During Vietnam’s thirty years of economic growth since 1986, government policies have
been central in raising rice production and export. However, the relevance of the ‘rice first’
policy and the place of smallholder agriculture have recently been questioned in the
discussion on Vietnam’s agricultural development strategy. The objective of this thesis is
to contribute to designing appropriate agricultural development strategies for Vietnam,
based on empirical analysis at the farm household level.
The thesis begins by reviewing theories and literature on the agricultural transformation.
This review assists in the development of the analytical framework and research issues for
the thesis. The next chapter provides an overview of agricultural reforms and structural
transformation in Vietnam since 1986. The core of the thesis is contained in the next three
chapters. Chapter 4 examines the merit of crop diversification in rural Vietnam. Chapter 5
investigates the effect of nonfarm participation on household production choices. Chapter
6 studies the effect that land reforms directed towards land consolidation have on labour
allocation and promoting the economic diversity of farm households. The final chapter
discusses policy implications.
The findings indicate that economies of scale are evident in Vietnam’s multiple crop
production. Output complementarity is found to exist between rice and other annual
crops. Also, substantial technical inefficiency exists in diversified farms. Enhancing
education, particularly for women, and further land reforms are the main technical
efficiency shifters. Results also show that in a multiple crop environment, households
with smallholder production respond to cost stress by lowering family labour use. In
addition, in the short run, labour movement into nonfarm activities reduces rice production
in the north of Vietnam. In contrast, in the south, labour participation in nonfarm activities
has induced rice farmers to maintain rice production by hiring more labour during periods
of peak labour demand, and by investing in more capital to facilitate less labour-intensive
farming. While agriculture in the north is losing its comparative advantage, the stability of
rice production at the national level is welcome news for policy makers in that it suggests
that food production can be maintained, despite the rapid structural change in rural areas.
Finally, land reforms that lead to less labour-intensive farming, along with the
development of credit and insurance markets in rural areas, are important in raising
agricultural productivity and the promotion of economic structural transformation.
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In general, in light of increasing rural wages and structural change, Vietnam’s
agricultural transformation replicates the early East Asian experience, characterised by
the dominance of smallholder agriculture. There has so far been no definitive policy
resolution of the optimal structure of Vietnam’s smallholder agriculture. The balance
between efficiency and equity, between lowering production costs and raising prices,
is a challenge for policy makers. The findings suggest policies for maintaining the
comparative advantage of agriculture. The government should relax the ‘rice first’
policy to improve household welfare. In addition, land reforms responding to less
labour-intensive farming, and the development of the nonfarm economy, should play a
central role in restructuring smallholder agriculture.