income source, or adopted ‘No livelihood diversification’ whereas, 52.15% practiced ‘Moderate level’ of livelihood diversification status. Surprisingly, 33.33 percent of the respondents ‘highly diversified’ their livelihood income sources. The mean HHI score is 2.68 which indicates ‘highly diversified’ livelihood sources result across all households. Using similar techniques, other researchers have also shown similar results [42]. 27% and 37% of the respondents in the Coastal Community of Bangladesh have ‘poor’ and ‘medium’ levels of livelihood diversification, respectively.
3.5. Determinants of Household Livelihood Diversification
Table 7 presents determinants of livelihood diversification. The ordered Probit model was used to detect the determinants of the livelihood diversification status. Here it is mainly focused on carrying out the data analysis and identifying explanatory factors (continuous and discrete) that affect livelihood diversification status. Before running the data analysis, the existence of bad correlation (multi-collinearity) among potential explanatory variables was tested using Variance Inflation Factor (VIF) and Contingency coefficient values for continuous and discrete variables, respectively. Then, the test result revealed that there is no strong correlation among independent variables. Accordingly, the VIF values for all continuous variables were found to be small (i.e., VIF<10) which is below the cutting threshold value of 10. In the same way, the multi-Collinearity test result for discrete explanatory variables revealed a contingency coefficient value of less than 0.75 which confirmed the existence of no strong association.
To determine the determinants of the livelihood diversification status of households ordered probit analysis model is used with a 95% confidence interval (CI) or p<0.05 value. The model fitting information shows that the model has high predictive power with Nagelkerke pseudo-R-square value 0.562 which indicates the model fits the data well with 56.2% of the variance in the dependent variable (i.e., livelihood diversification status) explained by the modeled explanatory variables. Whereas; the difference between the two log-likelihoods the chi-square has shown a significance level of less than 0.001.
Parameter Estimates
In the following part, the parameter results with significant influence on the household livelihood diversification status were interpreted. Among 17 explanatory variables, 7 variables were found to significantly determine the likelihood of household livelihood diversification from lower to higher or vice versa.
Family size of the household: the sample respondents have a relatively larger average family of 6.81 which is even greater than the regional average of 5.47 members in the Southern Nations Nationalities people’s region of Ethiopia [14]. It is expected that an increased family size can increase the likelihood of increasing livelihood income sources. However, the model result revealed that family size has negatively and significantly affected the probability of household livelihood diversification at a less than 5% significant level. Accordingly, a unit increase in the family size decreases the likelihood of income diversification to a higher level by 0.0681 units when other factors are kept constant. This may imply, that an extended family member may become a burden in the rural contexts where there is a shortage of land resources and other off-farm and non-farm job opportunities.
Landholding size: Here, livelihood diversification is expected to be happening both within the agricultural sector and outside of the agricultural sector, in turn, could have a positive impact on household general well-being and food security (Onunka et al., 2017) [46]. In this regard, as expected land holding size has positively influenced the likelihood of household livelihood diversification at less than a 5% significant level. A unit increase in the landholding size of a household increases the likelihood of attaining a higher livelihood diversification category by 0.225 units if other factors were kept constant. Consequently, increased landholding size gives opportunities to expand income sources into growing several crops and vegetables, and rearing large variety and size of livestock. Therefore, it is advisable to improve mechanisms of accessing land for rural households to enhance household food self-sufficiency and productivity through livelihood diversification.
Total Livestock holding size: Although a minimal average livestock holding size (2.95 Tropical Livestock units) is reported in the study, income gained from livestock and livestock products is confirmed as the top-ranked among on-farm income sources. As expected, the model result indicated that the size of total livestock holding became one of the important determinant livelihood diversification factors that positively affected at less than a 1% significance level. A unit increase in livestock holding size in TLU increases the likelihood of households achieving higher diversification levels by 0.178 times when other factors are kept constant. This may be explained as increased diversity and size of livestock holding could mean expanded sources of food and income for households in the form of livestock and livestock products. Thus, in the highly fragmented landholding areas like; the Chencha district; rearing diversified livestock in an intensive and home-managed way with necessary expertise and support services seems more recommendable.
Access to Farmer Training Center (FTC) services: Access to agricultural production-improving technologies and services like Farmer training services is one of the important factors that are expected to enrich farmers with the necessary knowledge and skills to increase production and productivity through adopting diverse income activities. As expected, access to FTC services was found to positively determine the likelihood of household livelihood diversification. Accordingly, a household that had access to FTC services has an increased likelihood of falling into the higher livelihood diversification category by 0.388 units more than non-users at less than 10% significance status. Increased access to FTC enhances livelihood diversifications of households by exposing them to new experiences, knowledge, and skills to practice in their livelihood system. Thus, strengthening FTC service provision in the area would have a desirable effect on livelihood diversification and the food security status of rural households.
Access to Transfers of Payment: In the study, households use a variety of cash and kind transfers of support to sustain their living. Alternative transfers reported include; remittances from their family members from urban centers of the country and abroad the country, PSNP support, food insecurity relief aids during food deficit seasons, and so on. As expected, ceteris paribus, the lack of access to transfers of payment significantly decreases the probability of households falling into the higher livelihood diversification category by 0.586 units at less than a 5% significant level.
On-farm participation: In rural areas, on-farm income sources are the most important livelihood diversification sources, in the form of livestock and crop production. The probit model result indicated that participation in on-farm activity highly contributed to the livelihood diversification status of the respondent households at a 1% significant level. Keeping other factors constant, those who did not participate in on-farm activity have a 2.207 units lower likelihood of falling into a higher (moderate or highly diversified) income category than those who have participated in on-farm income activity. This implies, that participation in various on-farm activities enhances improved livelihood diversification status and in turn, improves food security and household resilience to food insecurity.
Off-farm participation: This study has revealed options for off-farm livelihood sources such as; wage labour, firewood collection and charcoal production and sale, animal feed collection and sale, grain and livestock trades, petty trade, furniture and woodwork, and farm tool production and sale. In the econometric model analysis, access and participation in off-farm activities significantly influenced the livelihood diversification status of households at less than a 5% significant level. Considering other factors constant, households who had not participated in or accessed incomes from off-farm activity have decreased probability of attaining higher livelihood by 0.392 units than those who had access to off-farm income participation.
3.6. Socio-economic characteristics and their associations with food security status
Livelihood diversification is a common practice followed by rural farming households in Africa which involves increasing economic activities within and out of farming activities as a means to escape from the effects of poverty and food insecurity problems (John Afodu et al., 2020) [57]. As can be in Table 7, the associations between different socioeconomic variables and the food security status of weaving-based households were observed using Pearson Correlation Analysis [42]. Accordingly, age of the respondent (AGE), educational status in years (EDU), family size (FAMSZ), number of productive labour (PROLABR), total landholding size (LAND), livestock holding size, total income from all sources (TOTINCOM), Livelihood diversification status using HHI (LD), food security status (FCS) and Dependency Ratio (DEPNDC) were used.
As shown in the Table 8, the result revealed that Pearson correlation of household age and Food security status (FCS) was found to be very low negative and statistically significant (r=0.199, p<0.01). This shows that an increase in household head age leads to a decreased Food Consumption Score in the household. Educational status of the household head (EDU) and Food Consumption Score (FCS) were found low positive and significantly correlated (r=0.322, p<0.01). This implies that increased educational attainment leads to enhanced food security status. The association of other variables like; family size, landholding size, total livestock holding size, and total household income have a very low positive and significant correlation at p<0.01 with the Food security of households. However, the Pearson correlation of livelihood diversification status (HHI) has a high positive (r=0.720, p<0.05) and significantly correlated with food security status (FCS).
This implies that an increase in household livelihood diversification has a positive association with the improved food security status of the households. This result is similar to the research output of Onunka et al. (2017) [47] who found a positive association between increased livelihood diversification and improved food security status among households of Udi local government area, Enugu state, Nigeria. Another study by [58] has also found a positive effect of livelihood diversification on the food security status of farming households. Therefore, expanding and creating necessary opportunities for weaving-based households to diversify their income sources within and out of farming activities is advisable to improve the well-being and food security status of their households.