Determinants of income diversification of farm households in the Western Region of Ghana

Abstract

This study assesses the determinants of income diversification of farm households in the Western Region of Ghana. A censored Tobit regression model was used to find the determinants of the degree of income diversification measured by the Simpsons Index of Diversity (SID). The results indicate that a total of 65% of households engage in non-farm income sources. The estimated Share of Non-farm Income (SNFI) - 29.05% in total household income and SID-0.338 were found to be low. Age, number of years of education, female headed households, household income per capita, number of extension visits, productive assets owned and nature of road were found to be significant in determining income diversification of farm households in the Western Region. Farm households require government and private sector support to increase the gains made in participating in various diversification strategies through policy, provision of public goods, capacity building in order to raise their living standards.