Contract Farming Effects on Technical Efficiency of Export-Oriented Rice Production in Vietnam

Measures to increase technical efficiency in emerging and developing economies’ agriculture receives great attention by governments, NGOs, private firms and researchers in times of urgent need for poverty reduction and growing resource rivalry in the world. A cross sectional sample of 246 Vietnamese export-oriented rice households is used to provide empirical evidence of the effects of contractual farming (CF) schemes on technological adoption and technical efficiency using a meta-frontier framework. Propensity score matching and stochastic frontier model with correction for sample selection are used to control for potential bias arising from observable and unobservable variables respectively. Our results show that CF has a positive impact in both the adoption of better technologies and in the management characteristics that affect the technical efficiency. This study contributes to the literature of impact evaluation by showing how the integration via contractual schemes can enhance farmers productivity and consequently their livelihoods.