Land fragmentation potentially has significant and negative effects on agricultural productivity and growth. Fragmentation prevents the use of modern, mechanized equipment such as tractors and harvesters. It may also prevent the adoption of crops, which can only be grown profitably at a certain scale. Fragmentation also often increases labor requirements because of the difficulties of using mechanized equipment and because substantial amounts of time spent on transport between plots and on maintaining boundary demarcations. Production for commercial purposes (rather than own consumption) may only make sense if a certain scale of production is reached because commercialization comes with fixed costs of marketing (for example investment in drying equipment) and because traders require minimum amounts of products before entering into transactions.

 

We may distinguish between inter-and intra-farm land fragmentation. Inter-farm fragmentation implies that land is divided between many small farms. Intra-farm fragmentation, on the other hand, means that land on each farm is divided into many plots. This paper studies the determinants as well as the effects of both types of land fragmentation in rural Vietnam, using plot, household and commune level panel data from 12 provinces.

 

The effects of inter-farm land fragmentation are not clear. A classic thesis in the development economics in the inverse farm size-productivity relation (e.g. Carter 1984, Benjamin 1995). If small farms are more productive than large farms, then high levels of inter-farm fragmentation should be good for productivity. Furthermore, an equal land distribution also in many cases has a positive effect on the political economy of a society. On the other hand, there may well be increasing return to scale in agriculture, at least at some levels of farm size. Since farms in Vietnam are very small, the hypothesis of increasing returns is quite plausible. In particular, the theory of an inverse farm size-productivity relation is typically based on the view that large farms need to hire large amounts of labor, which is less productive than family labor, due to difficulties of monitoring. In Vietnam, however, very few farms are beyond the scale where most work can be carried out by members of the family. Hiring labor during times of planting and harvest is common, but the bulk of agricultural labor is supplied by the family. Thus, the inverse farm size-productivity relation many not apply in Vietnam.

 

Focusing on the effects of intra-farm fragmentation, it is clear that production is more troublesome at more fragmented farms, due to the need to move labor and equipment between plots, and maintain plot boundaries. On the other hand, a fragmented holding may to some extent insure the owner against the risks of crop failure, flooding and so on. This insurance many in turn increase willingness to experiment with new crops and other technologies and may in that sense also have a positive effect on productivity. Hence, for both the inter-and intra farm fragmentation, there is not clear and prior prediction regarding effects on productivity. This is why an empirical analysis is important.

 

In terms of the determinants of land fragmentation, it is clear that in the case of Vietnam, egalitarian government land allocation policies at the time of de-collectivization in the late 1980 and early 1990s is a major reason behind current levels of fragmentation, although population pressure and inheritance practices also play important roles. Reductions in land fragmentation may be brought about by either markets, or by government and community interventions. We study the effects of land sales and rental markets and government land consolidation programs in reducing levels of inter-as well as intra-farm land fragmentation.