Since independence, poverty reduction and enhanced food security have been Kenya Government’s
objectives. At micro-level, households diversify income sources as a management strategy to enhance
their welfare. However, this had not been satisfactorily achieved due to multiple factors. This research
was aimed at analyzing factors influencing income diversification in maize based farming systems. It is
hypothesized that these factors significantly contribute to the performance of agro-based household
economies. A cross-sectional survey was carried out in 2004 covering 1850 rural households covering
seven agro-ecological zones describing different sources of incomes and labour allocation using a
structured questionnaire. Multi-stage sampling technique was used in selecting respondents.
Descriptive statistics, multinomial logit and Tobit models were employed in the analyses. The results
show that majority of farmers engage in cash cropping but with off-farm income supplementation.
However, though there is evidence that most households have opportunities in cash cropping and nonfarm
activities, pricing, inefficiency in production and marketing negatively impact on the fight against
poverty and food security. In addition, lack of capital, makes it difficult for farmers to diversify from
subsistence agriculture to commercial farming. Household heads and their spouses spend about 70%
of their time on-farm. The household members participate in low paying casual labour ranging from
KSh. 84.00 to 120.00 per day which is relatively lower than the governments’ recommended rate of KSh
210 to 245 depending on locality. In addition, households with bigger farm size are more likely to
participate in the non-farm sector than those with illiterate or low educated heads. This implies that
government role in catalyzing asset accumulation through job creation in both farm and a non-farm
activity is still an important aspect if poverty and food insecurity have to be alleviated.