Access to Credit and Rice Production Efficiency of Rural Households in the Mekong Delta

Abstract

Rice production in the Mekong Delta region accounts for more than 50% of Vietnam’s total paddy production and 90% of its rice export volume. Therefore, increasing the efficiency of rice production systems and enhancing the comparative advantage of Vietnam’s rice industry have been an important focus area for policy makers and researchers for many years. Access to credit has been identified as a key factor for improving rice production. This fact is validated in this study by considering the production and technical efficiency levels of rice production for a sample of farmers in the Mekong Delta. The study focuses particularly on the effects of both formal and informal credits on production levels and production efficiency by using a Stochastic frontier analysis and a quantile regression. By using the data from survey 300 rice production farmers in Mekong Delta in 2014, the results confirm the positive influence of credit on production and production efficiency. Both formal and informal credit appears to be important. The findings also imply that in order to improve the rice production outcomes, various possibles policy recommendation needed to be considered such as expansion of rura l credit systems, establishment more branches of agricultural and community banks, settlement the savings mobilization programmes and provision the “credit plus” services to the banks customers.