Title of Dissertation The Impact of Contract Farming on Income: A Case Study of Northern Laos. A Heckman selection correction model or treatment effects 84 model of the impact of contract farming on income. Factors affecting household farm production and income 86 among contract and non-contract farming groups.
INTRODUCTION
- Introduction
- Objectives of the study
- Benefit of the study
- Scope of the study
In the case of Lao PDR, contract farming can therefore be a scheme that will help alleviate some of the problems associated with poverty. In 2011, the largest contractor was Dau Tieng Viet-China Rubber Joint Stock Company (a China-Vietnam joint venture), which invested in rubber on 173,152 hectares, Thai and Chinese contractors invested in corn on 66,000 hectares, and Thai, Chinese and Vietnamese contractors invested in other crops (eg: rice, tea, watermelon, potato, chili, Indian beans, peanuts and soybeans) in an area of approx. 26,000 hectares in 2011 (see Figure 1.11) (IISD, 2012). Policy implications for Lao government to support a household to engage in contract farming if contract farming significantly improves their income.
THEORETICAL AND LITERACTURES REVIEW
Types of contract farming in Lao PDR
A small-scale contractor will buy produce directly from farmers through an informal contract or verbal agreement, as in the case of Bokeo. Subcontractors or middlemen who contact the farmers and sell the produce to the main investor or the market with which they have negotiated (oral or formal contract), as in the case of Bokeo. The contractor is that investor who establishes direct contact with the farmer through an official contact, as in the case of the capital city of Vientiane.
Impact of contract farming on income
This study thus focuses on the impact of contract farming on household incomes across all types of contracts applied in the three provinces. Thus, they failed to succeed in contract farming, as in the case of Cambodia (Patrick, 2004). Phoumanivong and Ayuwat (2013) used quantitative analyzes to evaluate the impact of contract farming on the income of sugarcane farmers in Savannakhet province.
Factors that affect households’ decision making to participate in contract farming
- Characteristics of farmer
- Household assets
- Agricultural activity
- Access to electricity and health care services
- Location
The educational level of the household head also contributes to their decision to participate in contract farming. Therefore, households with financial constraints or debt participated more in contract farming (Patrick, 2004; Tionco et al., 2009; Schipmann and Qaim, 2011). Therefore, Tibet-China may have a higher chance of participating in contract farming compared to the other three groups.
Literatures review of policy implications for contract farming
- Contractor
- Contract farmer
- Government
Creating contracts based on farmers' needs can encourage more farmers to participate in contract farming. Strong government regulation is needed for contract farming to work by penalizing parties (both contractors and farmers) who break their contract (Glover, 1987). Since contractors are seen as oligopoly or monopsony traders, the government should make laws to support a competitive environment in contract farming.
Empirical models
- Factors that affect a household’ decision making to participate in contract farming
- Impact of contract farming on income
The evaluation shows that we cannot reject a null hypothesis because the probability value is equal to 0.9994, which is greater than 0.05 (Prob. > 0.05), so the random effects logit model is a suitable model to examine factors influencing household participation. in contract farming (see table 3.1). The estimate shows that we cannot reject a null hypothesis because the probability value is equal to 0.9985, which is greater than 0.05 (Prob. > 0.05), so the random effects probit model is a suitable model to examine the factors influencing households to participate in contract farming. Statistical descriptions of the dependent variables revealed that the percentage of households that participated in contract farming was approximately 37.31% (dummycf).
Finally, the geography in Northern Laos shows that Phongsaly Province shares a border with China and Vietnam, which made farmers more likely to participate in contract farming compared to other provinces. Therefore, this study uses a Hausman test to estimate which model is most suitable to investigate the impact of contract farming on income. The estimate shows that we cannot accept a null hypothesis because the probability value equal to 0.0000 is less than 0.05 (probably < 0.05). The fixed effects model is therefore a suitable model to investigate the impact of contract farming on income.
Therefore, panel data is the good data set to estimate the effect of contract farming on income than cross-sectional data. Using the econometric approach (fixed effects) to evaluate the impact of contract farming on income per capita. adult equivalent. Therefore, this study uses all types to evaluate the impact of contract farming on household income.
Households that received income from non-farming activities were households that had no land to produce crops, so they could not participate in contract farming in this study.
Data
The number of households in Phongsaly that participated in contract farming was much higher than the other two provinces (Table 3.8 and Table 3.9). From 2009 to 2011, the number of Phongsaly households participating in contract farming remained constant and increased significantly in 2012 and 2013, as shown in Table 3.7. Luangnamtha Province had a percentage of households participating in contract farming increased from 27.03% to 27.37% as shown in Table 3.8.
RESULT
- Factors that affect a household’ decision making to participate in contract farming
- Impact of contract farming on income
- Factors that affect households’ farm production
- Information gathering interviews with the government officers
- Information gathering interview with a government officer in Phongsaly province
- Information gathering interview with a government officer in Bokeo province
- Information gathering interview with a government officer in Luangnamtha province
In addition, this study uses the partial marginal effects of independent variables that significantly influence the likelihood that a household will decide to participate in contract farming, based on figures shown in Appendix B. Factors that significantly influence households' decision to participate in contract farming in all models are Tibet-Chinese households (tibetchn), share of irrigated land (prop_irr), farm size (farmsize), distance between village office and provincial office (dt_province), households live in Bokeo (bokeo) and Luangnamtha (luangnamtha). The other eight variables, namely the proportion of adult members in the household (prop_member), the household head was male (male), the household head had years of education equal to or greater than three (edu_3), households are Hmong- The Lumien group (hmonglu) and the Mon-Khmer group (monekhmer), households had debts (debts), poor road conditions (poorroad), distance between village office and market (dt_mkt), do not significantly affect the household decision to engage in contract farming as in the previous studies (Miyata et al. 2009; Rao and Qaim, 2011).
This is because additional water is not necessarily an input for crop cultivation under contract farming (farmers with access to irrigation systems may see additional water suitable for crop cultivation without contract farming (Patrick, 2004). This result reveals that the form of contract farming could Multilateral model in Chapter 2. The results of the impact of contract farming on farm income per adult equivalent are classified into three scales: finc_adultequi1 (model 1), finc_adultequi2 (model 2), finc_adultequi3 (model 3), using fixed effects with the standard error of the group by village, as shown in table 4.2.
Therefore, it is not necessary to use the Heckman selection model to evaluate the impact of contract farming on agricultural income per adult equivalent. This means that, holding other factors constant, if households were to participate in contract farming, agricultural income per adult equivalent would increase on average by kip per year (chicken per year model (chicken per year model (model 3)) compared to households not Phommachak (2016) points out that three types of contract farming models have existed in Phongsaly since 2002: informal, intermediate and multiparty models.
Most contract farming projects are located in Nam Bak village, Long district because the village shares a small border with China.
CONCLUSION
Conclusion
Limitation of the study and recommendation
Policy implication
Finally, in Bokeo, access to irrigation systems and capital for agricultural investment is the challenge that hinders farmers' ability to add value. Farmers are mostly dependent on the climate and season for crops and lack the money needed to expand their investment due to lack of access to credit. Therefore, the government should support the farmers by providing irrigation systems and access to credit that can help farmers in Bokeo overcome these constraints, resulting in improved farm productivity and returning a higher standard of living for farmers (Sengkhamyong, 2016).
These are reasonable strategies to alleviate poverty problems and improve the living standards of households in Bokeo, Luangnmatha and Phongsaly in northern Laos.
BIBLIOGRAPHY
Commercialization of agriculture in Uganda: The case of sorghum, sunflower and rice contract farming schemes. Socioeconomic Determinants of Nutritional Status of Children in Lao PDR: Effects of Household and Community Factors. Gains from participation in high-value agriculture: Evidence of heterogeneous benefits in contract farming schemes in South India.
Changing cultivation practices of Hmong, Khamu and Lao ethnic categories in the Nam Nane watershed, Nane District, Lao PDR. Management, Institutional and Pro-Poor Analysis of Cassava Contract Farming in Quang Tri Province, Vietnam. Social Performance and Distributional Implications of Contract Farming: An Equilibrium Analysis of the Arachide De Bouche Program in Senegal.
APPENDICES
The main agricultural crops in Phongsaly, Bokeo and Luangnamtha provinces
The main agricultural crops in Phongsaly provinces
The main agricultural crops in Luangnamtha province
Phongsaly agriculture crops
The main agricultural crops in Bokeo province
Luangnamtha Agriculture crops
Bokeo agriculture crops
Factors that affect a household to participate in contract farming by random effects of logit and probit models without robust and cluster standard errors
Factors influencing a household to participate in contract farming by random effects of logit and probit models without robust and cluster standard errors. Note: Standard errors are in parentheses; *** indicates significance at the 1% level, ** indicates significance at the 5% level, and * indicates significance at the 10% level. Impact of contract farming on income through fixed effects without robust and cluster standard errors.
Impact of contract farming on income by fixed effects without robust and cluster standard errors
A Heckman selection correction model or treatment effect model of the impact of contract farming on income.
A Heckman selection correction model or treatment effects model of the impact of contract farming on income
Factors affecting household farm production and income among contract and non-contract farming groups.
Questionnaire
AGRONOMY-SOCIOECONOMIC SURVEY QUESTIONAIRE Household Agro-Socio-Economic Survey
Check the box. Check the box. a Budget allocation/spending Male Female. Will you receive advice on the use of improved types of seeds and fertilizers? If so, where do you get advice or information about new technologies (check the box).
Do you know or understand the best agricultural technologies for mountain areas and for raising livestock. Do you know about pre-harvest and post-harvest losses, mitigation measures, pest-free storage,.
AGRONOMY-SOCIOECONOMIC SURVEY QUESTIONNAIRE Village Agro-Socio-Economic Survey
General Information
Available labor in town (18 years old . and above) Religion Female Male Total Female Male Total. Primary to Primary Age Children Children Actually Attending School No. Female No. Male Total No. Primary to Primary Age Children Children Actual Schooling No. Female No. Male Total No. Female No. Male Total.
Health Issue
Village Response to the Proposed Subproject 28. Potential beneficiaries of the subproject
BIOGRAPHY
