Nigerian Journal of Agriculture, Food and Environment. 15(2): 40-49 Published June, 2019 Ibrahim et al., 2019 40 NJAFE VOL. 15 No. 2, 2019 EFFECT OF NON-FARM INCOME ON POVERTY STATUS OF FARM HOUSEHOLDS IN OGUN STATE, NIGERIA *Ibrahim, S. B., Akerele, D., Oyawole, F. P., Uthman, O. J. and Aminu, R. O. Department of Agricultural Economics and Farm Management, Federal University of Agriculture, PMB 2240, Alabata Road, Abeokuta, Ogun State, Nigeria *Correspondence Author: ibrahimsb@funaab.edu.ng ABSTRACT Understanding alternative pathways to poverty reduction among rural farm households aside the mainstream agricultural productivity pathway is crucial for the Sustainable Development goal on poverty eradication to be achieved. In this paper, we analysed the drivers of non-farm employment and income as an alternative strategy, and its effect on poverty among farm households in Ogun State. The study made use of primary data collected from 120 households in a cross-sectional survey. Data were analysed using descriptive statistics, Heckman selection model, Foster, Greer and Thorbecke indices and Logit regression. The results showed that 93.0% of the respondents participated in non-farm employment, and generated N33,208 per year on the average, with trading and business being the most preferred activity. Furthermore, 49.0% of the farm households were poor, with poverty gap index and poverty severity of 0.31 and 0.22 respectively. Household size, education and presence of tarred roads are significant factors that influence participation in non-farm employment, while education and being female positively influence non-farm income. The Logit regression results show that non-farm income has a negative significant effect on poverty incidence, and thus provides empirical basis for a shift from an exclusive focus on agricultural productivity pathway to rural development to an inclusive policy framework that promotes non-farm employment as an alternative pathway for improved rural welfare. Efforts to provide good roads and improve access to education should be made so as to open up alternative employment opportunities to rural farm households. Keywords: Non-farm employment, poverty, Heckman selection model INTRODUCTION The first of the millennium development goals set by the United Nations in September, 2000 was to eradicate extreme poverty and hunger, by halving the number of poor people in the world by 2015 (UN, 2015). Although substantial progress was made to achieve this, poverty and hunger have not by any means been eradicated. This is reflected in the sustainable development goals, whose first two goals are ‘to end poverty in all its forms everywhere’ and ‘to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture’ (UNDP, 2016). Poverty encompasses different dimensions of deprivation that relate to human capabilities including consumption and food security, health, education, rights, voice, security, dignity and decent work. It is defined as a pronounced deprivation in ‘wellbeing’, with wellbeing articulated by Sen (1987) as a capability to function in society. Thus, poverty arises when people lack key capabilities, and so have inadequate incomes or education, or poor health, or insecurity, or low self-confidence, or a sense of powerlessness or the absence of rights such as freedom of speech in the society (World Bank, 2000; OECD, 2001). In Nigeria, the incidence of poverty is more pronounced in the rural areas, where the majority of agricultural production takes place (NPC, 2004; Asenso-Okyere and Jemaneh, 2012). According to Anyanwu (2012), from 1980 to 2010, the incidence of poverty in the rural areas has always been more than that of the urban areas, peaking in 2010, with the rural areas having a poverty incidence of 73.2%, while that of urban areas was 61.8%. Furthermore, the distribution of extreme poverty by occupational category indicates that 67.4% of the poor in Nigeria were engaged in agriculture (National Bureau of Statistics (NBS), 2012). Since one of the defining characteristics of the poor is that they are significantly rural, and mostly directly or indirectly engaged in agriculture for their livelihood, rural farming households have traditionally been thought to focus solely on farming, and engage in little or no non- farm activity (Reardon, 1998). This has resulted into government and international organizations focusing most policies and interventions targeted at reducing rural poverty and food insecurity on increasing agricultural production (productivity). However, while it is true that most rural households are involved in the farm sector, the rural nonfarm