ABSTRACT
This study examined the effect of diversifying livelihood strategies on the welfare status of smallholder farm households. Data were collected from 270 farm households across the state using structured questionnaire and analyzed with descriptive statistics (means and percentages) as well as inferential statistics (Heckman 2-stage model, OLS, multinomial logit and correlation models). Farming in the study area was dominated by females with mean age of 41 years as indicated from the study and implied that these farmers were in their youthful and active years of life. About 75% of the respondents had a secondary education at minimum and recorded about 17 years of experience in agricultural activities. Most farm households in Abia state are agrarian rural dwellers who depend mostly on the proceeds from their farms to survive and meet their daily food and other necessary requirements. The result of the Heckman’s two-stage selection model showed that age of household head, sex of household head, years of education, household size, farming experience, market distance, cooperative membership, use of electricity and technology all affected the decision to diversify livelihood as well as intensity of diversification. The MNL model result showed that age of the household head, sex of the household head, years of education, market distance (km), farm size, use of technology, size of livestock and total household income were the significant factors affecting the choices of different livelihood strategies. The welfare status of the households showed that majority (43%) of the farm households were extremely poor followed by 34% who were non-poor. The Ordinary Least Square (using the semi-log form as the lead equation) result showed that level of education, farming experience, credit used, livelihood diversification, total household income, sex, farm size, age of farmer and household size were welfare determining factors. The positive correlation between livelihood diversification and welfare suggested that households which diversified their livelihood sources are more likely to have better welfare conditions than those who did not. Since education of the household members positively influence income generation and diversification, improvement in the quality of education of the rural household members will improve income generation and diversification. There is a need to encourage farmers to form cooperative societies for marketing their produce and procure inputs in bulk. Further improvements through the identification of alternative farm strategies by understanding dynamics of off-farm labour pattern in other sectors would represent a viable strategy to understand risk aversion effects on agriculture. Policy makers should formulate and ratify appropriate rural development policies and strategies based on existing situation of rural livelihood to boost development of the rural community.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table of Contents vi
List of Tables viii
Abstract ix
CHAPTER 1:
INTRODUCTION
1.1 Background
Information 1
1.2 Problem
Statement 4
1.3 Research
Question 7
1.4 Research
Objectives 8
1.4 Hypotheses 8
1.5 Justification 9
CHAPTER 2: LITERATURE REVIEW
2.1 Conceptual Literature
2.1.1 Concept
of diversification 11
2.1.2 Concept
of livelihoods 11
2.1.3 Concept
of livelihood diversification 11
2.1.4 Concept of agricultural transformation process 14
2.1.5 Evolution
of the sustainable livelihoods approach (SLA) 18
2.1.5.1 Overview
of the sustainable livelihoods framework (SLF) 19
2.5.1.2 Household
vulnerability and livelihoods 21
2.1.5.3 Livelihood
strategies and activities 22
2.1.5.4 Livelihood
strategies and livelihood outcomes 22
2.1.5.5 A
critique of the SL approach 23
2.1.6 Rural livelihood diversification measurement 26
2.1.7 Classification
of livelihood strategies 28
2.1.8 Welfare 31
2.2 Theoretical
Framework 31
2.2.1 Theory of assets 33
2.2.2 Theory of activity 35
2.3 Empirical
Review 36
2.3.1 Income
from non-farm activities 36
2.3.2 Farm livelihood diversification in sub-Saharan Africa 41
2.3.3 Motivation for livelihood diversification 43
2.3.4 Determinants
of livelihood diversification 49
2.3.5 Determinants of welfare 56
2.4 Analytical
Framework 58
2.4.1 Regression analysis 58
2.4.2 Multinomial
logit model 59
2.4.3 The
Herfindahl diversification index 62
CHAPTER 3:
METHODOLOGY
3.1. The
Study Area 64
3.2 Sampling
Procedure 65
3.3 Data
Collection 65
3.4 Method
of Data Analysis 66
CHAPTER 4: RESULTS AND DISCUSSION
4.1 Socio-Economic Characteristics of Respondents 78
4.2 The Various
Patterns of Livelihood and Level of Diversification 83
4.2.1 Patterns
of livelihood diversification 83
4.2.2 Level of
Diversification of livelihood 85
4.3 Factors Affecting the Decision to
Diversify Livelihood and Intensity of Diversification 86
4.4 Factors
Influencing the Livelihood Diversification Patterns of the
Households 93
4.5 Households’
Welfare Status and Determinant Factors 100
4.5.1 Welfare
status 100
4.5.2 Welfare determinants 100
4.6 Relationship
between Welfare and Livelihood Diversification 101
CHAPTER 5:
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary 107
5.2 Conclusion 109
5.3 Recommendations 110
References
Appendix
LIST OF
TABLES
3.1: A priori expectations 77
4.1: Distribution
of respondents by their socio-economic characteristics 78
4.2:
Patterns of livelihood
diversification 83
4.3:
Level of diversification 85
4.4: Heckman
estimates of livelihood diversification decision and intensity
determinants 87
4.5: MNL estimates of households’ choice of
livelihood diversification strategies 94
4.6:
Welfare status 100
4.7:
OLS estimates of welfare determinants 102
4.8:
Correlation between welfare and
livelihood diversification 106
CHAPTER 1
INTRODUCTION
1.1
BACKGROUND
OF THE STUDY
Agriculture
is the main source of livelihood in Nigeria, especially in the rural areas and
is plagued with various problems (Adepoju and Obayelu, 2013). The farm sector
employs about two-thirds of the country’s total labour force and provides a
livelihood for about 90% of the rural population (IFAD, 2009), thus making it
the most important sector in this respect (Chauvin, Mulangu, and Porto 2012;
Akaakohol and Aye, 2014). Agriculture is
an important sector for majority of the rural populations’ livelihood in
developing countries. It has been the predominant activity for most rural
households in Sub-Saharan Africa (SSA) which offers a strong option for
spurring growth, overcoming poverty, and enhancing food security (World Bank,
2008; Yizengaw et al., 2015).
Nigeria
is largely an agrarian country despite its large oil earnings. Agriculture is
characterized by small-scale production which is mainly subsistence, use of
simple crude tools and generally traditional farming methods. Despite these
characteristics, 80% of food in Nigeria is produced by these small-scale
farmers (Chauvin et al., 2012).
Nigeria’s
varied climate which ranges from the tropical areas of the coast to the arid
zone of the north affords her the opportunity to cultivate nearly all the types
of agricultural produce grown in the tropics and semi-tropical parts of the
world (Olayemi et al., 2012).
However,
farming as a primary source of income has failed to guarantee sufficient
livelihood for most farming households in sub-Sahara African countries
(Babatunde, 2013). This is because the agricultural sector in the sub-Saharan
African countries is highly characterized by decreasing farm sizes, low levels
of output per farm, and a high degree of subsistence farming (Jirstrom et al., 2011). As a result, most of the
rural households are poor and are beginning to diversify their livelihoods into
off and non-farm activities as a relevant source of income.
The
contribution of non-agricultural activities to household income in the
developing world in general and Sub-Saharan Africa in particular is
substantial. Local non-farming income contributes between 30 to 40 % of rural
household income in the developing world (Haggblade et al., 2007; Oyimbo
and Olayele, 2016). Various studies have shown that while most rural households
are involved in agricultural activities such as livestock, crop, or fish
production as their main source of livelihood, they also engage in other income
generating activities to augment their main source of income (Adepoju and
Obayelu, 2013).
However,
having a universal classification of the types of non-farm income generating
activities across Agricultural Zones and location in Abia State .Abia State major
non-farm activites engaged by the majority of people are transportation and
trading. Other notable non-farm activities engaged in by the majority of
households in the state include food processing, restaurants/beer parlor,
barbing saloon, teacher. Clergy, craft making, dye and weaving textile, soap
making etc. ( Obinna ,2014). Within the interior areas of the state, most
households in craft work are located within the semi-urban and urban areas of
the state.
Diversification
involves the maintenance and continuous alteration of a highly-varied range of
activities and occupations to minimize household income variability, reduce the
adverse impacts of seasonality and provide employment / additional income
(Ellis, 2000; Barrett et al., 2001;
Lanjouw and Lanjouw, 2001; Davis and Bezemer, 2004; Matsumoto et al., 2006; Haggblade et al., 2010; Weldegebriel, 2009).
Despite
such benefits, diversification can also have negative sides depending on the
motivation behind it (Hart, 1994). For instance, certain types of
diversification may provide short-term security but trap households in
low-return activities that make poverty persistent (such as poorly-paid
piecework that leads to the neglect of farm production) or can degrade the
natural-resource base (such as unsustainable charcoal production) (Barrett et al., 2001; Ellis and Freeman, 2004).
Therefore, there is an important conceptual distinction among two types of
diversification: off-farm and non-farm strategies (Weldegebriel and Prowse,
2013).
Agricultural
diversification refers to either a change in cropping pattern or the farmers
opting for other on-farming options like poultry farming, animal husbandry etc.
This practice allows farmers to expand the production, which helps generate a
higher level of income. Changing a cropping pattern involves the
diversification between food and non- food crops, conventional crops and
horticulture, high and low-value crops, etc ( NCERT,2016).
Thus,
the expectation that achieving the goal of reducing poverty only through
increasing agricultural productivity and redressing the issues of access to key
agricultural resources without non/off-farm livelihood diversification could
not be successful in the sub-Sahara African countries (Emmanuel, 2011). For
these reasons there is a strong consensus that any development intervention to
improve the livelihood and food security situation of the rural poor need to
take agriculture along with the non/off-farm livelihood diversification,
without undue preference being given to farming as the unique solution to rural
poverty.
1.2
PROBLEM
STATEMENT
Anchored
on the global poverty reduction agenda lies the quest to attaining a hunger
free world, more particularly in developing countries. Admittedly, the advent
of international frameworks such as the Universal Declaration of Human Rights
in 1948 and the Millennium Development Goals (MDGs) in 2000 (now Sustainable
Development Goals) has galvanized support and provided significant impetus
towards global hunger eradication. According to the 2013 Global Hunger Index
Report, the number of hungry people has declined by approximately 33 percent in
the past two decades (Von Grebmer et al.,
2013).
In
spite of this progress, the onset of the 2008/2009 global economic crisis and
food price spikes slowed progress towards the MDGs in general and hunger
eradication in particular (UN, 2010; Green, 2012). In the wake of this, it is
reported that some “41 million people in Asia-Pacific and another 24 million in
sub-Saharan Africa have plummeted into hunger” (Karl, 2009). In other words,
global hunger remains a crucial concern for millions of people (Greenland,
2005; Ivers and Cullen, 2011). In sub-Saharan Africa (SSA), the phenomenon is
rife, accounting for about 26.8 percent of hungry people worldwide (FAO, WFP
& IFAD, 2012). Of these, 80 percent live in rural areas, working as
‘peasants, landless labourers and pastoralists’ (Tobin, 2009).
In
the 1960s, agriculture played a dominant role in the Nigerian economy. With the
exploration and development of oil sector, agricultural production began to
decline to the level of importing most of the staple foods. The Nigerian
economy had experienced rapid aggregate economic growth largely through the
expansion of oil production (CBN, 1995). The rise in oil production has been
accompanied by income disparity among the citizens. The World Bank (2002)
reported that the Gini ratio for income distribution in Nigeria between 2003
and 2009 widened from 40.0 to 442. Nigeria thus presented a paradox. The
country is rich but most of the people are poor. The impact of interpersonal
differentials is substantiated by the gap between the rich and the poor.
Evidence
in Nigeria reveals that, the number of those in poverty is on the increase. The
number of those in poverty increased from 27% in 1980 to 46% in 1985. It
declined slightly to 42% in 1992. In 1999, it was estimated that, more than 70%
of Nigerians lived in poverty, (Ogwumike, 2005). Despite the various poverty alleviation programmes
adopted by various governments in Nigeria, over 93 million Nigerians still live
in poverty, with at least three million sliding into extreme poverty between
November 2018 and February 2019 (Olayinka, 2019). In recent times, based
on the poverty line of $1.90 per day, 46.5% of Nigerians are extremely poor,
with the World Poverty Clock naming Nigeria, ‘the poverty capital of the
world’. According to the World Poverty Clock (2019), extreme poverty in Nigeria
is increasing by almost six persons per minute. Therefore, reducing rural
poverty has been on the agenda of international development agencies as well as
governmental and non – governmental organizations for a long time.
There
is no developed approach to estimate the great degree of heterogeneity in asset
positions across households and the multiplicity of activities in which they
are engaged to generate income. There also exists a gap in knowing the level of
engagement in different activities by the rural farm households and the reasons
for that. Could it be, because they lack access to sufficient land to make
agriculture a viable income strategy or because of market failures for credit
and insurance that push them into non-farm activities to diversify their risk
and seek sources of liquidity to be used in agriculture?
The
reduction of poverty is the most difficult challenge facing any country in the
developing world where on average, the majority of the population is considered
poor. In Nigeria, the number of those in poverty has continued to increase
(Lawal et al., 2011). Despite the various efforts of government to
reduce the incidence of poverty through different poverty alleviation
programmes and strategies and the quest to be one of the 20 largest economies
by the year 2020, Nigeria continues to be one of the poorest countries in the
world (Adepoju, 2012). Its incidence rose from 27.2% in 1980 to 42.7% in 1992
and 69% in 2010 (NBS, 2012). Nigeria has been ranked 153rd with human
development index of 0.471 in 2013 UNDP Human Development Index despite moving
a step up from the 2011 rating, portraying the country among the poorest
countries in the world, majority of whom resides in the rural areas with
farming as their primary occupation.
Although
Nigeria has a huge agricultural endowment, hunger characterizes the majority of
the population. About 64.4% and 83.7% of the population live below the poverty
line of US$1.25 and US$2 per person per day, respectively (Aye, 2013). Nigeria
faces a lot of challenges including that of attaining food security, which is
one of the millennium development goals (FAO, 2003). Some of these challenges
are caused by natural resources (soil, water and climate), faulty micro
economies, agricultural policies, bad economy, etc. Due to these challenges,
smallholder farmers in Nigeria are poverty stricken. These challenges affect
individual farmers and put the household welfare of the farmer at danger or at
risk. Consequently, this risk encourages farmers to diversify into other non-farm
activities which are expected to supplement their income. Ibrahim et al, (2009) discovered that income
and crop diversification have been identified as essential strategies for
raising income and reducing rural poverty.
Etuk,(2018) highlight that access to credit
and strengthening of the credit institutional arrangement improves the
livelihood of rural household.
Having studied previous works in related areas
by different authors. The researcher observed that not much has be done in the
area of ‘determinants and welfare effect of agricultural and livelihood
diversification among smallholder farmers in Abia state, Nigeria’. Hence, this
particular study adopted multinomial logit model to analysis Demography to
avoid selection bias in the choice livelihood diversification.
Given that the majority of the farmers are
smallholders who produce on a subsistence level, since the greater percentage
of the population is domiciled in the rural area, the need to study the
livelihood of rural farmers becomes paramount.
1.3
RESEARCH
QUESTIONS
The
following questions represent the specific objectives of this study:
i.
what are the various
patterns of livelihood and level of diversification?
ii.
what are the factors
affecting the decision to diversify livelihood and intensity of diversification?
iii.
what are the factors
influencing livelihood diversification pattern?
iv.
what is the welfare
status of the respondents and the determinant factors?
v.
what is the relationship
between welfare and livelihood diversification?
1.4
RESEARCH
OBJECTIVES
The
broad objective of the study was to examine the pattern, determinants and
welfare effect of agricultural and livelihood diversification among smallholder
farmers in Abia state, Nigeria. The specific objectives were to:
i.
identify the various patterns
of livelihood and level of diversification;
ii.
estimate the factors
affecting the decision to diversify livelihood and intensity of
diversification;
iii.
analyze the factors
influencing livelihood diversification pattern;
iv.
determine the welfare
status of the respondents and the determinant factors
v.
examine the relationship
between welfare and livelihood diversification.
1.5
HYPOTHESES
The
following hypotheses were tested in line with the objectives of the study:
H1:
Livelihood diversification
intensity is positively influenced by gender, level of education, household
size, distance to market, remittances, cooperative membership, credit use and
availability of electricity and negatively influenced by respondents’ age, farm
size, labour and farm income.
H2:
Livelihood
diversification pattern is directly related to
education, number of household members in school, distance to market, use of
farm technologies, total household income, household size and inversely related
to farm size and dependency ratio
H3:
Welfare status of the households is
positively influenced by level of education, farming
experience, credit use, diversification, value of physical assets and income
and negatively influenced by age of respondents, sex of household head,
household size and dependency ratio.
H4: There is a positive relationship between welfare status and
livelihood diversification
1.6
JUSTIFICATION
The
rural livelihood diversification from farming is one of the rural households’ strategies
for survival in developing countries (Ellis, 1999) like Nigeria. Most rural
populations in Africa have been suffering from poverty and environmental
degradation. Maintenance of a diversified resource base is a prerequisite for
adaptation to climate variability as diversified livelihood systems allow
indigenous farming communities to draw on various sources of food and income.
The rural people diversify into non-farm activities to explore opportunities
through which they increase and stabilize their incomes or to supplement
farming in order to improve the welfare or living standard of their households
(Akaakohol & Aye, 2014). In Abia State as well, rural households diversify
or engage in other income generating activities as a way to avoid risk from
agricultural disasters or failure, some households diversify into other
agricultural sectors/farming strategies while others diversify into non-farm
activities like tailoring, crafts and skills like knitting, plaiting of
hair/barbing, others get civil service jobs, etc.( Obinna,2014) In doing so,
they can diffuse the risks of vulnerability to climate change (Macchi et al.,
2008). Consequently, this study serves as a guide to provide rural households
in particular alternative ways to escape poverty and improve their welfare.
The
growth of non-farm income sources if accessible in remote rural areas might
reduce the need for landless dwellers to carry out extractive practices in
local environments for their survival. This has been called the “substitution
of employment for the environment” and has received quite a lot of attention in
the policy literature (Lipton, Sucher, Kaiser, & Dreyer, 1991). In
addition, livelihood diversification is an effective way of solving the
problems caused by poverty and environmental degradation. Therefore, livelihood
diversification can be used as an efficient indicator to evaluate the success
and sustainability of the rural community, which is, for instance, true in
China (Liu & Liu, 2016). A replication of such similar study to see its
impact on welfare sustainability will be beneficial to government in making
policies relating to development and welfare advancement of the rural populace.
With
the analyses aimed at addressing the various livelihoods and their contributory
factors, it is obvious this would represent the entry point that highlight the
different livelihood diversification trends. This will also provide strategies
practiced by rural dwellers which would serve as reference points for
researchers and scholars in the promulgation of appropriate policies for
poverty reduction in the long run.
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