Farmer-trader vertical coordination: drivers and impact on the lotus-grain value chains in central Vietnam

Abstract

Lotus plants have emerged as a relatively new commodity in the food industry in Vietnam, with significant economic potential from its diverse applications in medicine, cosmetics, food, and decoration. Vertical coordination, involving strategic alignment and collaboration among different actors in the value chain, plays a critical role in supporting the small-grain grower-trader relationship. This study aimed to investigate the factors driving the adoption of vertical coordination mechanisms within lotus-grain value chains and to assess the impact of different coordination strategies applied by farmers on their well-being in central Vietnam. Employing a multinomial endogenous switching regression methodology, the study offers nuanced insights into the adoption patterns and impacts of various coordination strategies, controlling for both sample selection bias and unobservable factors. The results highlight the importance of trust, input management, and strategic decision-making in enhancing yield and revenue outcomes among smallholder farming households. Trust between farmers and traders significantly influences the adoption of such strategies in agricultural transactions. Higher trust levels correlate with an increased likelihood of adopting verbal, input, or written contracts. The positive impacts of input contracts on lotus grain yield and revenue, highlighting the importance of effective input management. These findings deepen our understanding of vertical coordination within lotus-grain value chains and assist stakeholders in making evidence-based decisions when selecting vertical coordination strategies for sustainable value chain management.

Impact statement

Vertical coordination between farmers and traders has emerged as a promising strategy for enhancing efficiency, promoting mutual benefits, and improving livelihoods within Central Vietnam’s lotus grain value chain. By addressing existing challenges and charting future directions, vertical coordination holds the potential to significantly contribute to the sustainable development of the lotus grain industry in the region. This study highlights the importance of trust, input management, and strategic decision-making in enhancing yield and revenue. Trust between farmers and traders significantly influences the adoption of verbal, input, or written contracts. The positive impacts of input contracts on lotus grain yield and revenue underscore the importance of effective input management. These findings assist stakeholders in making evidence-based decisions for sustainable value chain management.

Keywords:

• Vertical coordination
• Lotus-grain value chains
• Smallholder farming
• Welfare impact, Vietnam

Reviewing Editor:

• Goodness Aye, University of Agriculture, Makurdi Benue State, Nigeria

Subjects:

• Economic Development
• Agricultural Economics
• Agribusiness and Management

Acknowledgements

This work is supported by The Vietnam Ministry of Education and Training under research project B2023-DHH-26. We thank the participants of the workshop organized by the Department of Science and Technology of Thua Thien Hue province for their valuable comments and suggestions, provided under project TTH.2021-KX.06.

Authors contributions

Conceptualization, N.D.K., T.Q.D., T.T.Q and D.T.K.O.; methodology, N.D.K., D.T.K.O.; validation, T.Q.D.; formal analysis, N.D.K., T.Q.D. and D.T.K.O.; writing—original draft preparation, N.D.K., T.Q.D., T.T.Q and D.T.K.O.; writing—review and editing, N.D.K., T.Q.D. and D.T.K.O.; supervision, T.T.Q All authors have read and agreed to the published version of the manuscript.

Ethical approval

The Committee of Science and Education of University of Economics, Hue University approved the ethical proposal 2023-001 of the study.

Participant consent

Informed consent was obtained from all subjects involved in the study prior to the survey. The participants of this study did not give written consent for their data to be shared publicly, so due to the sensitive nature of the research, supporting data is not available.

Data availability statement

Code to obtain results for the study is available upon reasonable request.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Nguyen Duc Kien

Nguyen Duc Kien serves as a Senior Lecturer specializing in Resource Economics and Agricultural Supply Chain Management. He obtained his doctoral degree from the University of Sydney. Dr. Kien’s primary areas of expertise lie in assessing the economic aspects of agricultural activities, managing supply chains for agricultural products, marketing agricultural products, and analyzing the socio-economic effects of recent fluctuations in agricultural prices.

Thi Kim Oanh Dinh

Dinh Thi Kim Oanh serves as a senior lecturer within the Department of Rural Development. Her research interests lie in sustainable livelihood development, enhancing the competitiveness of agricultural products, and fostering coordination among stakeholders along agricultural supply chains. Additionally, she is currently pursuing a Ph.D. degree focusing on lotus value chain development at the University of Economics, Hue University.

Truong Tan Quan

Truong Tan Quan, Holding a Ph.D. degree in agribusiness from Lincoln University, New Zealand, Professor Truong Tan Quan specializes in supply chain management of agricultural products and capacity building for smallholder producers in developing countries.

Nguyen Thai Phan

Nguyen Thai Phan is a young lecturer at the University of Economics, Hue University, Vietnam. Currently pursuing a Ph.D. degree at Kangwon National University, Korea, from 2021 to 2024, Mr. Phan’s research focuses on behavioral economics and sustainable development.

Nguyen Cong Dinh

Nguyen Cong Dinh is a senior lecturer at the University of Economics, Hue University, Vietnam. Holding MSc and Ph.D. degrees in Environmental Science from Okayama University, Japan, Dr. Dinh’s research interests include climate change adaptation, disaster risk reduction, community-based tourism, and sustainable agriculture.

Pham Xuan Hung

Pham Xuan Hung serves as a Senior Lecturer at the University of Economics, Hue University, Vietnam. He earned his doctoral degree from RMIT University, Melbourne, Australia, in 2016. Dr. Hung’s research interests primarily revolve around rural development and project management. He has actively contributed to two projects supported by the EU and has been involved in various national projects within Vietnam.

Dung Truong Quang

Truong Quang Dung, Holding a Ph.D. from the University of Tasmania in Agricultural Supply Chains, Dr. Truong Quang Dung specializes in supply chain management topics, including risk management, supply chain resilience, and sustainability. For further details, please visit https://orcid.org/0000-0002-5108-5062.