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Rural Livelihood Diversificationin Rice-based Areas of BangladeshPresented ByMd Tanvir AhmedMS Research ScholarSocial Sciences DivisionInternational Rice Research Institute

Presentation OutlineBackground of the StudyStudy ObjectivesConceptual FrameworkMethodologyResults and DiscussionTake home messagesBackground of the StudyIt has been seen that, in rural Bangladesh, household income is coming from various sources rather only from farming

But there is not enough empirical evidence that measured the diversification of income sources in Bangladesh

Village Dynamics in South Asia (VDSA) project is collecting income and employment data at rural household level.

Rural livelihood diversification can be defined as the process by which rural households construct an increasingly diverse portfolio of activities and assets in order to survive and to improve their standard of living (Ellis, 2000).

Study ObjectivesThe general objective is to assess the livelihood diversification in rural rice-based areas of Bangladesh. Specifically;

To identify the dominant patterns of rural livelihoods; and

To determine the factors affecting rural livelihood diversification

Conceptual Framework

Research MethodologyDivisions: 6Districts: 11Study Villages: 12

RegionVillagesNorthernDharikamariRasun ShimulbariBoikunthapurMiddleKonaparaNishaiganjPatordiaSouth-EasternBhabanipurBegumpurPaschim BahadurpurDakkhin Kabir KathiWesternKhudiakhaliKhudiakhaliStudy Location

Sampling Design, Sample Size and Data CollectionMulti-stage random sampling technique

45 rural households were randomly chosen from each selected village

Total 500 out of 540 households were included in the analysis as some households data were incomplete

Primary data were collected for the year of 2012-13 through face-to-face interview using pre-tested semi-structured questionnaire.

Analytical ToolsDescriptive Analysis : Summary statistics, frequency tables, percentage

Test of Significance : ANOVA test, t-test

Net Income from Crops:NI = TR TCwhere, NI = Net income (profit) from the respective crop per farm TR = Total return per farm (included return from both main product and by-products) TC = Total cost pre farm

Measuring of livelihood diversification Simpson Diversification Index (SDI) was used to measure the livelihood diversification. The formula is

where, n = Total number of income sources and Pi = Income proportion of the i-th income source.

SDI values ranges from zero to 1. Households with highly diversified incomes will have high SDI values, and lesser diversified incomes will have lower SDI values.

Based on the SDI values, the level of livelihood diversification was defined as following:LEVEL OF DIVERSIFICATION SDI VALUESNo diversification < 0.01 Low0.01 - 0.25Medium0.26 - 0.50High0.51 - 0.75Very high> = 0.76Based on the operating land holdings, households were classified into four groups:LAND CLASSAMOUNT OF LANDFunctionally Landless > = 0.2 haSmall0.21-0.80 haMedium0.81-1.50 haLarge> =1.51 haDefinition of the explanatory variables used in the regression model

Tobit RegressionSDI* = 0 + 1 Gender + 2 Household size + 3 Farm size + 4 Member_org + 5 Migrants + 6 Dev_prog_part + 7 HH_assets + 8 Primary_Occupation + 9 Dependency_ratio + 10 Age_HH_Head + 11 Edu-HH_Head + 12 Amount_credit + 13 Amount_savings + 14 Distance_district_town + 15 Distance_market + 16 Region_D1 + 17 Region_D2 + 18 Region_D3 + 19 Land_D1 + 20 Land_D2 + 21 Land_D3+ i if SDI* > 0= 0 Otherwise where, SDI* = Livelihood diversification index0 = Intercepti = Error term, which is normally distributed with mean zero and constant variance

RESULTS AND DISCUSSIONSocio-Economic and Demographic Characteristics of Respondent Households

Household Income Sources and Their ShareIncome from all the sources were categorised into nine groups. Rice cropNon-rice cropsNon-crop AgricultureAgricultural laborerNon-agricultural laborerBusiness and caste occupationSalaried job and servicesRemittance Transfer PaymentFarm IncomeNon-Farm IncomeOff-Farm IncomeHousehold Yearly Total Income from All Sources and Their ShareAverage yearly income and share by sources of incomeSource of incomeAmount of incomeShare of income (%)BDT/YearUSD/YearRice Crop30,41538016Non-rice Crops16,1522028Non-crop agriculture17,6682219Agricultural laborer4,864613Non-agricultural laborer13,7141717Business and caste occupation38,99248720Salaried job and services12,4271556Remittances55,88869929Transfer Payment1,282161Total191,4022,393100F-value of ANOVA14.27 (P = 0.000)Dominant Patterns of Livelihoods by RegionShare (%) of income sources in four regionsSources of incomeNorthern RegionMiddle regionSouth-Eastern regionWestern regionShare (%)Share (%)Share (%)Share (%)Rice Crop30.128.15.07.0Non-rice Crops7.41.19.022.2Non-crop agriculture6.112.510.14.5Agricultural laborer1.02.02.65.5Non-agricultural laborer7.28.94.113.4Business and caste occupation29.514.019.124.0Salaried job and services7.87.03.612.7Remittances9.725.545.910.4Transfer Payment1.10.70.50.5Total100.0100.0100.0100.0F-value98.3 (P = 0.00)24.1(P= 0.00)8.64 (P = 0.00)4.69 (P=0.00) Share (%) of different sources in total household income across four regions

69.3%67.6%75.1%72.3%Farm, Off-farm and Non-farm IncomeFarm and non-farm income and their shareSource of incomeAmount of incomeShare of income (%)BDT/YearUSD/YearFarm 64,23580333.6Off-farm 4,864612.5Non-farm122,3031,52963.9Total191,4022,393100.0Household Livelihood DiversificationDistribution of households across the level of diversification

Level of DiversificationNumber of HouseholdPercentage (%)No 306.0Low 9819.6Medium 15931.8High 19238.4Very high 214.2Average SDI values by region

Distribution (%) of households into different level of diversification by regions

Most of the households from all four regions have diversified their livelihoods in to medium and high level.Regionlevel of diversification TotalNo (%)Low (%)Medium(%)High(%)Very high (%)Northern 2.412.843.238.43.2100.0Middle 10.924.228.932.83.1100.0South-Eastern 6.616.325.943.47.8100.0Western 2.529.630.937.00.0100.0All 619.631.838.44.2100.0RegionNo. of HouseholdAverage value of SDINorthern1250.45Middle1280.37South-Eastern1660.46Western810.39All5000.42Distribution of household (%) at different level of livelihood diversification by region

Average SDI values by household land class

Distribution (%) of households into different level of diversification by household land class

highest percentage of small (47%) and medium (46%) land holding households had high level of livelihood diversification

Land Classlevel of diversification TotalNo(%)Low (%)Medium(%)High (%)Very high (%)Functionally Landless7.131.234.824.12.8100.0Small5.616.725.146.56.0100.0Medium6.111.231.645.95.1100.0Large4.315.254.326.10.0100.0All6.019.631.838.24.4100.0Land ClassAverage value of SDIFunctionally landless0.34Small0.46Medium0.47Large0.40Distribution of household (%) at different level of livelihood diversification by household land class

Correlation analysis among the explanatory variablesFactors Affecting Livelihood Diversification

Variance Inflation Factor (VIF) analysis

Test of HeteroscedasticityAuxiliary regression

Breusch-Pegan / Cook- Weisberg test (hettest test)

Tobit (Multiplicative Heteroscedasticity) regression results

Marginal effect

Take Home MessagesRural households in Bangladesh are diversifying their livelihoods mostly at medium level

South-Eastern region has highest livelihood diversification while Middle region has the lowest.

Small and Medium land holding households have higher level of livelihood diversification than Landless and large land holding households.

Non-farm income contributes more in total household income, hence it should be encouraged to expand non-farm employment opportunities.

Functionally landless households should be given more attention to increase and diversify their incomes.

Maraming salamat po!

Y* = 0 + i Xi + i i = (Xi) Ui

Tobit Multiplicative Heteroscedasticity Model