Effects of regular off-farm activities on household agricultural income: Evidence from Kenya’s Kerio Valley

Abstract

This paper contributes to clarifying the scientific debate on whether off-farm activities hurt or help agricultural income. The main purpose of this research is to estimate the impacts of rural household’s participation in regular off-farm activities on agricultural income. The literature indicates that off-farm activities affect rural household’s income but studies on their effect on agricultural income have remained largely inconclusive. Determining how off farm activities affect agricultural income is highly relevant for the decisions of poor rural households and policy makers to allocate resources efficiently and increase investment to combat poverty. Investigation of the effects of regular off-farm activities is carried out in the following logical sequence: we performed surveys to gather information from rural households located in the Kerio Valley in Kenya; using the matching technique, we compared agricultural income per capita between households that took part in regular off-farm activities and those that did not. Methodological tools of the research were the results of a three-year project focusing on improving rural income. The object of research is the households in Kerio Valley in Kenya because they practiced the typical mix of farm and off-farm activities in rural Kenya. The empirical results of the analysis showed at first that household’s participation in regular off-farm activities had no significant effect on household agricultural income per capita. However, by splitting agricultural income into crop and livestock incomes, we found that participation in regular off-farm activities did not affect crop income per capita but it increased livestock income per capita. The results can be useful to policy makers because it shows the existence of a symbiotic association between regular off-farm activities and livestock production. The results also confirm that creating opportunities for rural households to engage in off-farm activities generates supplemental revenues, and more importantly, reliable assets.