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Effect of contract farming on productivity and income of small holders: The case of tea production in north-western Vietnam

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  • Saigenji, Yoshiko
  • Zeller, Manfred

Abstract

This paper examines potential of contract farming as a rural development tool by revealing its effect on productivity and income of small holders in tea production in north-western Vietnam. In the present research, three economic analyses are applied. First, the technical efficiency of tea production is estimated by using stochastic frontier model. The results show that contract farming achieved significantly higher technical efficiency compared to non-contract farming. Second, logit model is investigated to determine the influential socio-economic characteristics of households for contract participation. The model indicates that social relationship of households, such as the membership in the communist party, play an important role in contract participation with 73% correct prediction. Finally, the impact of contract participation on income is estimated by applying Propensity Score Matching. A significant effect of contract participation on income by 8,000 VND daily per capita can be observed.

Suggested Citation

  • Saigenji, Yoshiko & Zeller, Manfred, 2009. "Effect of contract farming on productivity and income of small holders: The case of tea production in north-western Vietnam," 2009 Conference, August 16-22, 2009, Beijing, China 51681, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:51681
    DOI: 10.22004/ag.econ.51681
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    Cited by:

    1. Dufhues, Thomas & Buchenrieder, Gertrud & Quoc, Hoang Dinh & Munkung, Nuchanata, 2011. "Social capital and loan repayment performance in Southeast Asia," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(5), pages 679-691.
    2. Minot, Nicholas & Sawyer, Bradley, 2016. "Contract farming in developing countries: Theory, practice, and policy implications," IFPRI book chapters, in: Devaux, André & Torero, Maximo & Donovan, Jason & Horton, Douglas E. (ed.), Innovation for inclusive value-chain development: Successes and challenges, chapter 4, pages 127-158, International Food Policy Research Institute (IFPRI).
    3. repec:ipg:wpaper:2014-464 is not listed on IDEAS
    4. Iro Ibrahim Kutawa, 2016. "Empirical evidence on contract farming in northern Nigeria: Case study of tomato production," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 6(12), pages 240-253, December.
    5. Phu Nguyen-Van & Nguyen To-The, 2016. "Technical efficiency and agricultural policy: evidence from the tea production in Vietnam," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(3), pages 173-184, November.
    6. Harshana PVS, 2019. "Analysis of Satisfaction of Small Cucumber Contract Famers in Predominantly Agriculture areas in Sri Lanka," Annals of Social Sciences & Management studies, Juniper Publishers Inc., vol. 2(4), pages 92-99, January.
    7. Tuan M. Ha & Ockie J. H. Bosch & Nam C. Nguyen, 2016. "Establishing an Evolutionary Learning Laboratory for Improving the Quality of Life of Vietnamese Women in Small-scale Agriculture: Part I—The Current Situation," Systems Research and Behavioral Science, Wiley Blackwell, vol. 33(4), pages 532-543, July.
    8. Thomas Dufhues & Gertrud Buchenrieder & Hoang Dinh Quoc, 2012. "Social capital and loan repayment performance in Northern Vietnam," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 277-292, May.
    9. Phu Nguyen-Van & The Nguyen To, 2014. "Agricultural extension and technical efficiency of tea production in northeastern Vietnam," Working Papers hal-01725580, HAL.
    10. Nguyen Bich Hong & Mitsuyasu Yabe, 2017. "Improvement in irrigation water use efficiency: a strategy for climate change adaptation and sustainable development of Vietnamese tea production," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(4), pages 1247-1263, August.
    11. Kutawa, Iro Ibrahim, 2016. "Empirical Evidence on Contract Farming in Northern Nigeria: Case Study of Tomato Production," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society (AESS), vol. 6(11), January.
    12. Le Ngoc, H., 2018. "Contract farming effects on technical efficiency of the export-oriented rice production sector in Vietnam," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277409, International Association of Agricultural Economists.
    13. Anh Tru Nguyen & Janet Dzator & Andrew Nadolny, 2018. "Contract farming, agriculture productivity and poverty reduction: evidence from tea estates in Viet Nam," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 25(1), pages 109-145, June.
    14. Tuan, Nham Phong, 2012. "Governance, Institutional, and Pro-Poor Analysis of Cassava Contract Farming in Quang Tri Province, Vietnam," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 9(2), pages 1-17, December.

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