Profitability and Profit Efficiency of Rice Farming in Tra Vinh Province, Vietnam

Abstract

This study attempts to identify profit, profit efficiency as well as determinants of profit efficiency among rice farmers in Tra Vinh province, Vietnam based on the data collected from 196 sample rice farmers in two districts of Tra Vinh province. The Cobb-Douglas stochastic frontier profit function incorporating profit inefficiency effects was employed to analyze the data. The results revealed that the net income and the net income over gross income ratio of rice production were 9.5 million VND/ha (~ 420 USD) and 30.6 percent, respectively; profit efficiency ranged between 33.87 to 97.22 percent, with an average of 75.61 percent. Significant factors found negatively affect the rice farm profit include prices of fertilizer and pesticide, while positive effects came from seed price, wage rate and land area (fixed factor). Significant determinants that were found positively affect profit efficiency of rice farmers were education attainment, household farm labor, farm size dummy, training dummy, and farmer’s association membership.