Analyzing Factors That Affect Rice Production Efficiency and Organic Fertilizer Choices in Vietnam

Abstract

Rice farmers in Vietnam face many difficulties achieving technical efficiency (TE), which can be measured by the distance to the production frontier, in rice production due to non-optimal combinations of inputs and the influence of household socioeconomic characteristics. This study investigates the TE of rice production by applying stochastic frontier analysis to raw data obtained from the Vietnamese Households Living Standards Survey 2016 (VHLSS 2016) database. In addition, organic fertilizers now demand much attention worldwide because of their environmentally friendly characteristics. Therefore, this study identifies the effects of organic fertilizer choices on the TE of rice production. The results show that farmers in Vietnam achieved 87.6 percent TE and that most factors tested had significant effects on rice production. Instead of rice monoculture, the four main factors with strong and positive effects on TE levels were intensive labor, irrigation, mixing crops instead of rice monoculture, and education. Moreover, this study also revealed that organic fertilizer plays a vital role in growing rice by applying propensity score matching (PSM) between farmers who use or do not use irrigation facilities in rice production. While in the process of building a system, the government should focus on rice producers to strive for maximum efficiency with regard to labor productivity and mixed-crop farming, and to take proper measures to improve rice productivity and quality through the use of organic fertilizers. As a result, this study revealed that the use of organic fertilizers for rice production in Vietnam does not always benefit households’ TE.