Improving resource allocation and incomes in Vietnamese agriculture
AbstractThis paper uses data collected in an extensive survey of farm costs in the Dong Nai River Basin of Vietnam to estimate the parameters of production functions for rice, vegetables, and coffee. These estimates are then combined with price information to estimate marginal value products for irrigation, fertilizer, labor, and other farm inputs. Comparing marginal value products of the various inputs across crops and with factor prices suggests there may be potential for improving resource allocation and farm incomes. One novel contribution is the consideration of water and irrigation—a concern of considerable interest amidst rising water scarcity in the region. Most notably, the results indicate that fertilizer is the primary constraint to increased yields and farm income. Across all crops the marginal return to phosphorous, for example, ranges from 6,000–20,000 Vietnamese dong (VND) (US$1 = VND1, 800).Making similar comparisons with irrigation water suggests there is potential for improving resource allocation by diverting water from vegetables and coffee toward rice production. The marginal return to irrigation water for rice production is VND 2,500. For coffee and vegetables, marginal returns are negative. For vegetables, preliminary evidence suggests that all irrigation water is not created equal—groundwater and sprinkler irrigation systems have marginal physical products more than double that of traditional sources.
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Bibliographic InfoPaper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 984.
Date of creation: 2010
Date of revision:
Dong Nai basin; farm input allocation; irrigation efficiency; translog production function; water allocation policy;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2010-07-17 (Agricultural Economics)
- NEP-ALL-2010-07-17 (All new papers)
- NEP-DEV-2010-07-17 (Development)
- NEP-EFF-2010-07-17 (Efficiency & Productivity)
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