Land Rights and Technology Adoption: Improved Rice Varieties in Vietnam

Abstract

Adopting improved seed varieties is a type of agricultural investment that has substantially ensured food security in developing countries and helped farmers transition out of poverty. This paper examines the impact of land rights on the adoption of high-yield rice varieties by farmers in Vietnam. Using panel data from representative surveys of Vietnamese households, I find that having land-use certificates has a positive influence on households’ adoption of improved rice varieties. Additionally, I explore the channels through which land rights affect improved seeds adoption. Within households, having a land title matters at the plot level, which suggests the significance of the tenure security channel. I also find evidences of the credit channel, in which holding land titles encourages a household to take loans for rice production.

Acknowledgements

I would like to thank Kevin Donovan, Nilesh Fernando, Lakshmi Iyer, and Joseph Kaboski for their valuable advice and many suggestions that have greatly improved this paper, as well as participants in the Development seminar at the University of Notre Dame for their helpful comments. Professor Finn Tarp authorized on behalf of UNU-WIDER and the University of Copenhagen the use of the VARHS data for this article and I appreciate his assistance. All errors are my own.

Disclosure statement

No potential conflict of interest was reported by the author.

Supplementary Materials

Supplementary Materials are available for this article which can be accessed via the online version of this journal available at https://doi.org/10.1080/00220388.2019.1677889

Notes

1. See Brasselle et al. (2002); Place and Otsuka (2002); Place (2009).

2. See Evenson and Gollin (2003); Shiferaw, Kassie, Jaleta, and Yirga (2014); Verkaart, Munyua, Mausch, and Michler (2017).

3. See Walker and Alwang (2015).

4. Foster and Rosenzweig (1995) found that lack of knowledge about new seeds prevents farmers from adopting them. As they have more experience with the new technologies, this barrier diminishes.

5. The recent 2013 land law now allows individuals to apply for LUCs in this type of situation.

6. ‘A third channel studied by Besley can be called the transferability channel: because of better land rights, the transaction cost of selling or renting out land is reduced, and when there is a negative shock to the owner’s productivity (such as health issues or income shock), farmers can easily sell or rent their land to other cultivators. For the type of investment that improves land quality, the lower trading cost will incentivise households to invest more to increase the value of the land. Since the productivity-enhancing investment here, planting improved seeds, does not boost the land value, this third channel is not especially relevant.

7. See Appendix A for a complete derivation.

8. When tracking down households’ LUC status at plot level, we see some inconsistency in households’ self-report. A number of households reported that some of their plots did not have LUCs in the current survey but claimed to have LUC for the same slots in the previous round of the survey. These plots make up about 3% of the total plots. To avoid any discrepancy and inconsistency of the report, we take out these plots and the households that cultivate them.

9. In the Supplementary Materials, I provide results for another variety identification: only considered hybrid seeds high-yield varieties.

10. See Appendix for a more detailed note on variety identification.

11. Goldstein and Udry (2008) show that in Ghana, individuals that have position in the political hierarchy have more tenure security rights and invest more in land.

12. The introduction of newly developed high-yield rice varieties in Vietnam is often promoted by state officials, local government and local Farmers’ Union since agricultural crop cultivation, especially rice planting, is considered important to the state’s socio-economic agenda. Information and suggestions about the type of varieties that should be planted each season are often given to farming households by officials, members of supporting groups at the commune level.

13. Land certification appears to have more effect on seed adoption in earlier years than in later years. To see that this is indeed the case, we break down the effect of LUC holdings in each year on planting high-yield seeds for the period 1998–2004. Figure 1 displays the estimated coefficients for the impact of having LUC (and the fraction of LUC area) in each year on farmers’ choice of seed adoption with 95% confidence intervals. The effect starts out substantial and statistically significant in the earlier years and then fades out in the later years, becoming very close to zero for 2003 and 2004. The fact that we see a diminishing effect is understandable given that in the 2004 sample, 76% of households already used high-yield seeds and 83% of the households have LUCs. One way to think about it is when households get more exposure to improved seeds and planting them is popular within their communes, it is much less of a learning curve to try these new types. Thus, improving land rights plays a less significant role in encouraging people’s decision to adopt.

14. The table of results is presented in the Supplementary Materials.

15. See Supplementary Materials.

16. This is consistent with the literature’s findings. SeeCameron (1999), for example.

17. Hossain et al. (2003) find that the net return of hybrid rice cultivation is 34% to 46% higher than that of inbred HYV cultivation. Although we do not find information about how much more profitable improved open-pollinated varieties are compared with local varieties, the combination of hybrid and inbred HYV planting certainly has higher returns than planting these traditional varieties.