Recent Evolution of Perennial Crop Farms: Evidence from Dak Lak Province, Vietnam

• Published in: AGRIS on-line Papers in Economics and Informatics 2020-09, Vol.10 (3), p.87-100
• Main Authors: Thuy, Phan Thi, Niem, Le Duc, Lebailly, Philippe
• Format: Article
• Language: English
• Subjects: coffee and pepper farms; Crop Production/Industries; economic performance; Evolution; Production Economics; Vietnam
• ISSN: 1804-1930; 1804-1930
• DOI: 10.22004/ag.econ.309940

There is a great consensus about the crucial role of perennial crops in an agricultural economy of a country. The paper aims (1) to identify the differences in the costs and profits of perennial crops produced by two study groups, a group producing coffee (GpC) and a group producing pepper (GpP) over two crop years 2016/2017-2017/2018; (2) evaluate the evolution of the economic performance of each group during two years; and (3) examine factors influencing the farm profitability. By using the mixed data from a household survey conducted in three sub-regions of Dak Lak province, Vietnam, a financial verification is used to explore the economic incentives between two groups and a discriminant analysis is undertaken to classify the determinants of the farm profitability. The results perform that the GpC is generally lower input costs and economic benefits than the GpP. The decrease of economic indicators of the GpP during two years, meanwhile, is more significant than that of the GpC in the same period. In addition, the GpP is likely to invest more inputs, heavily use chemical cost, be more susceptible to pests and diseases, and the volatile market conditions in comparison to the GpC. Categorically, the variable cost and reduction rate in terms of value-added, net farm income (NFI), profit, labor productivity, and the ratio of NFI to family labor of the GpC have lower than those of the GpP, respectively, during two years. Furthermore, in similarly conditional practices, the perennial crop farms generate different returns depending on experience, training, other income, and gross outputs. The findings provide information for farmers to make accurate decision about coffee and pepper farms production as recommended by reducing the quantity of fertilizers, allocating resources and diversifying crop systems. Additionally, the empirical results also offer policymakers the farms sustainable development at local and national levels. Going forward, authors suggest these factors be considered in the future.