Abstract
Improvements in the farm household’s income and identifying the factors contribute to its improvement is very critical for enhancing food and poverty reduction strategy of Ethiopia. The aim of this paper is to investigate the factors contributing to rural farm households’ income differential in Haramaya district East Hararghe, Oromia, Ethiopia. The study used both primary and secondary data. Primary data was collected from 120 sample respondents in 2015 production year. The study was used linear regression model to identify contributing factors and the model output indicated that, irrigation use, livestock holding, education level of household head, cultivated area, age and amounts of fertilizer used were the significant variables that contribute to farm income differential in the study area. Therefore, the policy implication of the study is that, increasing and proper utilization of the aforementioned variable’s should have get due attention to speed up the enhancement of rural farm household income.