Contract Farming Through a Cooperative to Boost Agricultural Sector Restructuring: Evidence from a Rural Commune in Central Vietnam
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The Vietnamese government has proposed contract farming through a new type of cooperative as an institutional innovation which aims to restructure the agricultural sector. However, policy changes often impact farmers, who bear the primary effects of the transition process. Understanding households’ strategies for land use and livelihood is crucial for policymaking in the agricultural development field. This study was conducted in the rural Binh Dao commune in Central Vietnam. We analyzed household members’ labor force changes and their livelihood behaviors after their participation in a contract farming scheme using qualitative analysis methods combined with geographic information system (GIS) support, based on secondary data and in-depth interviews of 190 farmers. Simultaneously, we created a digital map of the cooperative’s production area to investigate changes in land use and production activities. The findings show that contract farming shaped the vertical coordination of the value chain from the farmers to the cooperative and agricultural product trading companies. Subsequently, it encouraged land use and labor efficiency due to mechanical support. In addition, it also increased productivity and protected farmers from market risks. However, despite its positive effects on agricultural productivity in this case, the contract farming scheme could not achieve the restructuring of the rural labor force toward non-agricultural sectors. Ironically, farmers in the Binh Dao commune tended to increase cultivable land during the agricultural restructuring program, rather than switching their labor forces to non-agricultural sectors. The lack of stable non-farming job opportunities in rural Vietnam results in challenges to the efficiency of agricultural restructuring programs. Consequently, farmers in the Binh Dao commune are still smallholder farmers, depending on the family labor force.
Abstract
The Vietnamese government has proposed contract farming through a new type of cooperative as an institutional innovation which aims to restructure the agricultural sector. However, policy changes often impact farmers, who bear the primary effects of the transition process. Understanding households’ strategies for land use and livelihood is crucial for policymaking in the agricultural development field. This study was conducted in the rural Binh Dao commune in Central Vietnam. We analyzed household members’ labor force changes and their livelihood behaviors after their participation in a contract farming scheme using qualitative analysis methods combined with geographic information system (GIS) support, based on secondary data and in-depth interviews of 190 farmers. Simultaneously, we created a digital map of the cooperative’s production area to investigate changes in land use and production activities. The findings show that contract farming shaped the vertical coordination of the value chain from the farmers to the cooperative and agricultural product trading companies. Subsequently, it encouraged land use and labor efficiency due to mechanical support. In addition, it also increased productivity and protected farmers from market risks. However, despite its positive effects on agricultural productivity in this case, the contract farming scheme could not achieve the restructuring of the rural labor force toward non-agricultural sectors. Ironically, farmers in the Binh Dao commune tended to increase cultivable land during the agricultural restructuring program, rather than switching their labor forces to non-agricultural sectors. The lack of stable non-farming job opportunities in rural Vietnam results in challenges to the efficiency of agricultural restructuring programs. Consequently, farmers in the Binh Dao commune are still smallholder farmers, depending on the family labor force.
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