Factors Affecting Technical Efficiency of Small-holder Coffee Farming in the Krong Ana Watershed, Vietnam

Abstract

Coffee production is a major source of income for farmers in the DakLak province in Vietnam. Although Vietnam is one of the largest coffee producers in the world, research to improve the coffee industry is lacking, in particular, evaluating production efficiency in coffee farming could highlight factors that improve technical efficiency. The overall objective of this study is to estimate the technical efficiency of coffee production and determine which factors affect technical efficiency of small holder coffee farmers in the Krong Ana Watershed of the DakLak province. Based on the stochastic production frontier, the estimated mean technical efficiency scores were 0.7466 and 0.6836 respectively for the Cu Kuin district and the three combined districts (Krong Ana, Krong Bong and Lak). Formal education of the household head, amount of financial credit obtained, ethnicity, coffee farming experience of the household head, and agricultural extension service used were key factors that can increase technical efficiency in coffee production.

Toward Sustainability or Efficiency: The Case of Smallholder Coffee Farmers in Vietnam

“…Otherwise, shortage of liquidity leads to farmers' misuse of proper fertilizer, pesticide, or recommended varieties in coffee replantation. Ho et al (2014), Binam et al (2004), Nyagaka Daniel and Nguyo (2009), and Dessale (2019) also found a positive relationship between credit and technical efficiency in their findings, which is in line with this study.…”

“…In sustainable farming system, variable education had a negative and significant effect on inefficiency of sustainable coffee farming, hence a higher-educated farmer is more technical efficient in sustainable farming system. This result is similar to the findings of Ho et al (2014), Dessale (2018Dessale ( , 2019, and Binam et al (2004) at the point that farmers benefit from schooling through higher level of technical efficiency. Well-educated farmers easily acquire and utilize skills and knowledge through trainings and successfully transfer it into efficient production.…”

“…Ethnic variable had a significant and negative impact on technical inefficiency, which means increased participation of ethnic minority farmers in the conventional coffee farming leads to higher efficient level of coffee production. The result is similar to findings of Ho et al (2014) and Gaitán Cremaschi et al (2018). This contradicts our hypothesis that ethnic minority farms are less favorable for coffee production (Gaitán Cremaschi et al 2018), for example, most of ethnic minority farmers in remote areas are facing a lack of capital but are not eligible for loans to replace old and unproductive coffee trees (DakLakDARD 2016).…”

“…Existing literatures suggest that several socioeconomic factors might have significant effects on farming efficiency, such as: age of farmer (Binam et al 2004;Dessale 2018Dessale , 2019Kamau et al 2017;Sriboonchitta and Wiboonpongse 2004);gender (Bich Hong and Yabe 2015;Sriboonchitta and Wiboonpongse 2004); education (Dessale 2018(Dessale , 2019Ho et al 2014;Tun and Kang 2015); and ethnicity (Gaitán Cremaschi et al 2018;Ho et al 2014). In addition, farming experience (Poudel et al 2015;Sriboonchitta and Wiboonpongse 2004); household size (Bati Mustefa et al 2017;Binam et al 2004;Okoruwa et al 2006); extension service (Poudel et al 2015); cooperative membership (Bich Hong and Yabe 2015); and credit (Dessale 2019;Nyagaka Daniel and Nguyo 2009).…”

“…This contradicts our hypothesis that ethnic minority farms are less favorable for coffee production (Gaitán Cremaschi et al 2018), for example, most of ethnic minority farmers in remote areas are facing a lack of capital but are not eligible for loans to replace old and unproductive coffee trees (DakLakDARD 2016). Hence, the reason could be farmers' high dependency on coffee production (Gaitán Cremaschi et al 2018) or effects of multiple environmental factors (Ho et al 2014).…”