Epsilon Archive for Student Projects

Abstract

The purpose of this study is to analyze the determinants of rural household income diversification and its impact on food security in Tanzania. With the current changes in the climatic conditions, there is a need for households to reduce their dependence on agriculture and diversify into other income generating activities. Apart from climatic shocks, I study what other factors influence the level of income diversification in Tanzania rural households Data from the National Panel survey covering 2251 households for 2010/11 and 2012/13 were used, forming a long-balanced panel of 4502 households. A Tobit regression model is applied to determine factors influencing household income diversification. Results of descriptive statistics show that value of household productive asset, household size, climatic shock, household’s education level, and age are important determinants of household income diversification. Rich households obtain the largest share of their income from wages (35%) while poor households obtain the largest share from crop sales (61.7%) To examine the impact of Income diversification on household food security, binary logistic models are used. The results show that income diversification increases household calorie intake. Meaning that a household with more diversified income consumes more calories per day per adult. However, increasing income sources does not affect household food spending because agriculture supply a large share of their food requirements. Since households rely on rain-fed agriculture as their main source of income, there is a need for diversification in order to increase their income and improve their food security status. Therefore, policies should be set to encourage households to diversify their income into nonfarm activities as it is necessary for sustainable income and improved health.