Primarily, several studies in Ethiopia have disclosed the roles of non-farm livelihood activities on poverty reduction. Agreeing with Amogne et al (2017) study, diversifying the sources of livelihood for subsistence farms beyond agriculture plays a significant role in reducing poverty as well as withstanding the adverse impacts of climate change. It has also indicated by Asfaw Albora (2018) that the diversity of rural livelihoods in low income developing countries is receiving increased attention in discussion about rural poverty reduction, since 1990.
Moreover, the non-farm activity lessens the rural households’ vulnerability of Ethiopia rural households. In the same way, Prowse Martin (2016) found that diversity has long been viewed as a risk minimization strategy in the face of increasing climatic and economic risk in developing country. It plays significant positive roles such as reducing the adverse effects of mismatch between uneven farm income streams and continuous consumption requirements, spreading out risks among variety of activities and creating employment opportunity (Kebede et al, 2014). A similar study by Temesgen, Lingler and Hassan (2010), in Blue Nile Basin found that smallholder farmers who have non-farm source of income are less likely to depend on food aid and liquidating their assets in time of climate induced shocks.
Furthermore, non-farm activities have a greater contribution in the Ethiopia households’ incomes improvement and food security. As distinguished by Mathewos et al (2016), those practicing livelihood diversification have witnessed an implication in households’ consumption, increased income, improved food security status, and the most commonly reported reason for diversification was meeting households’ necessity. Sahilu Dirriba and Bekele Tassew (2015) also showed that the households engage in diversify livelihood strategy away from purely crop and livestock production towards farm, non-farm and off-farm activities that are undertaken to broaden and generate additional income for survival and cope with the harsh and difficult environment.
On the other hand, non-farm activities play a greater role into the share of rural households’ incomes. It was evident from the study by Dereje Tesema (2018) that farmers integrate farm and non-farm livelihood activities in order to benefit from cash and survival needs. Barrett and Reardon (2000) reported that the share of non/off-farm income in rural Ethiopia averaged about 36% in 1989/90. Still, the share of the non-farm activities in Ethiopia declining year after year.
