www.ijird.com February, 2019 Vol 8 Issue 2 ISSN 2278 – 0211 (Online) The Role of Non-Farm Income during Variable Rainfall: The Case of Rural Farm Households in Ijere Woreda, Oromia Region, Ethiopia Biruk Sisay Desulie Lecturer, Department of Rural Development and Agricultural Extension, Ambo University, Ethiopia Abstract: A growing body of empirical evidence shows that rainfall is highly variable throughout Ethiopia. This situation coupled with poor irrigation development, small agricultural land holding, and population pressure forced rural households to diversify their income sources into off-farm and non-farm activities. However, the contribution of these activities to total income of households and their role on reducing vulnerability of farmers to rainfall variability has not been studied. This study, using cross sectional data from Ijere woreda, Oromia regions and employing both descriptive and econometric analysis, attempted to explain the various off-farm & nonfarm activities, measured their contribution to total household income, and analyzed the role of such incomes on households’ vulnerability to rainfall variability. As such, the study found that rural households who participated in off-farm and non-farm activities were able to earn 9.7% and 7% of their total income, respectively. Results also indicated that off-farm and nonfarm activities helped participant households to smooth their income over years enabling them to be less exposed to income fluctuation and rainfall variability than nonparticipants. Thus, income diversification is found a significant livelihood strategy to hedge against weather risks – rainfall variability. Yet, Off-farm activities are found to be more of labor intensive and used for day-to-day consumption. In addition, although there is a potential for developing the rural nonfarm economy, the current share of nonfarm income was very limited which was due to the limited/low profit margins and multiplier effects of the nonfarm activities. Keywords: Nonfarm income, off-farm income, rainfall, Ethiopia 1. Introduction Africa is the poorest continent in the world. It is often characterized as the least developed, technologically backward, food-insecure and the most marginalized continent. Besides, malnutrition, disease, environmental degradation, natural resource depletion, unemployment and weak institutional capacities are among the factors which pose serious development challenges for Africa and Sub-Saharan Africa, in particular (ECA, 2012). In Sub-Saharan region, agriculture in the major means of livelihood for the rural farmers and the erratic nature of rain is probably the most distinguishing characteristic of Sub-Saharan African agriculture. Masvaya et al. (2008:12)have put it “as smallholder farmers in Sub-Saharan Africa practice rain fed agriculture, they are therefore at high risk of crop failure given the erratic nature of the rains as well as the rainfall variability.”Mertz et al. (2008) also stated that farmers in the Sub-Saharan region have always been facing climatic variability at intra- and inter-annual and decadal time scales. In all rural communities, climate is one of the factors influencing households coping and adaptation strategies to environmental changes (Adger, 1999). Hence, coping and adaptation strategies have traditionally included crop diversification, mobility, livelihood diversification, and migration Mertz et al. (2008). Ethiopia, like other Sub-Saharan African countries, shares most of those challenges and characteristics. The country’s economy is mainly dependent on agriculture which accounts for 42percent of the GDP (MoFED, 2011). The agriculture, given its huge share in GDP, is mainly characterized by extreme dependence on rainfall which is proved to be highly variable throughout the country (Cheunget al., 2008). Rainfall is often erratic and unreliable. And rainfall variability and associated droughts have historically been major causes of food shortages and famines in rural areas (Seleshi and Zanke, 2004).Million (2010) also indicated the fact that drought is the number one risk not only for rural Ethiopians, but also for the country as a whole. By recognizing the nature of agriculture sector, the Ethiopian government has devised plans targeted to agricultural development. Currently, the main focuses of agriculture and rural development plan are extensive use of labor, proper utilization of agricultural land, strengthening agricultural marketing, irrigation development and income diversification (MoFED, 2010). Amongst, income diversification has shown a growing importance for the contemporary rural households. According to Ellis (1999), empirical evidence from a variety of different locations suggests that rural households do indeed engage in multiple activities and rely on diversified income portfolios. For instance, in Sub-Saharan Africa, a range of 30–50 percent reliance on non-farm income sources is common; but it may attain 80–90 percent in southern Africa. In INTERNATIONAL JOURNAL OF INNOVATIVE RESEARCH & DEVELOPMENT DOI No. : 10.24940/ijird/2019/v8/i2/FEB19005 Page 8 www.ijird.com February, 2019 Vol 8 Issue 2 south Asia, on average, roughly 60 percent of rural household income is from non-farm sources. In Ethiopia, approximately 25percent of all households in rural Ethiopia own one or more nonfarm enterprises. However, about 2percent of households exclusively rely on nonfarm activities (Rijkers et al., 2002).In this study, following Leones’s (1998) definition, nonfarm income is any source of income not generated through agricultural activities. And off-farm income is any agricultural income that is earned away from the family’s farm. Various reasons for rural livelihood diversification have been documented in development literatures. According to Ellis (2000),the reasons for households to adopt multiple livelihood strategies are risk (in relation to climate), coping strategies(involuntary response to unanticipated failure), seasonality (returns to labor time), labor markets (in relation to education, skills, location and gender), credit markets (availability of funds), and asset strategies (future income generating capabilities). By category, Barrett et al. (2001) indicated two motives: push factors and pull factors. Push factors includes land constraints, population pressure, landholdings fragmentation, reaction to crisis, etc. And pull factors comprises realization of strategic complementarities between activities, such as crop-livestock integration, specialization according to comparative advantage accorded by skills or endowments. Nevertheless, even though considerable studies have been done on off-farm and nonfarm income diversification activities in Ethiopia (e.g. Mintewab et al., 2010; Woinishet, 2010; Adugna et al., 2012; Lemi, 2006; Block and Webb, 2001), they did not show the significance of off-farm and nonfarm income during weather shocks such as rainfall variability. Thus, this study intended to investigate the contribution of nonfarm activities to rural household income and assess their role in reducing vulnerability to variable rainfall, taking the c smallholders in Ejere woreda, West Shewa zone, Oromia region. As such, the specific objectives of the study are: (1) to identify the various nonfarm income diversification activities in the study areas; (2) to measure the contribution/share of off-farm and nonfarm incomes to total household income, and (3) to analyze whether households with nonfarm income sources are less vulnerable tovariable rainfall. 2. Research Methods 2.1. Description of the Study Area West Shewa zone is one of the zones in the Oromia regional state located at the central part of thestate. West Shewa is bordered on the south by the Southwest Shewa Zone and the Southern Nations, Nationalities and Peoples Region, on the southwest by Jimma, on the west by East Welega, on the northwest by Horo Gudru Welega, on the north by the Amhara Region, on the northeast by North Shewa, and on the east by Oromia Special Zone Surrounding Finfinne(West Shewa Zone, Agriculture Office, 2017). Based on the 2007 Census conducted by the Central Statistical Agency of Ethiopia (CSA), this Zone has a total population of 2,058,676, of whom 1,028,501 are men and 1,030,175 women. With an area of 14,788.78 square kilometers, West Shewa zone has a population density of 139.21. A total of 428,689 households were counted in this Zone, which results in an average of 4.80 persons to a household, and 415,013 housing units. Altitude of West shoa zone ranges from 1000 to 3500 meters above sea level, where the largest area lies between 2000 and 2500 meters above sea level. Topography of the zone; which is mainly leveled field with main drainage basins like Abay, Ghibe and Awash; makes it an ideal place for agriculture (West Shewa Zone, Agriculture office, 2017). Agriculture provides the largest share to the livelihood of the population in West Shewa. Agriculture is dependent on rainfall as there is lack of adequate knowledge, skill and infrastructure in irrigated agriculture. Crop-livestock mixed farming system is the common practice. The zone is an ideal place for market oriented crop and livestock commodity development as it is endowed with resources necessary for production and have good access to urbanmarkets e.g. Addis Ababa, Holeta and Ambo town. According to World Bank (2004) memorandum, the average rural household has 1.4 hectare of land (compared to the national average of 1.01 hectare of land and an average of 1.14 for the Oromia Region)and the