Impact of crop commercialization on smallholder farmers’ resilience to shocks: Evidence from panel data for rural Southeast Asia

Abstract

We assess the impact of crop commercialization on the resilience to shocks of smallholder farmers and examine which groups of smallholders are more resilient from crop commercialization. We use balanced panel of 1,370 smallholders from Thailand and 1,497 smallholders from Vietnam collected in three survey waves for the empirical analysis. We employ a generalized structural equation model to estimate the (latent) variable of smallholders’ resilience. Then, we apply fixed-effects estimations with an instrumental variable and a control function approach to address the endogeneity concerns of crop commercialization in assessing the impact of commercialization on the resilience of smallholders. The results show that crop commercialization has a positive effect on smallholders’ resilience capacity. To examine which groups of smallholders are more resilient from crop commercialization, we apply an unconditional quantile regression model. The results show that crop commercialization has the highest impact on smallholders in 10th and 25th quantile groups of resilience capacity. Thus, crop commercialization should be stimulated to improve smallholders’ resilience to shocks. Besides, improving infrastructure for transportation and information and communication technology at the village level and the effectiveness of public governance at the national level could lead to a better resilience of smallholders.