Factors affecting Farmer's participation and economic performance in contract rice farming: Dong Thap Province, Vietnam

概要

Rice is a crucial agricultural commodity in Vietnam as it is the staple food and a vital export of the country. Despite being one of the world's biggest rice exporter, Vietnam’s rice industry still faces various vulnerable factors such as competition from emerging rice exporters, unsustainable production, and climate changes. These challenges motivated the Vietnam government to issue policies towards improving added value and sustainability in the rice sector, among which policies on contract farming are prominent. Contract farming is expected to divert middlemen's production costs, thus improving farmers’ income and added value of rice products. Moreover, it is also likely to improve traceability and create favorable conditions for farmers to adopt sustainable and large-scale farming.

【Objective】
Few studies focusing on farmers’ decision to participate in contract farming have been conducted in the Mekong Delta, Vietnam. Furthermore, there are several studies on the economic performances of contract rice farming in experienced provinces in the Mekong Delta; none has been conducted in the promising rice producer - Dong Thap. Therefore, it is necessary to carry out a study to discover factors affecting farmers’ participation in contract rice farming and their economic performances in the Dong Thap province, the third largest rice-producing province in Vietnam.

【Method】
This study was carried out in 3 districts (Thanh Binh, Cao Lanh and Thap Muoi) of the Dong Thap province with 86 contract farmers and 101 non-contract farmers. In addition to the characteristic description of these two groups, this study also applied Propensity Score Matching (PSM) to achieve the above-mentioned objectives.
【Results】
The main findings from the study are: rice farmers with smaller household sizes, less dependent on paddy, larger paddy area, less experienced or less income per person from paddy are less likely to join contract farming; contract farming can help rice farmers reduce seed and pesticide use and increase the farm-gate price, thus gain more profit.

【Conclusion】
Although contract farming is still a controversial subject that needs further development and adaptation, according to contracting commodities and locations, this study compellingly indicated that contract rice farming can help rice farmers reduce seed and pesticide use and increase farm-gate price thus gaining more profit through lowering production cost and increasing income. Hence, contract rice farming should be widely launched.

However, this study has only been able to analyze data from crop Dong Xuan 2019/20, which was a successful crop in terms of both yield and selling price one, long-term prospects of contract rice farming are still questionable. Further studies on the economic performance of contract farmers in a broader length of time should be considered.