Determinants of Smallholder Farmers' Marketing Channel Choice: Evidence from the Vietnamese Rice Sector

Abstract

Cash crops such as specialty rice and other high‐value varieties produced for domestic and international markets are considered an increasing source of income for smallholder farmers in many Asian countries. The present study focuses on the factors affecting Vietnamese specialty rice farmers' choice of marketing channel and how their choice influences farm performance. The analysis has been conducted using multinomial logit and linear regression models on quantitative data collected from 280 specialty rice farmers in the Red River Delta, one of the main rice production regions in Vietnam. Results reveal that even though local collectors and wholesalers are still the most common recipients of farmers' goods in rural areas, reduction in transaction costs with regard to uncertainty influences farmers to choose modern marketing channels through collective action (via specialty rice farmer associations). This collective marketing channel helps farmers increase average prices received by US$0.028 per kg of paddy. Based on the results, manifold political implications are derived.