Analysis of Income Diversification among Rural Households depending on Oil Palm-related Enterprises in SouthSouth, Nigeria

Abstract

The need to mitigate risk and enhance the livelihood of the rural household through income diversification is of paramount importance. Therefore, this study analyzed income diversification among rural households depending on oil palm-related enterprises. This research focuses on the following specific objectives: estimating the income shares from each of the income generating strategies, describing the intensity of income diversification and concentration of income across different income generating strategies, and examining the factors influencing income diversification among the rural households in the study area.  The study adopted a multi-stage sampling procedure in combination with purposive, proportionate and simple random sampling technique in selecting the 42 respondents. The data for the study were analyzed using the Mean of Income shares technique, descriptive statistics, Herfindahl-Hirschman Index (HHI), and the ordered probit model. According to the result, the share of total income that came from on-farm operations was 49.99% in Delta State and 59.73% in Edo State. The overall income shares from non-farm and off-farm earning activities were 40.85% and 40.22% for Delta and Edo States, respectively. The study also reveals diverse levels of engagement in several livelihood strategies, with the respondents with four different income-generating strategies having the highest intensity of income diversification (0.4). Edo State rural households' income was slightly more concentrated across various income sources with HHI value of 0.68, while Delta State was less concentrated with HHI value of 0.67. Based on ordered probit model result, education, primary occupation, access to electricity affected it at p < 0.01% probability level, environmental concern affected it at p < 0.05% probability level significantly affected income diversification index. Therefore, it is recommended that, individuals, government and non governmental organizations should implement programs and policies that can enhance infrastructure and human capital development in order to raise the productivity and living standards of the rural households in the study area,