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Humboldt-Universität zu Berlin - Lebenswissenschaftliche Fakultät - Quarterly Journal of International Agriculture

Quarterly Journal of International Agriculture No. 3/13


Investments of Rural Households in Northeast Thailand and the Future of Small Scale Farming

Lena Hohfeld and Hermann Waibel
Leibniz Universität Hannover, Germany


Abstract

This paper analyses investments of some 2000 farm households in rural villages in three provinces of Northeast Thailand. We use a multinomial logit model to analyse the determinants of different types of investments in agriculture as well as small scale enterprises and a hurdle model to investigate the intensity of investments in agriculture. Results show that only 30% of rural households undertake investments and most investments made are small. Only households with larger land sizes tend to invest and wealthier households are more likely to invest larger amounts. Female headed households, those with older household heads as well as households in remote areas invest less. Access to finance increases the probability of investing in small scale enterprises, but does not influence agricultural investments. Households with larger investments in agriculture tend to not invest in non-farm activities. The paper demonstrates implications for rural development and agricultural policy in Thailand and other Asian emerging market economies.

Keywords: farm investments, hurdle model, Thailand, rural development, vulnerability to poverty

JEL: Q12, R11, O13, O12

Vol. 52 (2013), No. 3: 217-236