The thesis consists of three papers based on the original data collected through fieldwork in Mekong River Delta, Vietnam. It is focused on understanding the implications of modern agri-food sector restructuring for farmers in developing countries. The thesis particularly looks at (i) the impact of the emergence of food standards on farmers’ wellbeing, (ii) the effects of various forms of vertical coordination on household welfare and (iii) the consequences of the concurrent emergence of food standards and vertical coordination in the Vietnamese pangasius sector.
The first paper, Food Standards are Good — for Middle-Class Farmers, joint with Henrik Hansen, estimates the impact of food standards on farmers’ wellbeing using the data from the Vietnamese pangasius sector. In this paper we estimate both the average effect as well as the effects on poorer and richer farmers using the instrumental variable quantile regression. We find that large returns from food standards are possible but the gains are substantial only for the ‘middle-class’ farmers, occupying the range between 50% and 85% quantiles of the expenditure distribution. Overall, this result points to an exclusionary impact of food standards for the poorest farmers. The richest farmers do not apply standards because the added gain is too small.
In the second paper, Welfare Effects of Vertical Integration and Contracts in Pangasius Sector in Vietnam, I analyse the impact of different vertical integration options on household welfare and the implications of different stages of integration for the success of the whole sector. Contract farming and employment on rocessorowned estate farms are in this context considered as two distinct options of ertical integration. The welfare gain from contracts and estate employment is estimated using a maximum simulated likelihood estimator. The results show positive welfare effects from participating in contract farming, but not from employment on processor-owned estate farms. The results imply that contract farming creates opportunities for economic growth, but the additional effort is required to make the contracts more accessible to smallholders.
The third paper titled Food Standards and Vertical Coordination in aquaculture: The Case of Pangasius from Vietnam investigates the interaction between food standards and vertical coordination. Farmers and processors in the Vietnamese pangasius sector the adopt food standards to improve market access by ensuring high quality supply. Instead of encouraging the application of standards and contract farming, processing companies prefer to vertically integrate primary production largely due to concerns over the stable supply of pangasius with satisfactory quality and safety attributes. These tendencies increase the market dominance of industrial farming and worsen the position of small household farms.