Estimating the Market Power of Traders in the Arabica Coffee Value Chain in Lam Dong, Vietnam

Abstract

Although some studies have assessed the market power of advanced degrees in Vietnam’s agricultural sector, this research only focuses on analyzing the level of market concentration through CR4 or HHI indexes. The stochastic cost frontier can estimate market power using the Lerner ratio when input price data are not available and with or without constant returns to scale. Thus, the stochastic cost frontier with a maximum likelihood approach of Kumbhakar et al. (2012) is used to assess the market power of traders in the coffee value chain in Lam Dong province, Vietnam. The estimated market power and Lerner rate results are 0.0001. This index shows that the local coffee market is a market with perfect competition. So the traders do not have market power. Thus, there is no collusion between coffee traders to lower the purchase price for farmers or increase the price for processors and exporters. An RTS ratio of 0.96 (less than one) shows that the return to scale for traders is decreasing. This number proves that the degree of competition in the local coffee market among traders is very high.

Analysis of technical efficiency’s lettuce farmers in Dalat City, Vietnam

“…Farmers planting lettuce in a greenhouse, using plastic to cover the beds, and applying automatic irrigation and spraying systems use less labor than farmers who cultivate outdoors without good weed and pest control and with manual farming activities. So labor depends on the complexity of the farming activities (Nguyen, Nguyen, & Pham, 2021). The average number of lettuce/1,000m 2 is nearly 20,000 plants (10,000 -28,000 plants), mainly depending on the different varieties of lettuce.…”