Analysis of Income Diversification Strategies among Farm Households in Oyo State

Diversification of income sources is considered as a desirable option to augments income among small scale farmers. This study evaluates the income diversification among farm households in Oyo State of Nigeria. A multi-stage sampling technique was used to select 280 rural households. The data collected were analysed using diversity index and Tobit regression analysis. The results showed that all the respondents participated in arable farming and this accounts for 28.29 percent of the total income. 57.85 percent participated in tree crop income and this accounts for 11.95 percent of the total income, 60.36 percent of the households engaged in non-farm income and it accounts for 19.93 percent of the total income. The results of Tobit regression showed that education, household size, access to credit and extension contact were the factors increasing income diversification among the rural households in the study area. The study revealed that agriculture remains the major source of income among the respondents. Therefore, the study recommends improvement of agricultural activities through the distribution of agricultural inputs such as improved seeds, fertilizers and better extension services delivery in order to boost agricultural production. Keywords: Income diversification, Diversity index, Rural Household, Tobit regression