Agroforestry and farm income diversification: synergy or trade-off? The case of Ethiopia

This study analysed the relationship between agroforestry and non-farm income diversification activities. A survey was conducted on 136 farm households by employing both structured and semi-structured questionnaires in four farm villages of Northwest Ethiopia. The bivariate probit model was employed to estimate the simultaneous adoption of agroforestry and non-farm diversification activities. In addition, a focus group discussion was administered by choosing participants composed of village leaders, male and female farm household heads, young farmers, and key informants. The result indicated that agroforestry adoption and non-farm income generating activity participation incidences jointly determined significantly and positively by the comparative economic return of adopting the joint activities, moderately secured land property right perceptions, non-farm income and agroforestry adoption experience. On the other hand, as the household is distant from the proximate market and the main road, and a number of oxen the farm household owns have the significantly negative impact on the likelihood of simultaneous adoption likelihood by the farm household on both activities in Northwest Ethiopia. In the focus group discussion, the agricultural extension and natural resource conservation experts and the participants said that better economic return of agroforestry production compared to food crop farming, less labour intensity of agroforestry than food crop production, and better land management system for agroforestry than food crop production were found to determine positively the agroforestry and non-farm joint participation decisions. The findings indicated that substantial parts of the study area have been converted from cereal crop production system to agroforestry land use which enables the community to diversify their income. The farm household participated in agroforestry production not only just from its expected comparative economic return but also from the synergy effects it has with the non-farm income generating activities. Therefore, policy interventions that simultaneously motivate agroforestry and non-farm income diversification activities could enhance the sustainability of land management and maximise the farm households’ economic return from these joint practices. Accessing farm technologies like fertiliser and improved seed, and institutions such as rural markets and infrastructures for farm households will be helpful to economically empower them in a sustainable way.