Adoption and Promotion of Organic Tea Production in the Thai Nguyen Province, Vietnam: Economic Consequences and Sustainability Issues

In Vietnam, tea has a long and glorious history, rich in tradition and cultural significance. Recently, it has become one of the country’s primary industrial export crops. However, excessive use of pesticides and agro-chemicals in tea production has produced negative impacts on the environment and to human health. Conversion to organic tea production reduces the environmental threat from pesticide and agro-chemical usage and enables organic tea producing farmers to be eligible for receiving a price premium for their organic product. Results from the adoption and risk analyses for organic tea production in the Thai Nguyen province, show that the premium price and outside support play major roles in increasing adoption rates for organic tea production. Economic analyses also show that removing either the premium price for organic tea or outside support, reduces the probability of adopting organic tea production to zero. Among the policy scenarios tested, the guaranteed premium price has the largest effect for increasing adoption rates and sustaining organic tea production in the Thai Nguyen province. The premium price policy can increase the probability of adopting organic tea production up 90% while a tax on conventional tea output values can only increase adoption rate by 9 %.