Technical Efficiency of Tea Farms: Case Study in Thainguyen Province of Vietnam

Abstract

Tea production plays a vital role in rural development and poverty reduction in the North region of Vietnam, specializing in Thainguyen, a northeastern province of Vietnam. This study aims to analyze the technical efficiency of tea farms in Thainguyen province and subsequently to identify the key factors affecting their technical efficiency. The data envelopment analysis (DEA) method was first used to compute the technical efficiency levels. Tobit model was then used to determine factors affecting the inefficiency level of tea farms in the study area. The data of 50 farmers were collected by interview technique. The findings investigated that the average technical efficiency of tea farms was 0.73, implying that tea farms could increase their efficiency level by using inputs more efficient. The results of the Tobit regression model in the second stage revealed that factors related to age, education, and experiences had a significant positive influence on the technical efficiency of tea farms, therefore, to improve the efficiency of tea farms, the government should address policies to encourage tea farms to attain more education through extension system and training and technological transfers activities to help tea farms in adopting high technology in production to improve their efficiency level.