Factors influencing coffee farmers’ choice of purchasing partners in the Central Highlands of Vietnam

Abstract

This study aims to analyze the current state of coffee production and the factors influencing coffee farmers’ decisions in selecting purchasing partners in the Central Highlands of Vietnam. The Random Utility Theory and Transaction Cost Economics, combined with the Multinomial Logit regression method, are used to analyze the factors affecting farmers’ choices, based on data collected from 584 coffee households. Most farmers have small-scale production (01 - 02 hectares) and mainly sell to local traders or purchasing agents, rather than processing/exporting companies, even though the latter channel offers higher returns. The results show that age and market distance from the household to the nearest business facility have a positive influence on farmers’ decisions to choose local traders and purchasing agents instead of processing/export companies, while gender, education level, experience, farm size, payment time, agricultural extension services, specialization, and access to market information have a negative impact. Farmers and purchasing partners in the supply chain often lack binding commitments to carry out transactions. Enhancing agricultural extension services and providing market information can improve farmers’ market access, thereby strengthening their position in the supply chain. Financial support programs and incentives for cooperation between farmers and enterprises will create favorable conditions for the sustainable development of the coffee sector.