Explore Determinants of Smallholder Farmers’ Livelihood Diversification Strategies among Rural Farm Households in Buno Bedele and Ilu Ababor Zones of SouthwesternOromia Regional States, Ethiopia

Livelihood diversification is a crucial adaptive strategy for smallholder farmers in Ethiopia, where approximately 80% depend on rain-fed agriculture. However, livelihood diversification is determined by complex and yet empirically untested factors in selected districts of Buno bedele and IluAbabor Zones. Thus, the aim of this study is to assess the determinants of livelihood diversification strategies in the study area a sequential mixed-methods approach was employed in regions selected for their agricultural potential and evolving irrigation practices. Data was gathered from 353 households using purposive and systematic random sampling, along with structured surveys, focus group discussions (FGDs), and key informant interviews (KIIs). Quantitative data were analyzed using descriptive statistics and a multinomial logit model, categorizing the dependent variable into four livelihood strategies: (1) only Agricultural activities; (2) Agriculture activities & Off-farm activities; (3) Agriculture activities with Non-farm activities; and (4) an integrated approach (Agriculture activities + Non-farm + Off-farm). Qualitative data were thematically analyzed to contextualize quantitative findings. The analysis revealed that 70% of households engaged in diversification, but only 14.4% pursued fully integrated strategies, highlighting significant gender disparities (87% male respondents). Key econometric results indicated that access to credit (Coeff. = 1.1767, p < 0.001) and market proximity (Coeff. = 0.1064, p = 0.024) were significant determinants of diversification. Policy should shift from individual capacity-building to addressing structural barriers, focusing on financial access, rural infrastructure, and gender-sensitive programs to empower women. In general, fostering partnerships with local organizations can amplify the impact of these initiatives, and implementing training programs for skills development will further strengthen diversification efforts.