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Drivers of transaction costs affecting participation in the rental market for cropland in Vietnam

Author

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  • Huy, Hoang Trieu
  • Lyne, Michael
  • Ratna, Nazmun
  • Nuthall, Peter

Abstract

Farm incomes in rural Vietnam are tightly constrained by very small farm sizes. Stringent limits on the area of cropland that individuals may own means that farmers need a well-functioning rental market to consolidate land parcels, grow their farm enterprises, adopt new technology and increase incomes. This research investigates the efficiency and equity impacts of the rental market in rural Vietnam and attempts to identify transaction costs impeding the market. A generalised ordered logit model with shifting thresholds allowing transaction costs to impact lessors and lessees differently was specified and estimated using data extracted from the Vietnam Household Living Standards Surveys. The findings show that rental transactions reduced imbalances in factor endowments, transferring cropland to households that were relatively landpoor but more willing and able to farm. However, the market is constrained by transaction costs that affect lessors and lessees differently. It is recommended that government should complete its land registration program and relax restrictions on the use of wetlands to grow crops other than rice. It should also improve access to allweather roads as this encourages participation on both sides of the rental market, whereas better access to communications infrastructure was found to promote only the supply side.

Suggested Citation

  • Huy, Hoang Trieu & Lyne, Michael & Ratna, Nazmun & Nuthall, Peter, 2016. "Drivers of transaction costs affecting participation in the rental market for cropland in Vietnam," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(3), July.
    • Handle: RePEc:ags:aareaj:292462
    DOI: 10.22004/ag.econ.292462
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    Citations

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    Cited by:

    1. Jianying Wang & Yumei Xu & Lilin Zou & Ying Wang, 2021. "Does Culture Affect Farmer Willingness to Transfer Rural Land? Evidence from Southern Fujian, China," Land, MDPI, vol. 10(6), pages 1-19, June.
    2. Bachev, Hrabrin, 2022. "Как Да Оценим Управленческата Ефективност На Българските Земеделски Стопанства [How to assess the governance efficiency of Bulgarian agricultural farms]," MPRA Paper 113590, University Library of Munich, Germany.
    3. Hrabrin BACHEV, 2022. "An Approach To Understanding And Assessing The Governance Efficiency Of Agricultural Enterprises," Economic Archive, D. A. Tsenov Academy of Economics, Svishtov, Bulgaria, issue 2 Year 20, pages 21-38.
    4. Yahui Wang, 2019. "What Affects Participation in the Farmland Rental Market in Rural China? Evidence from CHARLS," Sustainability, MDPI, vol. 11(24), pages 1-15, December.
    5. Zhang, Jian & Mishra, Ashok K. & Hirsch, Stefan, 2021. "Market-oriented agriculture and farm performance: Evidence from rural China," Food Policy, Elsevier, vol. 100(C).
    6. Amaka Nnaji & Nazmun Ratna & Alan Renwick & Wanglin Ma, 2023. "Risk perception, farmer−herder conflicts and production decisions: evidence from Nigeria," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(2), pages 683-716.
    7. Wang, Yahui & Li, Xiubin & Li, Wei & Tan, Minghong, 2018. "Land titling program and farmland rental market participation in China: Evidence from pilot provinces," Land Use Policy, Elsevier, vol. 74(C), pages 281-290.
    8. Huy, Hoang Trieu & Nguyen, Trung Thanh, 2019. "Cropland rental market and farm technical efficiency in rural Vietnam," Land Use Policy, Elsevier, vol. 81(C), pages 408-423.
    9. Oliver Schulte & Trung Thanh Nguyen & Ulrike Grote, 2022. "The Effect of Renting in Cropland on Livelihood Choices and Agricultural Commercialization: A Case Study from Rural Vietnam," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2878-2898, December.
    10. Mbudyza, J. J & Ayuya, O. I & Mshenga, P. M, 2017. "Drivers of small scale farmers participation in agricultural land rental markets in Kenya," African Journal of Rural Development (AFJRD), AFrican Journal of Rural Development (AFJRD), vol. 2(4), December.
    11. Tang, Liang & Ma, Xianlei & Zhou, Yuepeng & Shi, Xiaoping & Ma, Jia, 2019. "Social relations, public interventions and land rent deviation: Evidence from Jiangsu Province in China," Land Use Policy, Elsevier, vol. 86(C), pages 406-420.
    12. Bachev, Hrabrin, 2022. "A framework for assessing the governance efficiency of agricultural farms," MPRA Paper 113696, University Library of Munich, Germany.
    13. Qian, Chen & Li, Fan & Antonides, Gerrit & Heerink, Nico & Ma, Xianlei & Li, Xiande, 2020. "Effect of personality traits on smallholders’ land renting behavior: Theory and evidence from the North China Plain," China Economic Review, Elsevier, vol. 62(C).

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