IDEAS home Printed from https://ideas.repec.org/a/bla/ajarec/v69y2025i4p911-933.html

The Role of Farming Efficiency in Rural Transformation: Insights From Long‐Term Panel Data for Thailand

Author

Listed:
  • Kasem Kunasri
  • Manh Hung Do
  • Trung Thanh Nguyen

Abstract

Rural transformation is important for economic growth and is characterised by the reallocation of labour from farm to non‐farm sectors. However, there is limited evidence on how farming efficiency affects rural transformation at the household level. In this study, we explore the effects of farming efficiency on rural transformation and investigate the influence of farming efficiency on the shift from full‐time to part‐time farming at the smallholder farm level. We use panel data from the Thailand–Vietnam Socio‐economic Panel. Our sample includes 10,549 observations collected in Thailand from seven survey waves between 2007 and 2019. Our results reveal that farming efficiency positively and significantly affects the share of farm income, per capita farm income and per hectare agricultural machinery expense, while it has a negative and significant effect on the share of non‐farm income, per capita non‐farm income and the share of livestock income in farm income. These results imply that more efficient farmers tend to stick to farming and apply mechanisation in crop production, while less efficient ones seem to shift to non‐farm sectors. Policies designed to encourage farm enlargement and labour allocation to accelerate rural transformation are recommended.

Suggested Citation

  • Kasem Kunasri & Manh Hung Do & Trung Thanh Nguyen, 2025. "The Role of Farming Efficiency in Rural Transformation: Insights From Long‐Term Panel Data for Thailand," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 69(4), pages 911-933, October.
    • Handle: RePEc:bla:ajarec:v:69:y:2025:i:4:p:911-933
    DOI: 10.1111/1467-8489.70051
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-8489.70051
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-8489.70051?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Elina Pradkhan, 2017. "Financial activity in agricultural futures markets: evidence from quantile regressions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(4), pages 610-625, October.
    2. Conning, Jonathan H. & Robinson, James A., 2007. "Property rights and the political organization of agriculture," Journal of Development Economics, Elsevier, vol. 82(2), pages 416-447, March.
    3. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    4. Huy, Hoang Trieu & Nguyen, Trung Thanh, 2019. "Cropland rental market and farm technical efficiency in rural Vietnam," Land Use Policy, Elsevier, vol. 81(C), pages 408-423.
    5. Yanjie Zhang & Xiaobing Wang & Thomas Glauben & Bernhard Brümmer, 2011. "The impact of land reallocation on technical efficiency: evidence from China," Agricultural Economics, International Association of Agricultural Economists, vol. 42(4), pages 495-507, July.
    6. Rigg, Jonathan, 2006. "Land, farming, livelihoods, and poverty: Rethinking the links in the Rural South," World Development, Elsevier, vol. 34(1), pages 180-202, January.
    7. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
    8. Sheng, Yu & Davidson, Alistair & Fuglie, Keith & Zhang, Dandan, 2016. "Input Substitution, Productivity Performance and Farm Size," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(3), July.
    9. Para Jansuwan & Kerstin K Zander, 2022. "Multifunctional farming as successful pathway for the next generation of Thai farmers," PLOS ONE, Public Library of Science, vol. 17(4), pages 1-22, April.
    10. Sanzidur Rahman & Aree Wiboonpongse & Songsak Sriboonchitta & Yaovarate Chaovanapoonphol, 2009. "Production Efficiency of Jasmine Rice Producers in Northern and North‐eastern Thailand," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 419-435, June.
    11. Sheng, Yu & Jackson, Thomas & Gooday, Peter, 2017. "Resource reallocation and its contribution to productivity growth in Australian broadacre agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(01), January.
    12. Subal Kumbhakar & Gudbrand Lien & J. Hardaker, 2014. "Technical efficiency in competing panel data models: a study of Norwegian grain farming," Journal of Productivity Analysis, Springer, vol. 41(2), pages 321-337, April.
    13. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August.
    14. Tasso Adamopoulos & Diego Restuccia, 2014. "The Size Distribution of Farms and International Productivity Differences," American Economic Review, American Economic Association, vol. 104(6), pages 1667-1697, June.
    15. Zhang, Lan & Feng, Shuyi & Heerink, Nico & Qu, Futian & Kuyvenhoven, Arie, 2018. "How do land rental markets affect household income? Evidence from rural Jiangsu, P.R. China," Land Use Policy, Elsevier, vol. 74(C), pages 151-165.
    16. Do, Manh Hung & Nguyen, Trung Thanh & Grote, Ulrike, 2023. "Land consolidation, rice production, and agricultural transformation: Evidence from household panel data for Vietnam," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 157-173.
    17. Federico Belotti & Silvio Daidone & Giuseppe Ilardi & Vincenzo Atella, 2013. "Stochastic frontier analysis using Stata," Stata Journal, StataCorp LLC, vol. 13(4), pages 718-758, December.
    18. Mulubrhan Amare & Priyanka Parvathi & Trung Thanh Nguyen, 2023. "Micro insights on the pathways to agricultural transformation: Comparative evidence from Southeast Asia and Sub‐Saharan Africa," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 71(1), pages 69-87, March.
    19. Timothy J. Coelli & D.S. Prasada Rao & Christopher J. O’Donnell & George E. Battese, 2005. "An Introduction to Efficiency and Productivity Analysis," Springer Books, Springer, edition 0, number 978-0-387-25895-9, January.
    20. Bachewe, Fantu N. & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu S., 2018. "Agricultural Transformation in Africa? Assessing the Evidence in Ethiopia," World Development, Elsevier, vol. 105(C), pages 286-298.
    21. Ayala Wineman & Thomas S. Jayne & Emma Isinika Modamba & Holger Kray, 2020. "The changing face of agriculture in Tanzania: Indicators of transformation," Development Policy Review, Overseas Development Institute, vol. 38(6), pages 685-709, November.
    22. Tim Coelli & Sanzidur Rahman & Colin Thirtle, 2002. "Technical, Allocative, Cost and Scale Efficiencies in Bangladesh Rice Cultivation: A Non‐parametric Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 607-626, November.
    23. Prabhu Pingali & Anaka Aiyar & Mathew Abraham & Andaleeb Rahman, 2019. "Transforming Food Systems for a Rising India," Palgrave Studies in Agricultural Economics and Food Policy, Palgrave Macmillan, number 978-3-030-14409-8, April.
    24. Wang, Xiaobing & Yamauchi, Futoshi & Otsuka, Keijiro & Huang, Jikun, 2016. "Wage Growth, Landholding, and Mechanization in Chinese Agriculture," World Development, Elsevier, vol. 86(C), pages 30-45.
    25. Awudu Abdulai & Hendrik Tietje, 2007. "Estimating technical efficiency under unobserved heterogeneity with stochastic frontier models: application to northern German dairy farms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 34(3), pages 393-416, September.
    26. Michael R. Carter & Yang Yao, 2002. "Local versus Global Separability in Agricultural Household Models: The Factor Price Equalization Effect of Land Transfer Rights," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 702-715.
    27. Nguyen, Trung Thanh & Do, Truong Lam & Parvathi, Priyanka & Wossink, Ada & Grote, Ulrike, 2018. "Farm production efficiency and natural forest extraction: Evidence from Cambodia," Land Use Policy, Elsevier, vol. 71(C), pages 480-493.
    28. Gautam, Madhur & Ahmed, Mansur, 2019. "Too small to be beautiful? The farm size and productivity relationship in Bangladesh," Food Policy, Elsevier, vol. 84(C), pages 165-175.
    29. Derek Byerlee & Alain de Janvry & Elisabeth Sadoulet, 2009. "Agriculture for Development: Toward a New Paradigm," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 15-31, September.
    30. Ward, Patrick S., 2016. "Transient Poverty, Poverty Dynamics, and Vulnerability to Poverty: An Empirical Analysis Using a Balanced Panel from Rural China," World Development, Elsevier, vol. 78(C), pages 541-553.
    31. Sheng, Yu & Song, Ligang, 2019. "Agricultural production and food consumption in China: A long-term projection," China Economic Review, Elsevier, vol. 53(C), pages 15-29.
    32. Yair Mundlak & Donald Larson & Rita Butzer, 2004. "Agricultural dynamics in Thailand, Indonesia and the Philippines," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), pages 95-126, March.
    33. Subal Kumbhakar & Efthymios Tsionas & Timo Sipiläinen, 2009. "Joint estimation of technology choice and technical efficiency: an application to organic and conventional dairy farming," Journal of Productivity Analysis, Springer, vol. 31(3), pages 151-161, June.
    34. Rigg, Jonathan & Salamanca, Albert & Parnwell, Michael, 2012. "Joining the Dots of Agrarian Change in Asia: A 25 Year View from Thailand," World Development, Elsevier, vol. 40(7), pages 1469-1481.
    35. Paula Bustos & Bruno Caprettini & Jacopo Ponticelli, 2016. "Agricultural Productivity and Structural Transformation: Evidence from Brazil," American Economic Review, American Economic Association, vol. 106(6), pages 1320-1365, June.
    36. Johannes Sauer & Uwe Latacz-Lohmann, 2015. "Investment, technical change and efficiency: empirical evidence from German dairy production," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(1), pages 151-175.
    37. John Pender & Marcel Fafchamps, 2006. "Land Lease Markets and Agricultural Efficiency in Ethiopia," Journal of African Economies, Centre for the Study of African Economies, vol. 15(2), pages 251-284, June.
    38. Pradkhan, Elina, 2017. "Financial activity in agricultural futures markets: evidence from quantile regressions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(4), October.
    39. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    40. Jin, Songqing & Deininger, Klaus, 2009. "Land rental markets in the process of rural structural transformation: Productivity and equity impacts from China," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 629-646, December.
    41. Truong Lam Do & Trung Thanh Nguyen & Ulrike Grote, 2019. "Nonfarm employment and household food security: evidence from panel data for rural Cambodia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(3), pages 703-718, June.
    42. Do, Manh Hung & Nguyen, Trung Thanh, 2024. "Impact of crop commercialization on smallholder farmers’ resilience to shocks: Evidence from panel data for rural Southeast Asia," Food Policy, Elsevier, vol. 128(C).
    43. Klaus Deininger & Songqing Jin, 2008. "Land Sales and Rental Markets in Transition: Evidence from Rural Vietnam," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(1), pages 67-101, February.
    44. Diao, Xinshen & Kweka, Josaphat & McMillan, Margaret, 2018. "Small firms, structural change and labor productivity growth in Africa: Evidence from Tanzania," World Development, Elsevier, vol. 105(C), pages 400-415.
    45. Trung Thanh Nguyen & Viet Tuan Tran & Thanh-Tung Nguyen & Ulrike Grote, 2021. "Farming efficiency, cropland rental market and income effect: evidence from panel data for rural Central Vietnam," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(1), pages 207-248.
    46. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    47. Prabhu L. Pingali, 1997. "From Subsistence to Commercial Production Systems: The Transformation of Asian Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 628-634.
    48. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
    49. Lewbel, Arthur, 2018. "Identification and estimation using heteroscedasticity without instruments: The binary endogenous regressor case," Economics Letters, Elsevier, vol. 165(C), pages 10-12.
    50. T. S. Jayne & Jordan Chamberlin & Rui Benfica, 2018. "Africa’s Unfolding Economic Transformation," Journal of Development Studies, Taylor & Francis Journals, vol. 54(5), pages 777-787, May.
    51. Daniel L. Millimet & Ian K. McDonough, 2017. "Dynamic Panel Data Models With Irregular Spacing: With an Application to Early Childhood Development," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(4), pages 725-743, June.
    52. Deininger, Klaus & Jin, Songqing & Nagarajan, Hari K., 2008. "Efficiency and equity impacts of rural land rental restrictions: Evidence from India," European Economic Review, Elsevier, vol. 52(5), pages 892-918, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Do, Manh Hung & Nguyen, Trung Thanh & Grote, Ulrike, 2026. "Crop commercialization, structural change and income inequality: Insights from smallholder farmers in rural Southeast Asia," World Development, Elsevier, vol. 197(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Do, Manh Hung & Nguyen, Trung Thanh & Grote, Ulrike, 2023. "Land consolidation, rice production, and agricultural transformation: Evidence from household panel data for Vietnam," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 157-173.
    2. Manh Hung Do & Trung Thanh Nguyen & Ulrike Grote, 2022. "Is land consolidation policy a solution for rice production and agricultural transformation in Vietnam?," TVSEP Working Papers wp-028, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    3. Do, Manh Hung & Nguyen, Trung Thanh & Grote, Ulrike, 2026. "Crop commercialization, structural change and income inequality: Insights from smallholder farmers in rural Southeast Asia," World Development, Elsevier, vol. 197(C).
    4. Mulubrhan Amare & Priyanka Parvathi & Trung Thanh Nguyen, 2023. "Micro insights on the pathways to agricultural transformation: Comparative evidence from Southeast Asia and Sub‐Saharan Africa," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 71(1), pages 69-87, March.
    5. Huy, Hoang Trieu & Nguyen, Trung Thanh, 2019. "Cropland rental market and farm technical efficiency in rural Vietnam," Land Use Policy, Elsevier, vol. 81(C), pages 408-423.
    6. Manh Hung Do & Trung Thanh Nguyen, 2023. "Does irrigation development mitigate weather extremes’ impacts and reduce poverty? Evidence from rural Southeast Asia," TVSEP Working Papers wp-034, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    7. Thi Long Vy Le & Truong Lam Do & Huu Nhuan Nguyen & Trung Thanh Nguyen, 2023. "Farmland accumulation and rural household income: evidence from the Red River Delta region of Vietnam," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(11), pages 458-469.
    8. Fertő, Imre & Bakucs, Zoltán & Viira, Ants-Hannes & Aleksandrova, Olha & Luik-Lindsaar, Helis & Omel, Raul, 2024. "Are Organic Farms Less Efficient? The Case of Estonian Dairy Farms," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 16(4), March.
    9. Thanh-Tung Nguyen & Trung Thanh Nguyen & Ulrike Grote, 2020. "Weather shocks, credit and production efficiency of rice farmers in Vietnam," TVSEP Working Papers wp-017, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    10. Efecan, Ezgi Önen & Efecan, Volkan, 2025. "Impacts of social determinants on the transient and persistent inefficiency of health systems in OECD countries," Health Policy, Elsevier, vol. 161(C).
    11. Ali M. Oumer & Amin Mugera & Michael Burton & Atakelty Hailu, 2022. "Technical efficiency and firm heterogeneity in stochastic frontier models: application to smallholder maize farms in Ethiopia," Journal of Productivity Analysis, Springer, vol. 57(2), pages 213-241, April.
    12. Nguyen, Trung Thanh & Nguyen, Thanh-Tung & Do, Manh Hung & Rahut, Dil & Nguyen, Duy Linh, 2025. "Remittances, sanitation and child malnutrition in middle-income countries: A case study from rural Northeast Thailand and Central Vietnam," World Development, Elsevier, vol. 190(C).
    13. Lingran Yuan & Shurui Zhang & Shuo Wang & Zesen Qian & Binlei Gong, 2021. "World agricultural convergence," Journal of Productivity Analysis, Springer, vol. 55(2), pages 135-153, April.
    14. Gralka, Sabine, 2018. "Stochastic frontier analysis in higher education: A systematic review," CEPIE Working Papers 05/18, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    15. Hailu, Kidanemariam Berhe & Tanaka, Makoto, 2015. "A “true” random effects stochastic frontier analysis for technical efficiency and heterogeneity: Evidence from manufacturing firms in Ethiopia," Economic Modelling, Elsevier, vol. 50(C), pages 179-192.
    16. Shasha Liu & Robin Sickles, 2021. "The agency problem revisited: a structural analysis of managerial productivity and CEO compensation in large US commercial banks," Empirical Economics, Springer, vol. 60(1), pages 391-418, January.
    17. Quang Nguyen & Sean Pascoe & Louisa Coglan & Son Nghiem, 2021. "The sensitivity of efficiency scores to input and other choices in stochastic frontier analysis: an empirical investigation," Journal of Productivity Analysis, Springer, vol. 55(1), pages 31-40, February.
    18. Tenaw, Dagmawe, 2025. "Green and traditional productivity growth with natural capital: The role of resource depletion, environmental damages and sectoral composition," Resources Policy, Elsevier, vol. 103(C).
    19. Eric Njuki & Boris E Bravo-Ureta & Víctor E Cabrera, 2020. "Corrigendum: Climatic effects and total factor productivity: econometric evidence for Wisconsin dairy farms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(2), pages 848-848.
    20. Oliver Schulte & Trung Thanh Nguyen & Ulrike Grote, 2022. "The Effect of Renting in Cropland on Livelihood Choices and Agricultural Commercialization: A Case Study from Rural Vietnam," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2878-2898, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ajarec:v:69:y:2025:i:4:p:911-933. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.