Multinomial Logistic Regression Analysis of Livelihood Diversification Strategies of Rural Farm Households: A Case of Limmu District, East Wollega Zone of Oromiya Regional State, Ethiopia

This study investigated the factors that influence the choice of livelihood strategies in rural areas of households in Limmu District, eastern Wollega zone of Oromiya regional state, Ethiopia. 292 households’ were selected using multi stages random and purposive sampling technique. A Multinomial logit regression model was applied to identify the determinants of agricultural diversification strategies in the area. Out of the total sample household heads about 46% of the total household income was derived from on farm only, 30% from a combination of on farm and nonfarm, about 12.33% from a combination of on farm, non-farm and off-farm and 12% from a combination of on farm and off-farm activities. The multinomial logit regression analysis revealed that education level, access to credit, access to mass media, dependency ratio, access to irrigation, urban linkage, climate change, extension contact and distance to the nearest road were theoretically consistent and statistically significant effect to the likelihood choice of diversification strategies. Whereas, age of household head, sex, distance to the market, cooperative membership, crop risk and distance from market were insignificant predictor of diversification strategy at 5% significance level. The findings of the study suggest that efforts should focus on the promotion of options, substitution between assets and activities to diversify household specific agriculture-linkage with non-farm and off farm diversification rather than focusing on the single agricultural productive farm by taking action to improve information, mobility and asset accumulation. Keywords: Multinomial Logit, Limmu, Livelihood diversification, on farm, off-farm, non-farm DOI: 10.7176/JESD/12-13-03 Publication date:July 31st 2021