Economic efficiency versus social equity: the productivity challenge for rice production in a `greying' rural Vietnam?

Increasing productivity in agriculture is often deemed necessary to enhance rural in-
come and ultimately narrow the urban-rural disparity in transitional economies. However,
the objectives of social equity and economic eciency can contradict each other, especially
in the context of erce competition for resources between agriculture and non-agricultural
sectors and given the inherently redundant and unskilled aging rural population that of-
ten occurs during the economic transition to a market economy. We investigate the case
of Vietnam during its high economic growth period (2000-2016), over which the country
introduced policies to increase eciency in rice production and income for farmers. Con-
trary to expectations, we nd a steadily decreasing trend in the terms of trade for rice,
indicating regression in farm income. At the same time, the Malmquist productivity in-
dex has been falling in most regions due to a decline in technical change, along with little
improvement in technical eciency. We further examine the causes of ineciency using
data from two household surveys in 2004 and 2014 (with plot-level information) along
with semi-structured interviews with farmers in 2016-2017. The high ratio of aging farm
workers who are unable to nd alternative employment during the transition emerges as
an essential impediment to rice productivity, in addition to previously documented land-
use related issues. This demographic feature, along with government equity-targeting
measures, hinders the farm amalgamation progress, further limiting eorts to enhance
productivity. Thus, the goals of economic eciency and social equity appear contradictory features of Vietnam's rice policies, posing a signicant development challenge for the
country's current and likely future development.