Smallholding size, irrigation infrastructure, and the efficiency of coffee production in Vietnam revisited

Abstract

This article revisits the relationships between smallholding size, irrigation infrastructure, and the productive efficiency of coffee smallholders in Dak Lak, Viet Nam, previously examined in Forests, Trees and Livelihoods by Rios and Shivley (2006) (RS). The conjecture in RS that technical inefficiency on small coffee smallholdings in Dak Lak is correlated with decreasing returns to scale from irrigation infrastructure is first examined. A two-stage econometric analysis suggests that the observed technical inefficiency in RS more likely resulted from irrigation water constraints caused by severe drought in the year that RS surveyed than from scale diseconomies in irrigation infrastructure. Stochastic production frontier analysis is subsequently used to test whether the technical inefficiency estimated by RS persists during a normal rainfall year, and when coffee smallholder technical inefficiency is evaluated against a more encompassing production frontier that controls for plot specific irrigation technology, irrigation scheduling, and plot and local agro-environmental production conditions. Results show coffee smallholders are technically efficient when compared to this more encompassing production frontier. Results show that irrigation scheduling aptitude and local agro-environmental production conditions are key productivity determinants on coffee smallholdings in Dak Lak, and impart important policy information for strengthening the smallholder coffee sector in Dak Lak and for managing regional water resources.