Synergy or Trade-Off between Agricultural and Non-Agricultural Livelihood Portfolios in Rural Areas of North-Western Ethiopia

Abstract

Recent studies show that non-agricultural employment and income sources are increasing in rural areas. Therefore, the objective of this study was to evaluate the synergy or tradeoff between a household's agricultural and non-agricultural livelihood portfolios. A sequential embedded mixed research design was employed. Primary data was collected from 385 smallholder farm households selected in a three-stage sampling procedure to select dis- tricts, Kebeles, and households. Both descriptive and inferential statistics were employed to analyze the data. It was found that, although agricultural activities are the main source of livelihood, non-agricultural income accounts for nearly 47% of the total income in the study area. Analysis of the effect of non-agricultural income revealed a mixed effect on on-farm investment. While the effect of household engagement in non-farm employment and plan- tations was found to be positive, the effect of unearned income and agricultural wage em- ployment was negative. Thus, identifying the right type of non-agricultural employment to be promoted is crucial to creating a mutually complementary vicious cycle between non-ag- ricultural and agricultural activities.