Determinants of Agricultural and Non-Agricultural Livelihood Strategies in Rural Communities: Evidence from Eastern Nigeria

Abstract

Using primary survey data from two agro-ecologically distinct rural communities in eastern Nigeria, this paper examines the determinants of livelihood diversification away from agriculture as well as the manner in which different agro-ecological determinants affect such diversification. The probability of participating in non-agricultural activities was estimated in an endogeneity-controlled, two-step probit model employing data on household assets, demographics, human capital, as well as a proxy for differences in agro-ecology. Results show that not many households remain undiversified as they combine activities within farming, commerce, skilled non-farm and low skilled non-farm sectors. Both human capital and the agro-climactic variables were found to determine the nature of diversification. Against the backdrop of the recent de-agrarianisation thesis, the study found that despite high incidence of diversification, agriculture is not in any significant decline. Policies thus should be aimed at both agricultural and non-agricultural activities. Policies based on the assumption that agriculture is no longer relevant will hurt farming and retard development.

Keywords: Diversification, Livelihood strategies, subsistence agriculture, agro-ecology, south-eastern Nigeria

JEL Classification: O13, Q12