The Role of Income Diversification on Risk Management and Rural Household Food Security in Ethiopia

Abstract

This review synthesized the role of income diversification on risk management and rural household food security in Ethiopia. According to this review, from different researchers, farmers are engaged in a variety of off farm & non-farm activities to diversify their income with view to feed and sustain themselves during crop failures even if research and extension activities have not been done adequately on the issues related to off/non-farm activities .Income diversification of households based on share of income from each sources show that, the share of crop income takes the highest share  of the total household income followed by livestock income. So those, majority of farm households are mainly engaged in farming with few off-farm and/or non-farm activities. For instance, only 27 percent of Ethiopian farm households were engaged in nonfarm entrepreneurship and derive 50 percent or more of their income from nonfarm enterprises. When farming becomes less profitable and more risky as a result of population growth and crop and market failures, households are pushed into non/off-farm activities, leading to “distress-push” diversification. The relative reduction of the importance of agriculture and the expansion in rural off/nonfarm activities and income diversification are likely features of the process of economic development because it is a means for risk management as a form of self-insurance. As the food security researchers, about 10% of Ethiopia’s citizens are chronically food insecure and this figure rises to more than 15% during frequent drought years. Depending on reviewed document, to address food security issue in Ethiopia, the household head and members of the household should engage in different income generating activities for means of living and coping mechanism.