Determinants and impacts of agricultural commercialization: The case of small-scale rice farmers in Vietnam

Abstract

This paper analyzes the relationship between market access and the level of agricultural commercialization among smallholder rice farmers in Vietnam. The objective is to identify key determinants of market participation and estimate the impact of commercialization on productivity and crop prices. Using panel data from the Vietnam Access to Resources Household Survey (VARHS) for 2014 and 2016, we apply fixed-effects and Instrumental Variable (IV) regressions to control for unobservable characteristics and endogeneity. Results indicate that distance to the main rice buyer is negatively associated with commercialization, while distance to input markets is not statistically significant. Higher levels of commercialization are associated with increased productivity. While commercialization appears negatively related to output prices, the relationship reverses when we account for heterogeneity in production levels, suggesting economies of scale among more market-oriented farmers. The findings underscore the importance of reducing transaction costs and improving physical access to output markets. Policy efforts should prioritize rural road infrastructure and support for high-volume producers to enhance integration and farm profitability.