This non-farm sector is highly dependent on their

This chapter mainly deals with the
components of sustainable livelihood framework. It starts by clarifying the
major livelihood capitals (natural, social, human, physical and financial)
accessed by rural households against their livelihood diversification status.
Vulnerability contexts, and institutional and policy issues against rural
households’ livelihood diversification also discussed in brief and concise manner.
The types and combination of livelihood diversification strategies pursued by
rural households in order to attain food security in the intention that why and
in what context rural households diversify their livelihood also assessed in detail.
On top of this, the combination of livelihood diversification strategies, among
diversified livelihood households, are discussed albeit briefly.


Moreover, the researcher tried to bring to
light the main reason (s) why rural households diversified their livelihoods
and the contribution of livelihood diversification to the total income of the
household. Finally, the main determinants of rural households’ livelihood
diversification activities are also discussed using multinomial logistic regression

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now


5.2  Rural Households Livelihood Capitals /Assets/

The sustainable livelihood approach is
grounded in the idea that people’s livelihood is largely depending on the
opportunity to access livelihood capitals or assets which form the basis of
their livelihood strategies (Zoomers, 2008). Siti
(2013) argued that the ability of rural households to secure employment in the non-farm
sector is highly dependent on their asset endowments.  Households are often involved in a portfolio
of activities which is a result of various combinations of assets and
activities which  will  in 
turn  determine  the 
livelihood  strategies  that 
they  pursue.  Livelihood capitals are the core of the households’
strategy to survive, meet their future needs or reduce their exposure to risks.
A household’s asset portfolios determine the level of resilience and
responsiveness to risks, events and shocks (Mewal,
2016). Livelihood assets are allied each
other and transformable. In this regard, Walker et al.
(2002) stated that the status of one asset may negatively influence the
condition of other assets. For instance, the status of a natural asset
(depleted grazing land and highly eroded farm land) may influence the financial
asset of a household. In the same vein, financial assets are highly associated
with education and health status of the household where as social assets of the
household related with the participation of 
social institutions (like Iddir,
equb, debo, wonfel and etc.) and access to credit services.


The logic behind importance of  the presence or absence of livelihood assets
at the household level is that the more assets any household access to, the
less vulnerable to the negative effects of trends, shocks or seasonality they faced
and the more secure their livelihood will be. Normally, increasing one type of
capital will lead to an increase in other amounts of capital, for example, as
people become educated (increase in human capital) they may get a better job
which earns more money (increase in financial capital) which means that they
are able to upgrade their home and facilities (increase in physical capital).
Sometimes; however, one form of capital decreases as other increases. This
could be true, for example, where a person or household sells their land to
migrate to a city.


Diversification of livelihood is
entirely depending on the amount of assets a household owned. It is believed
that households who have adequate assets have an excessive opportunity to
diversified their livelihood than those who do not have. Of course, livelihood
researchers agreed that mainly there are five types of livelihood assets/
capitals in which rural households’ livelihood has been established (i.e.
natural, social, human, financial and physical capitals). Thus, the target households are enquired about the
livelihood assets they possessed and analyzed in relation to their choices of
livelihood diversification strategies.


Natural Capitals and
Households Livelihood Diversification      

Natural capital is the term used for natural
resource stock from which resource flows and services (such as land, water,
forest, air quality, erosion protection and rate of changes in these resources
and so on) useful for livelihoods are driven. It is of special importance for
those who drive all or part of their livelihood from natural resource-based
activities (Mewal,
2016). Of
the natural capitals, land is very important as it is the main factor of
production that can determine the livelihood of rural households and thus, in
Ethiopia, almost all rural household’s livelihood income is depending on
agricultural production (Yenesew, 2014). In addition, land,
for rural people, is a critical
production factor which determines the type of crops
that are grown
and the size of the
crop harvests. Under the subsistence
agriculture system, land holding size plays a significant role in
crop production
security (Mewal, 2016).


In line with the above justifications, in the study area,
the findings of the study displayed that almost all household’s livelihood
income depends on agricultural production and hence land is the main factor of
production that can determine the livelihood of rural farm households. The
overall average cultivated private land size of the sample respondents in the
study kebeles was 0.714 hectares
during the survey period and this average is slightly less than Borena district average land size( 0.8 ha) (BDAO, 2017);
Amhara region land size (0.97 ha) and national land size (0.95) (CSA,1998).


Table 5.1 Respondents Average Cultivated
Land against Their Livelihood Strategies




Average cultivated land size




















Sources: Own Survey, 2016               *** Significant at ?=0.01

Y=0, Y=1, Y=2, and Y=3 represents on-farm only, on-farm plus off-farm, on-farm plus non-farm,
and on-farm plus off-farm plus non-farm respectively.


The one way analysis of variance result has
shown that there was a significant mean cultivated  land size differences among the different
livelihood strategies pursued by rural households’  at less than 1% level of significance. As it
can be seen above in Table 5.1, farm households who have relatively large mean
cultivated land size (0.66 ha.) were found to be more depend on agricultural
activity alone. The value is significant at less than 1% significant level. On
the other hand, those households who have relatively small mean cultivated land
size (0.4 and 0.35ha.) were found to be engaged more in the combination of
agriculture & non-farm activities, and a combination of agriculture, off
farm and non-farm livelihood diversification strategies, respectively. This
indicates that, in general, rural farm households are engaged in a combination
of agriculture and off-and/or non-farm livelihood diversification strategies
because the return they got from these small land sizes could not support the
overall household food and other financial requirements, and hence forced them
to search for other alternative sources of income like non-agricultural
activities. Therefore, the above result implies that improving the
participation of rural farm households into profitable non/off-farm activities besides
agricultural activities is an effective way to reduce their food as well as
financial problems of rural farm households.  


The key informants stated that the main
means of accessing lands in the study area are acquisition from government land
distribution, family gift, inheritance, land renting, crop land sharing and a
combination of these. Among these means of accessing lands, government land
distribution is the main means of accessing land for the majority of rural
households. They also stated that landless and smallholder households shared in
land from farmers who have lands but no traction power, capital and labor to
cultivate the lands. The share cropping agreements are held between the
negotiating parties and local mediators depending on the crop type to be grown
and land suitability for crops. In the study sites there is a locally accepted
standard to rent in and out the land. The key informants reported that the
current mean contract price of 1 timmad
(one-fourth of a hectare of land) of land for one year varies between 1000-2000 ET birr depending upon
fertility and suitability to a particular crop types.  


Forest and water resources are also other
natural assets of the rural farm households in rural areas of most developing
countries like Ethiopia. However, the key informants, in all study kebeles, stated that “in our surroundings, unfortunately, there are no prominent forest cover and
water resources in which we benefited from them”. In addition, during field
survey, the researcher personally observed some small to medium size revers
(like Legemara, Legedaba ,Boreda and
Yeshum) flows to south wards to join Abay
river in south-west direction but no one can use them via irrigation or else
for crop production. This so, may be because of the topographic features of
such rivers are not suitable for irrigation.