In Partial Fulfillment of the Requirements for the Degree of MASTER OF SCIENCE IN RURAL DEVELOPMENT AND AGRICULTURAL EXTENSION

As history tells us, poverty in South Wollo including the study area Kalu district, is deep rooted and worse that the majority of people have suffered from poverty and poverty related problems for a very long period of time. Albeit there were decades of national and international funded development programmes in agriculture and rural development, sustained inflow of food aid and emergency relief operations, object poverty still characterize the lives of a large proportion of the population. This research was therefore, proposed to analyse the various facts of poverty such as profile, extent, and determinants of poverty; and also explores income distribution of the household in rural PAs of Kalu district using both quantitative and qualitative measurement (PPA). A multi stage random sampling technique was employed to select 200 household heads. Data were collected using key informant interview, focus group discussion and interview schedule. To determine poverty status of household, the collected data were analyzed and discussed by applying FGT for poverty index, descriptive statistics and Binary logit regression model; while the group discussion was summarized in percentile in tabular form. To analyse the income distribution of the household, Gini coefficient and Theil index were applied. The result of this research shows that the absolute poverty line in rural PAs of Kalu district was found 1878.72 Birr per adult equivalent per year. The FGT index was found to be 0.460, 0.107 and 0.036 for head count, poverty gap and poverty severity, respectively. Whereas Gini, Theil’s L GE (0) and Theil’s T GE (1) of inequality indices was found to be 0.225, 0.157, and 0.151, correspondingly. The mean differences were observed in variables like in expenditure (per adult and per capita consumption expenditure and various food and non-food items), resource ownership (income levels, irrigable land holding, rain fed land holding, soil fertility status, total livestock holding in TLU, types of house owned), production characteristics (types of crop and input use), access and use of services (membership to cooperatives, credit experience, saving habit, extension contact, receiving food aid), consumption deficit and coping and household socio-demographics (family size, use of contraceptives, age of the household head). In line with the descriptive, the binary logit model estimates suggests that the major significant determinants of household poverty are age of the household head, family size, income level in Birr, total livestock holding in TLU, and extension contact at various probability level. The PPA have also found six variables of determining the poverty status of households; these are land holding, livestock holding, housing condition, household income, availability of food, and covering healthy and other expenses. As per the findings of this study, the poverty head count index revealed almost half of the sample households were under the poverty line. Other indices of poverty (poverty gap index, and FGT (2) index) even implied there is sever poverty in rural areas of the study area. Consequently, it is important to reevaluate and reconsider the existing poverty reduction strategies with the focus of adjusting them to location specific circumstances.