EconStor >
Asian Development Bank Institute (ADBI), Tokyo >
ADB Institute Discussion Papers, Asian Development Bank Institute >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/53488
  
Title:Rice contract farming in Lao PDR: Moving from subsistence to commercial agriculture PDF Logo
Authors:Leung, PingSun
Sethboonsarng, Sununtar
Stefan, Adam
Issue Date:2008
Series/Report no.:ADB Institute Discussion Papers 90
Abstract:Poverty is prevalent among small farms in transition economies such as the Lao PDR, where market failures prevail and subsistence production is the norm. Contract farming is emerging as a promising tool to facilitate market linkages and provide the necessary supports that enable small farms to transition to commercial production. Using data from a household survey of 332 contract farmers and 253 non-contract farmers, this study attempts to empirically assess the potential of contract farming as a development tool to increase small farm incomes and reduce rural poverty. Using propensity score matching methodology and an endogenous switching regression model to assess the profitability of contract and non-contract rice farms in the Lao PDR, we found that contract farmers earn significantly higher profits than non-contract farmers. The results also show that contract farming tends to provide the greatest increase in income to farmers with below-average performance. These findings suggest that contract farming can be an effective private-sector-led mechanism to facilitate the transition to commercial agriculture. In addition to bringing foreign direct investment (FDI) into the rural sector, contract farming can be an effective tool to improve the profitability and raise the incomes of small farmers, thereby reducing poverty in rural areas with limited market development.
JEL:Q12
Q13
O31
Document Type:Working Paper
Appears in Collections:ADB Institute Discussion Papers, Asian Development Bank Institute

Files in This Item:
File Description SizeFormat
559359128.pdf127.34 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/53488

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.