Financial Capacity of Rice-based Farming Households in the Mekong Delta, Vietnam

Abstract

This study examines financial capacity of various types of rice farming households in the Mekong Delta. Household financial capacity was elicited and quantified through interviews with 449 households practicing rice-based farming systems in four agro-ecological zones of the Mekong Delta. Household net income, long-standing debt, and savings represent the three key parameters of household financial capacity. Analysis of farm size classes revealed that financial capacity was weak, especially among households with farms that were less than one hectare. Agricultural production was the primary component of household net income. The level of diversity of non-rice crops did not contribute significantly to increased household income. Net household income was positively correlated with farm size, land use circle (i.e., number of crops in a field), and non-farm activities. Mean household savings accounted for 27 percent of total net household income, and mean long-term debt was 11 percent of household savings. The low financial capacity of rice-based farming households introduces substantial challenges for Mekong Delta farmers to recover production costs caused by irregular weather patterns associated with climate change.