Rice market participation and channels of sale in rural Vietnam

Abstract

This paper contributes to the existing literature on agricultural commercialisation by focussing on the channels through which households sell their crops, as well as considering the determinants of their participation behaviour. An important innovation of this paper is to look at both the type of purchaser households use (trader or other household) and the location of sale (farmgate or not). We study these issues for the case of Vietnam, which over time has achieved an impressive success in agricultural commercialisation, and in relation to rice, drawing on data from a detailed rural panel survey for 2006, 2008 and 2010. We find that household asset endowments and access to public goods such as transport infrastructure significantly increase the probability of selling rice. We also find that larger scale of production and low transport costs are significant determinants of the probability of using more established channels of sale, such as traders or enterprises. Wealthier farmers are more likely to sell via this channel, but not if the quantity they produce is large, which is consistent with their better ability to meet costs for reaching more remunerative marketing opportunities. With respect to location of sales, we find that wealthier households with access to phones and own means of transport, but also households located in areas where transport infrastructure is less developed, are less likely to sell at the farmgate.