Crop diversification, economic performance and household behaviour Evidence from Vietnam

This study examines economic performance and household behaviour in multiple crop farming in Vietnam by measuring scale and scope economies, technical efficiency, and elasticities of substitution between inputs. The farming system in Vietnam is being transformed by integration between a set of cash crops and main food cropping operations. This transformation into diversified farming systems, where smallholders have a production base in rice, can affect the economies of scope, technical efficiency, and performance of farms. By using the approach of the input distance function, evidence is found of both scale and scope economies. These findings have important economic performance implications. Substantial technical inefficiency exists in multiple crop farming, which implies that by eliminating technical inefficiency crop, outputs could, in principle, be expanded by 20 per cent. Enhancing education and further land reforms are the main technical efficiency shifters. Evidence is also found for complementary between family labour and other inputs, except hired labour. The findings show further that the more adverse the farm production conditions, the more efficiently resources are allocated