Farmers' Knowledge and Farm Productivity in Rural Thailand and Vietnam

With the increasing complexity of farming in the developing countries in Asia and the growing challenge arising from climate change, management, technical knowledge, and skills become more and more important for smallholder farmers. So far, little is known about how knowledge, skills, and cognitive abilities of farm decision-makers affect agricultural productivity. Most empirical studies lack the necessary parameters to adequately measure knowledge and skills and often rely on simple parameters like educational attainment and years of formal schooling. However, to generate a better understanding of how knowledge and skills enable farmers to meet the challenges of increasingly obstacle farming environments, more direct measures of education are needed. This paper investigates the impact of farmers' knowledge on agricultural productivity by making use of specific agricultural knowledge questions and management tests conducted with 1,290 small-scale farmers in two provinces in Thailand and Vietnam, carried out in 2014. Applying OLS and 2SLS approaches and combining the knowledge and skills test results with productivity data of later waves allows for identifying the effect of agricultural knowledge and skills on agricultural productivity. Results show that farmers' specific agriculture knowledge is significantly and positively associated with profits but significantly negative with yields and total input costs. Hence, better farmers may strive for optimal instead of maximum yields, are more judicious in the use of inputs, and as a result, make more money in rice production.