Profitability of organic vegetable production in Northwest Vietnam: evidence from Tan Lac District, Hoa Binh Province

Abstract

This study compares the profitability of organic and conventional vegetable production in Tan Lac, a mountainous area in Northern Vietnam. The study is motivated by three questions: (1) Is organic vegetable production profitable, compared with conventional production? (2) Who among the vegetable farmers in Tan Lac tended to adopt organic production methods? And (3) what could be done to improve the overall success of organic farmers in Tan Lac? Data were collected from a household survey of 95 smallholder farmers. Focus group discussions and key informant interviews were also used to learn about farming practices and challenges in the area. A series of regressions are used to examine the comparative profitability of organic and conventional vegetable production and common characteristics of organic adopters. The results show that, on average, 1 ha of vegetables produced organically is about 41% less profitable than 1 ha of vegetables produced using conventional methods. However, this average difference can be attributed largely to the success of a small number of conventional farmers in the sample. Quantile regression results show that median outcomes did not differ significantly between the two groups. The choice of marketing channel is correlated with profitability. Organic farming success could be improved if marketing plans were established in conjunction with production plans and if smallholders cooperated on production and marketing plans.