Relationship Between Cropland Rental Market and Farm Technical Efficiency

Abstract

Increasing farm technical efficiency in developing countries is essential to raise farm productivity, and cropland rental market is theoretically expected to contribute to farm production efficiency growth. However, empirical evidence on the relationship between cropland rental market and farm technical efficiency in developing countries is scarce. In this paper, we apply the one-step stochastic frontier approach to evaluate farm technical efficiency and to determine the effect of cropland rental market on farm technical efficiency. We use a nationally representative sample dataset collected in 2004 and 2008 in Vietnam for our analysis. We find that cropland rental transactions promote farm technical efficiency and that the rental market transfers cropland from less to more efficient producers. We suggest that the constraints for cropland rental market operation be removed. In addition, promoting cropland registration for land use certificate, encouraging land defragmentation, and facilitating rural education should be undertaken to increase farm technical efficiency.