The economic efficiency of organic rice contract farming: case study in Phong Hien commune, Phong Dien district, Thua Thien Hue province

Abstract

A random survey of 85 farmers engaging in organic rice contract farming was conducted in Phong Hien Commune, Phong Dien District, Thua Thien Hue Province. The economic accounting and quantile regression methods are applied to quantify the economic efficiency of households and the factors that affect annual revenue in the various quantiles. The findings show that the average annual profit of farmers is 0.709 million VND/ 500 m². The revenue-to-total cost ratio in all cropping seasons is greater than 1, indicating that farmers are profitable and their profit margin is 17%. Moreover, an average family labor contribution generates a profit of 179 thousand VND/ 500 m². The results of quantile regression at 75% show that the annual revenue of households is positively affected by two factors: education and the interaction of cultivated area and family labor cost. Improving the economic effeciency of farming household hinges on their ability to effectively utilize and allocate expenses, optimize the costs of purchasing organic fertiliser, and harmonizing production scale with labor utilization sourced from within the family. This research contributes empirical evidence in support of planning the  development of organic rice production in Thua Thien Hue Province.