Agrifood market participation, household economies of specialization and diversification: Evidence from Vietnam

Abstract

Despite the growth of agrifood markets, and gradual structural transformation, smallholders persist in Asia. Such patterns are at odds with the views that market growth should encourage more specialization whereby smallholders’ transition to either larger farmers or specialized non-farm households. Using the panel household data in Vietnam, this study investigates how participation in agrifood markets affect smallholder households’ economies of scope (EOS) in diversifying into agriculture and non-agricultural income-earning activities. We find that, greater agrifood market participation proxied by the increased food purchase generally increases EOS between agriculture and non-agricultural activities at the household level. Moreover, it leads to greater labor productivity in agriculture, and also increases female household members’ diversifications into both agriculture and non-agricultural income-earning activities. These effects are relatively stronger and more consistent than conventional indicators of agrifood product sales or proximity to the market. The results shed more light on how exactly smallholders in Vietnam persist in the face of agrifood market growth, and what kind of their relations with such a growing market can be promoted in ways that enhance their livelihoods in the short- to medium- terms.