Governance Strategies and Welfare Effects: Vertical Integration and Contracts in the Catfish Sector in Vietnam
Organization Faculty of Social Sciences, University of Copenhagen, Denmark
Year 2014
Using an original dataset from the Vietnamese catfish sector, we study the impact of vertical
coordination options on household welfare and the implications of different stages of vertical coordination for
the success of the whole sector. The welfare gain from contract farming and employment on processor-owned
estate farms is estimated using a maximum simulated likelihood estimator. Our results show positive welfare
effects from participating in contract farming, but not from employment on processor-owned estate farms. The
results imply that contract farming presents opportunities for economic growth, but additional effort is required to
make the contracts more accessible to smallholders.